Pure North, is a Cider and Apple Juice producing company that is fairly new in the market. It started commercially started selling cider in 2010 to pubs and shops in Kirklees and Keswick areas (Yorkshire Region). The company acquired the license to sell cider to the general public in the summer of 2012. The company has installed newer technologies for its cider production. The ciders produced by the company are produced naturally free from chemicals.
The problem in hand is that the company has planted a new Orchard with wider cider apples. However, they have more fields in hand for which they are not sure if they should produce wider range of apple ciders or other fruit flavoured ciders.
The course of action for Pure North Cider
The company should produce fruit-flavoured ciders in their new orchard which they have acquired. There is ample evidence that supports this course of action for the North Cider. However, if the decision is made on the company analysis, the company as of 2011 had planted 250 trees of 17 different varieties of apples and pears. Since then it has been expanding at a steady pace. The trees which have been planted will be sufficient for the production of apple cider.
Current industry sales, Growth and Market Insights
Cider sales have shown a steady increase in the last seven years. In addition, taxation of cider is low in comparison to other alcoholic beverages. The cider sale reached USD 4330 million in 2018. Therefore, this is the time when Pure North can introduce cider variants (Fruit Flavored Ciders) in the market. Also, Pure North has been selling their products in on-trade which accounted for 32% of the total volume sales of 2012, which therefore will give advantage to them as they would introduce variant.
There are four major industry trends which eventually would promote the sale of fruit flavoured cider and act as evidence why Pure North should produce fruit-flavoured ciders. Firstly, the ciders currently available in the market are promoted as Summer Drink. This makes it a seasonal drink, therefore, if fruit flavours are promoted as winter drinks, the sales would increase. Secondly, while wine is considered a sophisticated drink by 50% of the population and only 8% feel that ciders are sophisticated. In order to make cider look sophisticated, companies are using sophisticated glassware and smaller serve sizes. Also, when more fruit flavours are added to the products line, the sophistication level of drink would be further enhanced.
Another trend which would influence and boost the sale of fruit-flavoured drinks is the decline in alcohol consumption. This is attributed mainly to three reasons:
- recession affecting social and economic condition,
- the inclination of people towards healthy lifestyle, and
- government “tax escalator” on alcoholic beverages.
Due to this, the people are shifting their inclination towards ciders, which is reflected in statistics as well. Wine and Beer are although the two most popular alcoholic drinks, the gap between cider consumption and alcoholic drinks have reduced significantly. Existence of different and sophisticated fruit flavours in cider will act as an added advantage to Pure North.
Finally, as alcohol consumption has declined, however, soft drinks saw a smooth growth in sales. However, the market is not very strong as there are many smaller companies occupying the market. In order to penetrate in the market, Pure North will have to manufacture different fruit flavored juices. This is possible if Pure North grow trees of other flavors in their new orchard.
The competitor analysis reveals that there are 10 major competitors in the market with the top three positions:
- Strongbow (Off-trade sales of £ 239mn in 2012),
- Magners (Off-trade sales of £ 74mn in 2012), and
- Bulmers (Off-trade sales of £ 70mn in 2012).
Other than these there are many smaller brands which occupy a major chunk of market share (Off-trade sales of £ 256mn in 2012). Pure North is part of this smaller category. The trend reflects that smaller brands are flourishing because 56% of the consumers reflect that they like trying different brands and flavors. The main reason behind the success of these smaller brands is that they are trying to set themselves apart from the major competitors by producing different fruit flavors.
Among the major competitors in the Fruit Flavored Ciders, there are only four major competitors of Pure North:
- Rekorderlig, and
Among these four, Kopparberg is a giant competitor and was one of the best performers of 2012. It produces Mixed Fruit, Brothers Strawberry and Mixed Pear Cider among others in the fruit flavored category. However, they are of foreign origin (Sweden) which is generally not a preferred trend in UK. As nearly 42% consumers prefer locally or regionally produced products. This acts as a disadvantage for Rekorderlig (multi-national brand), and Savanna (South Africa), as they are also of foreign origin.
Therefore, another major competitor of Pure North is Asphall. They are operating since 1728 and produce different variety of traditional ciders, vinegars and apple juices. However, Pure North can produce flavors which are not produced by the Asphall in order to expand market share.
Consumer demographics and trends
In terms of Demographics, trends reflect that cider enjoys a reasonable level of usage among 18-34 years old and over 55 years old. The over 55 years old age group prefer apple cider (drunk by 33%) in comparison to pear (17%) and other fruit flavoured cider (9%). This reflects that they are less enthusiastic about flavoured variants. However, this is a major group of cider drinker with the capacity to buy premium varieties. Therefore Pure North should tap them as their potential consumers in flavoured section.
It is noted that this age group is concerned with the quality of ingredients, country of origin and package size. Pure North is at an advantage as they are British Ciders and use traditional methods to produce ciders. Therefore even their flavoured ciders would not suffer on the grounds of lacking tradition.
Fruit Flavored ciders can be tagged as hot favourites among 18-34 year age groups. It is reflected by the trend that 33% of the people in this category drink more than three types of cider and only 16% sticking to one type. The popularity of fruit flavoured drinks among women and has also been observed due to the accessibility and appeal of the drink.
Additional pressure upon Pure North Cider with the suggested course of action
Pure North is fairly new in the market, which has restricted its reach to Yorkshire region only. The company, therefore, needs to resolve certain additional pressures to mark their presence in the market. In order to ensure the success of this action, the company needs to first devise an excellent promotional and advertising strategy which reflects on the demand of its consumers. The promotional activity should primarily focus on the quality of the ingredient and its tradition of local produce. This will enhance and improve the value for money image of the company and its products. Secondly, the company will have to work on improving the sophistication factor which can be done by serving the drink in small packages (for off-trade) and sophisticated glassware (for on-trade). Finally, they should produce fruit flavours which are not currently available in the market. This will give them an edge over their competitors.
SWOT analysis of Pure North Cider
|Existence of Fruit flavour cider market.||No Experience in the production of Fruit Flavored Cider.|
|Updated technology at production plants.||No business connection outside Yorkshire region.|
|The market for existing products is still flourishing, so no tension in this end.|
|Location of the company is the UK, which adds as an advantage among locals.|
|Cider increasing in sales and bound to rise till 2017 as per the forecast.||Lack of sophistication in comparison to Wine.|
|People are willing to try new brands and Flavors.||Overall low household penetration, the major part of sales is contributed by on-trade.|
|The decline of alcohol consumption.||Existence of competitors in the market.|
|The inclination of consumers towards healthier lifestyles.|