Drinks Market and Smoking Ban - Literature review Example

Introduction In recent years, there has been a growing national concern on the way the British particularly in relation to the phenomenon on Binge-drinking. It has been revealed by the BBC that forty percent of the male-drinking sessions in the UK are binge-drinking sessions and binge drinking among women has risen significantly over the last three years. We find a lot of articles in all the leading newspapers especially during the times of Christmas-New year as to how to cope with the hangovers at the end of the day. In a study by Alcohol Concern, the following startling facts were revealed In the UK, binge-drinking accounts for almost 40% of all drinking occasions by the men and for women, this figure stands at 22%. 5.9 million people drink more than twice than the daily recommended guidelines. People with the age group of 16-24 were most likely found to binge-drink. 36% of the men and 24% of the women were found to binge-drink at least once a week. Between the years 1998 and 2007, there has been a significant increase in the proportion of female binge-drinkers from 23% to 27%. The following literature review majorly focuses on the success story on Magners, an Irish cider brand, the drinking habits and patterns of the drinkers. It also focuses on the impact ban on smokers has on the cider market in UK along with the impact of the reduction of duties on the ciders. Literature Review Magners The UK retains relatively high levels of alcohol consumption. Historically, the country has been associated with brewing and distilling, the drinking of bitter in pubs and the consumption of whisky, a product historically tied in to Scotland. The trend for young people in their twenties to feel they can get drunk is being followed by teenagers who generally take an inspiration from the older people. (ICAP, 2007) This has resulted in more number of cases on 'binge' drinking - getting drunk more number of times within a very short time. The media suggests that this has been the main reason behind the increase in number of crimes at night. It is worth mentioning that studies show that of the people indulging in crimes at night, 80% of the cases were said to be committed by people between the age group of 20 and 30. When a bartender was asked about the increase in the drinking habits among the youth, he said, "'There's always someone asking for "one more bottle". Also the fact that public transport in many places stops just before midnight, so if they miss the last bus (costing say 1.50), they'll have to get a taxi (costing say 10), so they feel that it is better to spend money on drinks rather than on the expensive taxi." Philip, from Kidderminster, commented "I like drinking beer because there are many different types of traditional British beer to try and also as it is nice to meet up in a pub with friends." These factors, coupled with the lethargic attitude of the government of UK have led to boost of sales of not just Magners, but other brands as well. Coming to the laws laid out by the Government, which say that serving alcohol should be stopped at 11 PM. All these factors have been immensely helping the brands to execute their strategies and tap the markets. In fact, the brands have been focusing on aggressive promotions in places close to various universities, which have been severely criticized by eminent educationists who feel that this could increase the crime rates in the universities. The Government too has come under severe criticism for remaining as a mute spectator to all this. Hence, it can be inevitably said that the above-mentioned factors did go a long way in making the most by the brands, who've always considered youth centric places as demographic markets, which needed to be tapped appropriately. The success of Magners clearly illustrates as to how successful marketing campaigns coupled with aggression can boost the overall performance and growth of a firm. The television advertisements of the brand have been described as the marketing success of the decade and more and more people shower accolades on this brand, apart from getting attracted to it. The financial results revealed by the company from time to time break everyone's expectations and set proper benchmarks for it. The company's share has more than doubled since the last financial quarter and the sales are up by 264% and the overall profits by 66%. What makes Magners' success so surprising is how it has persuaded the drinking public to switch to a long unfashionable product, readily available in the UK, simply by convincing people to pour it into a glass filled with ice. The company has seen such a tremendous success that the major problem it faces is the lack of proper synchronization between supply and demand. (British Council, 2005) At the moment the group is said to be producing about 250 lts a year and much of it has been found to be getting drunk in its domestic markets. However, Magners is currently engaged in a bid for global domination, claiming footholds in 17 international markets, from Austria to Japan. Having grown too big for the 17 varieties grown at its 250-acre orchard in Clonmel in County Tipperary, Magners has become the biggest buyer of Irish apples. It also consumes a substantial portion of Northern Ireland's crop. The group plans to spend some 200m (135m) on doubling the company's capacity to 500 million liters over the next year. Magners was launched in the Northern Ireland and the United States in the year 1999. Though it was largely popular in the US, the popularity was largely confined only to the Irish communities in the US. The international campaigns took off when the brand was promoted under the new name in Scotland in 2003 and then in London and the Southeast. C&C invested millions of money in the summer campaign. The advertising spree started just when the heat wave had entered the place and with the start of the world cup. A few advertisements were shot in New Zealand on the Hawks Bay and the campaign grew out to be so effective that the brand managers said that they were receiving at least 40 e-mails a day asking them as to where they could buy this product. (CIAO, 2006) According to The Independent, "Perhaps most strikingly, to a British audience at least, was that the adverts presented a new face of Irish ness. Though the word Irish is integral to the brand's name, the marketing is a world away from the tweedy, dew-soaked image long associated with products emanating from the Old Country. But the idea of these young Celtic tigers, relaxing after a day slaving away on their Macs at the design consultancy, proved seductive with British consumers." The brand took off from the conventional posters of dew filled bottles and took to a new idea altogether, which paved way for a huge boost in sales of the company. According to Shane Whelan, an account director at Young Euro RSCG, the product rather than the country of origin dictated the idea of the advertising campaign. "We didn't dial up the Irish ness but we didn't dial it down either," he said. "There is no pretence about it. What has happened in Great Britain is that we have given people permission to drink cider again, but in a new way," he said. The adverts, specially filmed to emulate the four seasons, have been greatly admired within the media industry. According to the editor of Campaign magazine, Claire Beale: "They are incredibly atmospheric with an arresting soundtrack. The collaboration of imagery and music made them really stand out. The time was clearly right for a new refreshing drink, just as people were getting in that summer frame of mind. It is a very gentle advert. It is all about adults conversing together in a civilized setting." Advertisers have to face strict rules and regulations over how they sell alcoholic drinks, particularly how they represent the sexual attractiveness of the drinker and how they should not appear to appeal to young people.(Medical News today, 2005) Officials closely monitor these issues from time to time. However, that has not stopped Magners from promoting a successful campaign. (CIAO, 2006)However, not everyone is impressed with the success of Magners. The Campaign for Real Ale (Camra) views Magners' success with something not related to the taste, but rather to the hype created around it. It fears drinkers are being drawn in by slick advertising and expensive gimmicks rather than taste. (BBC, 2006) According to Camra, to qualify as real cider, the drink must not be pasteurized, micro-filtered or carbonated. The advent and promotion of Magners has revived the sales of the Ciders across UK as can be seen by the fact that the Cider sales are almost up by 27%. This is a significant development considering that the sector was completely in dark for over a decade. Caroline Penney, from the Association of British Cider Makers says "Cider is enjoying the greatest resurgence in sales for a decade "(BBC News, 2006) A few surveys conducted also suggest that Magners is getting along well with female drinkers as well. A random taste test by The Daily Telegraph in a Wetherspoons pub in central London some months back backed the evidence that women drinkers prefer Magners to other ciders such as Strongbow. Anne Marie Field House, a 23-year-old nail technician from Uxbridge, said: "I'd prefer the Magners, it's fizzier." Almost on the similar lines was the response from Care worker Victoria Bovey, 29, who said, ""It's a bit more appley, I'd say. It is a nicer flavor." (Drink aware, 2003) Barry Brewster, a general manager at Wetherspoons, said he had been surprised by the strong cider sales. "It has gone beyond all of our expectations over the last three or four months, it has been a bit of a sleeping giant. Cider has lost its stigma and everyone feels it is socially acceptable. It is something slightly different and has come across as a sexy alternative product for us." (BBC, 2005) Impact of the ban on smoking on the sales of ciders The smoking ban, which came into effect this summer, had raised lot of concerns and apprehensions in the bar trade circles. The fact that each of the trade participants would lose out on considerable shares of the market made them feel jittery. The pub sales in Scotland in first quarter after the smoking ban came down to 2-3% and clearly, this was an indication that the drink-manufacturing sector in the UK were to lose out on its customers and needed ways to retain them. Though the impact of the ban on smoking didn't really seem to have affected the pub sales in the long run, it did seem to affect the sales of drinks and beverages. However, this was only the case with pubs, which relied more on food-sales. In fact, pubs relying on food sales had increased their sales as more people liked eating in smoke free places. However, as many as 5,000 pubs and bars in the UK could cease trading by 2011 through a combination of the smoking ban, a clampdown on drinks promotions and declining beer sales, experts have warned. A report from consultancy Pricewaterhouse-Coopers (PwC) says that 8.6% of the 58,000 pubs, bars and nightclubs in the UK could disappear in the next five years. Stephen Broome, licensed sector industry specialist at PwC, and author of the report, said: "The experience from Scotland indicates that the overall impact of the smoking ban legislation should not be overestimated, but some premises will feel the impact more than others. Drinks-only venues, and those without external spaces for smoking, are likely to be most vulnerable." Another research by CAMRA, which had taken a sample of pubs from Scotland, found that 56 pubs a month were closing permanently, 80% of them in urban locations. Camra believes 1,300 pubs nationwide are currently under threat of closure. To head off problems, Broome recommends a short-term approach of cash generation rather than profitability for pubs, that could include promotions and price cuts where possible. But in the week the report was published, new laws were implemented forcing Scottish pubs and bars to sell alcohol responsibly. Nick Bish, chief executive at the Association of Licensed Multiple Retailers, said just as the industry was getting to grips with the smoking ban and the change in licensing laws, government bodies now had alcohol sales in their sights. It was also suggested that pubs offer heavy discounts to the consumers encourage heavy drinking. Hence, the smoking ban is surely going to be a major threat to the brands in the UK as the same was observed in the country of Scotland wherein cider and beer sales went low. Duties on drinks in the UK and their impact on the revenue generated The recent increases on the duties on beer and cider have been in-line with the inflation, as mentioned by the Chancellor of UK in his latest budget. The tax on beer and cider would increase by 1p (US$0.02), whilestill winewould face a tax rise of 5p (Just drinks, 2007). The tax on sparkling wine, however, willrise by 7p. Barry Chevallier Guild, a partner at UK cider producer Aspall Cyder, said that the increase in the tax on cider "was to be expected" after a duty freeze for two successive years.(Just drinks, 2007). Hence, this decision would definitely make some proportion of the beer-drinkers to turn to ciders in the near future. Though mixed reactions were evoked from the cider industry, it is indeed a fact that the cider industry is clearly the benefactor of the increase in the duties on the other related drinks. Hence, this move, optimistically, will actually make many people inclined towards ciders, especially people hailing from the lower economic classes. Considering that Magners has so far been way ahead of the other brands in the cider market with respect to the marketing, it is clear that Magners will definitely make the most out of this scenario. However, a few people also suggest that it is not because the consumer had re-discovered the taste for cider that the sales have Magners have boosted. They point out that Magners had managed to tap the extra-cool conditions and the serve with ice, which other brands do not offer. They also point out that since other brands like Elephant and Budweiser are also recommending their products to be served with extra ice, things won't be so easy for Magners' at least in the coming years. (IAS, 2006) Though they feel that the effects of this development will be felt sometime in the summer of 2007 itself, conceiving such a possibility at this stage is really difficult. They also feel that Magners is one brand, which will have to sink someday like many of its predecessors like Hooch, Sol and Caffrey's. However, as pointed out above, such a possibilty is ruled out at least for the coming few years. REFERENCES 1) Drinkaware (2002), Information on Alcoholic consumption at http://www.drinkaware.co.uk/ 2) Britishcouncil (2003), Information on Binge drinking at http://www.britishcouncil.org/japan-trenduk-eatingdrinking.htm 3) Information On Binge drinking in UK available at news.bbc.co.uk/1/hi/health/3122548.stm 4) Information on Binge drinking available at www.medicalnewstoday.com/medicalnews.php Newsid=16995 5) Information on Binge drinking available at en.wikipedia.org/wiki/Binge_drinking 6) Information on Binge drinking available at www.medicalnewstoday.com/medicalnews.phpnewsid=17988 7) Information on Eurpoean Binge drinking patterns available at www.ias.org.uk/resources/factsheets/binge_drinking.pdf 8) Information on Eurpoean Binge drinking patterns in Wales available at www.bbc.co.uk/wales/rsod/ 9) Reviews for Magners cider available at www.ciao.co.uk/Magners_Cider__5319508 10) Information on Magners brand available at www.magnerscider.com/about-us/faqs.asp 11) Review of the competition in the British cider market available at www.marketresearchworld.net/index.phpoption=content&task=view&id=773&Itemid= 12) Ee Huak Kuo (1999), Study of drinking habits among the youth, SUP 13) DIANE Publishing company, YOUTH AND ALCOHOL, DIANE publishing company 14) The British journal of Criminology (2001), Quadrangle books 15) Alcohol concern(2007), Information on Binge drinking patterns available at www.alcoholconcern.org.uk/files/20031212_114408_Binge%20drinking%20update%20%202003.pdf 16) Home office(2007), Information on the Binge drinking patterns available at www.homeoffice.gov.uk/rds/pdfs2/hors262.pdf 17) Medical news today(2007), Information on the binge drinking patterns available at www.medicalnewstoday.com/medicalnews.phpnewsid=17988 18) Justdrinks.com (2007), Information available on the duties on the drinks available at www.justdrinks.com 19) Beverage daily(2007), Information available on the increase in the increase in the duties on beer available at www.beveragedaily.com/news/ng.aspid=11798-beer-duty-increase 20) Magners(2007), Information on Magners cider available at www.magnerscider.com/ 21) BBC(2007), Information available on the successful marketing strategies by Magners available at news.bbc.co.uk/1/hi/business/6522855.stm Read More