Cider: The drink adding some fizz back into the Australian alcohol market

Australia is better known for its lagers and wines, but the budding cider segment is adding some fizz to the market that’s seeing Australians reduce their alcohol consumption.

Australians are drinking less now than they were previously. Beer is still the most popular alcoholic beverage, but its market share has experienced a long-term deterioration. In the period between 2008 and 2013, both beer and RTDs have experienced decreases in annual per capita consumption, and wine and spirits have reported somewhat uneven performances. While the rest of the market feels the squeeze of declining consumption, the only slice to see increases in per capita consumption during the period 2008-13 has been one of the newest and, at present, smallest segments: cider. Alcoholic cider has seen a 217% increase in consumption from an average 0.06 litres per person aged 15+ in 2008 to 0.19 in 2013.

Alcoholic cider has seen a 217% increase in consumption from 2008 to 2013

But cider’s effervescence is facing tough critics. In a bid against teen drinking, 2008 saw the tax rate of RTDs raised by 70% to AUD$0.95 per standard serving. Cider’s tax rate is currently AUD$0.23 per standard serving, however, in 2013, the Distilled Spirits Industry Council of Australia (DSICA) lobbied to have the tax raised on ciders to the same level as RTDs, arguing that many consumers view cider in the same way as RTDs. Cider Australia, the national association of cider and perry manufacturers, dispute this. They claim that wine is a more appropriate comparator, further justifying this by connecting cider’s growth to the success of Australia’s apple and pear farmers. The association notes that cider’s story echoes that of the Australian domestic vineyard owners and the resulting global and domestic success of Australian wines. This alignment certainly offers a better long-term model, as wine has shown the smallest per capita consumption fluctuations from 2008-13.

In the end, it comes down to a matter of definition. The Australian Tax Office defines cider and perry as “the product of the complete or partial fermentation of the juice or must of apples or pears”. It can be dry, draught or sweet, but added colours or flavours are prohibited. Ciders with added flavours and colourings are subject to the same tax rate as spirits and RTDs. On the other hand, Australia’s Food Standards Code’s definition of cider is much less stringent. Their latest guidelines lack any official stance on cider whatsoever and this has permitted and encouraged more than just 100% apple or pear based drinks, including RTDs, to jump on the cider bandwagon. Cider Australia is taking a stand, aiming to change this. Making the packaging laws clearer has been a priority for its 2014 leadership team. Until these changes come to fruition, cider is going to continue to struggle to define itself within the industry.

Mintel’s Global New Products Database (GNPD) shows that while both RTDs and cider have increased their share of alcoholic product launches in Australia since 2008, RTD product launches have dropped since their peak in 2011, following the RTD tax increase. Many of the RTDs released more recently are following a new trend – modelled after cocktails, such as whisky and cola, while the products that fit Mintel GNPD’s definition of cider emphasise their fruit flavours. Meanwhile, cider product launches continue to grow.

Consumer education about ‘real’ cider and perry is also high on Cider Australia’s list of priorities. Following the lead of the wine industry, cider makers are drawing customers in by creating stories and providing information on domestically grown and produced ciders. Their intent is to promote the source of their apples and highlight the expert craftsmanship with which cider is produced. This education could help to see these artisan and limited-batch products create a premium cider segment, further propelling cider’s growth, or at least keeping consumption steady in this unique slice of the overall declining Australian alcohol market.