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Flying Fish near beer

AB InBev ups the cider ante in SA

Distell’s cider hegemony is under big challenge by AB InBev’s ‘near beers’, with female imbibers driving much of the growth.

The release of Distell’s year to end-June numbers this week [Aug 27] may be sobering in terms of assessing additional competition in the cider and near-beer niches.

Distell’s two cider brands, Hunter’s Dry and Savanna, have carved out a lucrative niche in SA and Africa — so much so that the company ranks as the second-biggest cider producer in the world by volume.

It’s common knowledge that frothy profit contributions from Hunter’s and Savanna have buoyed Distell’s profit numbers over the past two decades.

In the interim results to end-December 2016 Distell already hinted that the cider party was quietening down, with volumes affected by pricing and, perhaps more worrying, increased competition.

Distell explained that ciders were affected by “trade down” as disposable incomes were under pressure, but it also noted “intensified beer pricing and pack activities in formal channels as well as recent RTD [ready-to-drink] launches”.

Any Distell shareholders who were a little rattled by these admissions will probably need a stiff drink after perusing beer giant AB InBev’s second-quarter results presentation. A carefully crafted assault on the cider market is quite apparent.

AB InBev’s SA market segment review, ominously headed “category expansion by ‘near-beer’ development”, referred specifically to niche brands Flying Fish (a flavoured beer), Brutal Fruit and Redd’s, an apple-flavoured fruit ale that mimics ciders.

Interestingly, it’s the feminine side that is paying off, with AB InBev reporting that Flying Fish was “recruiting women into the beer category” and disclosing that 80% of Brutal Fruit’s volumes were sourced from female drinkers.

With 100% volume growth, Flying Fish is the highest-growth brand in SA. It seems clear that with Redd’s, which is growing volumes more than 20%, AB InBev looks quite determined to blunt Distell’s cider thrust.

And here’s the scary part: Redd’s makes above-average margins despite its low price point, which is “designed to compete directly against core ciders and challenge the norm of value.”



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