Healthier lifestyles and the rise of social media could impact sales of Tennent's, the Scottish lager brand owned by C&C Group, in the coming years, according to investment bank Berenberg.
A report compiled by the bank's analysts Tom Davies, Javier Gonzalez Lastra, Matt Reid and Ramnique Sroa examined a number of factors that could impact Tennent's performance, noting that Scotland has seen a 230% increase in breweries, mainly craft operations, in the past ten years.
The fact that Tennent's places itself in the economy and mid-priced lager category is also potentially problematic, with these categories dropping by 4.0% and 1.2% respectively, as premium and imported premium beers see gains.
Further Headwind
However, demographics could provide a 'further headwind for alcohol consumption in Scotland, and we believe Tennent’s is exposed to this trend,' the bank said 'As we have highlighted in our previous demographic reports, although these focused on the US, Generation Z consumed significantly less alcohol than previous generations.'
It said that the rise of social media, which has 'placed significant emphasis on vanity and looks' is turning many young consumers off overconsumption of alcohol, while 'isolated socialising' via smartphones means that fewer young people are meeting up regularly with friends to consume alcohol.
'Indeed, CGA data for Scotland has indicated that total alcohol consumption in the country fell by 1.0% in 2005-15,' the bank said.
'We believe these negative consumer demographics have been a key factor driving this decline. In our view, these demographics will continue to be a drag on beer volumes in Scotland and we believe that the Tennent’s brand is particularly exposed to this demographic trend.'
While Tennent's will remain the market leader in Scotland, due to its perception as 'The Scottish Beer', declining beer consumption could be 'particularly significant' for the brand.
Headwinds
The bank also warned that C&C’s branded portfolio ‘faces a cocktail of top-line headwinds’, ranging from increased competition to negative consumer demographics.
It believes that the market expectations for the group are too high, despite the recent boost from the acquisition of UK wholesaler, Matthew Clark Bibendum.
© 2019 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: European Supermarket Magazine.
