E-Malt.com News article: Finland: Hartwall promoting small and medium-sized beer packages

Finnish Hartwall is investing efforts into small and medium-sized beer packages, which studies show Finns prefer, and is spurring on retailers to lower the prices of these packages, in order to make them even more appealing to consumers, the company said on September, 22.

In its consumer study, Hartwall examined Finns’ needs and desires in terms of the size of packages in which they want to buy beer. The study showed that Finns would buy beer in small or medium multi-packs – 6, 8 and 12 packs – if prices were reasonable. Small and medium-sized packs correspond best to the situations where people drink beer and with the needs of Finns. The main occasions when beer is drunk are as follows: when having sauna (35 % of all occasions), watching television (19 %) and with food (17 %).

At the moment, however, the Finnish beer market is dominated by cases of 24 cans. Over 70 percent of the beer market is made up of these least preferred but affordably priced large cases as well as cans purchased individual from cases.

“Cases of 24 cans are affordable, but they are inconvenient for many situations. They are convenient for only 10 percent of all situations in which people consume beer. It is clear that something in the market isn’t quite right, when most beer is still sold in cases, regardless of this fact,” says Jan-Kees Nieman, Managing Director at Hartwall.

The study carried out by Hartwall revealed that consumers would be prepared to pay more for small and medium-sized multi-packs as opposed to cases. The current price per litre, which can be as much as double that of beer in cases, does not encourage consumers to buy the size of package they want. Instead they select packs that are unnecessarily large for their needs.

Hartwall would now like to change the beer market in order to better respond to the needs and desires of Finnish consumers. The starting point is that Hartwall will invest more energy into small and medium 0.33 litre packs, preferred by consumers. It is essential to get the price down to a sensible level. Indeed, Hartwall is encouraging its own customers, the retail stores, to lower the price of small and medium-sized 0.33 litre packs from the current level.

“We asked consumers what they felt a suitable price would be for a small pack, and established that consumers would be willing to pay price index 130-140 for the 6 or 8 packs compared to a case. The price index for 12 packs would be 120 compared to cases. Our goal is to lower the price to this level from its current point,” Nieman says.

“The majority of the value of the beer market has disappeared over the last ten years. The situation has been affected by private imports increased by Estonia’s EU membership as well as changes in legislation, which require that offer prices of beer be in force for at least two months. The market and breweries have been performing a balancing act in a situation where beer is sold on offer every day of the year in practice. The Government had good intentions but miscalculated horribly”, says Nieman, providing some background information.

“During the last few years alcohol taxes have been increased three times. The tax increase has not been passed on to the consumer and the price ceilings in the beer market are getting lower and lower all the time. We have the highest excise duty in the EU, but one of the lowest margins in Europe. On a promoted case (sold at €19.90 €) 80% goes for taxes and fees”, Nieman continues.

If it succeeds, the change promoted by Hartwall will benefit everyone. Consumers get beer in the package sizes they want, at the price they are willing to pay. With the demand for beer distributed more evenly into different package sizes, the margin for the total industry also grows. Hartwall sees the change as a step toward more responsible alcohol consumption, too. Up until now, consumers have been driven by prices to buy more beer than they need, making it easier to drink more than they intended.

The change promoted by Hartwall will be visible in retail stores beginning in the autumn, when Hartwall introduces new, six can packs of Lapin Kulta and Karjala onto the market.


23 September, 2011