Member Article

David v Goliath battle sees Kopparberg triumph

The David versus Goliath story is a familiar one; the smaller man fighting the giant. The story is not just biblical, it transcends the business world too.

It is by this analogy that Kopparberg managing director, Davin Nugent, compares the cider industry.

Davin, 36, was sitting in a bar in Cork, in his native Ireland, back in 2004 when he spotted a new drink seeking him out from the fridges.

He was instantly sold. The drink was new, refreshing, and unique. The cogs began to whir; ‘there’s an opportunity here’, he thought.

Davin had always been interested in the alcoholic drinks market, having ran a drinks portfolio - including Tiger Beer - for a marketing firm in Dublin.

It was then that a partnership was born, and the preface to a story that has seen Kopparberg, the premium Swedish cider Davin first saw in Cork, become ubiquitous in UK bars and supermarkets.

Fast forward ten years, and Kopparberg - through clever branding, diligent research and market conditions - sells 40% of its brewery output in the UK, its biggest market.

Davin acknowledges the initial struggle to compete with the likes of Magners, who, in 2002, had 89% of the Irish cider market after revolutionising the way people consumed cider - poured from the bottle over ice.

This was his David versus Goliath. A small, independent brewery based in a small, rural Swedish town, founded and operated by two brothers - Peter and Dan-Anders - Kopparberg has gone from producing 75 million litres of cider compared to just half-a-million litres it produced in its first year of production in 1993.

It was up against the established order, the giants; Magners and Bulmers. They are owned by C&C in Ireland (the Bulmers name is owned by Heineken outside Ireland, they do not own the Magners name). Today, HP Bulmer makes 65% of the five hundred million litres of cider sold annually in the United Kingdom and the bulk of the UK’s cider exports. Stiff competition.

But Kopparberg had a crucial “point of difference’, as Davin described it.

He said: “We had one horse towns with Magners back then. People wanted a point of difference. That gave us the opportunity to bring the first pear cider to the table. Apple was king, why would people want pear, let alone sweet pear? It came down the that point of difference.

“We then had the chance to introduce other flavours, strawberry and lime and mixed fruit.” Mixed fruit is now Kopparberg’s most popular flavour, surpassing its first love, pear, and is the single largest selling bottled cider in UK bars. Elderflower and lime was launched after they spotted potential in the market; elderflower is the fastest growing adult soft in the UK.

Davin compares the introduction of pear cider in 2006, initially in Ireland, then into the UK, as “a ripple effect after throwing a pebble into a lake”.

He said: “Peter Bronsman came to me and asked if I can do a similar job with the UK market as I had in Ireland. We sensed a real opportunity. While the markets are different, it is still a very similar consumer in terms of the taste profile.”

After selling a small amount of pear cider to a small amount of opinion forming bars, the platform was set. More bars noticed and bought stock, then, a phone 2007 call that changed the course of Kopparberg’s history.

Davin said: “The supermarkets were starting to come calling, and then Tesco in the UK actually phoned us and asked us if they could list a product, which was fantastic - you rarely get a call from Tesco asking to list products, you usually bang on their door!”

That ripple turned into a wave. More supermarkets started stocking Kopparberg pear cider - the first of its kind in the UK - as did high end bars, something Davin attributes to its ‘point of difference’. “We stamped our credentials on this burgeoning category”, he said.

Last year was the best yet for Kopparberg, turning over a record £120 million, a 24% growth on 2012. The company has seen double-digit growth every year since its launch, and new flavours are lined up to tempt the discerning palate. Raspberry will be launched in the next few months.

Davin commented: “Beer drinking is falling by volume, as people try other products. Cider is becoming really popular as it is being marketed a great deal, as it offers a higher margin return than beer, because beer has become so competitive so relatively inexpensive.

“They haven’t stopped drinking beer, but they will now start the night - or even end the night - with a refreshing cider.

“I refer to today’s drinkers as the ‘Ryanair Generation’. People are now more comfortable flying to far-flung destinations, sampling the sights and the tastes that they offer, and being open to those when they come back to the UK, so people are drinking different drinks.”

And this represents the provenance of Kopparberg.

After falling overboard as a 24-year-old sailor in 1987, Peter Bronsman vowed to return to his native Sweden and set up his own business, if rescued.

Luckily for cider drinkers the world over, Peter was rescued. A passionate beer drinker, he and his brother began importing beers from around the world, focusing on brands that Mr Bronsman had enjoyed on his global travels with the merchant navy.

Savings from the business and a bank loan saw the Bronsman brothers buy a former brewery in Kopparberg, in rural Sweden, where they started to brew beers and a range of flavoured ciders including pear flavours and mixed fruit flavours under the Kopparberg name.

Getting around Sweden’s ban on alcohol advertising and promotions, Mr Brosnan targeted Swedish holiday markers across the Mediterranean with promotions as well as cutting deals with Spanish and Greek importers.

When returning, the holidaymakers would seek out the Kopparberg brand, leading to a boom in domestic sales.

Davin was working in Magners country - Dublin - for Richmond Marketing (who retain a share in Kopparberg) when he first saw Kopparberg’s potential. He approached Peter Bronsman to make the case for one distributor and marketing company to lead the brand in Ireland. Davin won the rights and took 15% of the packaged cider market in Northern Ireland in its first summer alone.

Since then Davin has gone on to do huge things for the business and is now managing director, helping Kopparberg retail in more than 40 countries and employing over 35 people across the UK. He is now back working in Dublin after a spell in the UK.

He said: “Peter is entrepreneurial and backs people. He bought the brewery when he was 28, and everything we have done has had an element of risk. We understand the market and the trade.”

He claims competition is stimulating Kopparberg’s own brand, and that the company concentrate on quality, not quantity. He said: “We don’t want to sell vast quantities like Magners. We are not empowered by ego or vanity. We want to be sustainable, and continue to drive and pioneer the cider category.

“Most big breweries now have a cider offering, so, again, having a point of difference is paramount”.

By introducing pear counterparts, the competition has “shined a light on a category we pioneered”, in turn aiding Kopparberg.

Davin added: “We are an independent brewery, and the challenge is to keep on our toes, and outsmart the competitors - like Stella Cidre, Brothers, Rekorderlig - because we can’t outspend. The average age of our 35 staff in the UK is 34, and they are quick to make changes where necessary.”

The sweetness of Kopparberg’s cider appeals to a many age groups. Kopparberg target 24-34 year-olds, who have “jettisoned their favoured drinks from their student days and now have burgeoning careers, and aspire to a brand like Kopparberg”, Davin says.

He adds: “We don’t advertise on X-Factor and the like, we do so on E4, More4 - a bit more discerning. Non-cider consumers are attracted to Kopparberg by the fruit element.

“Our real asset is that we are growing penetration wider than cider traditionalists, and we are a leader, not a follower.”

Kopparberg sponsor popular Manchester club night Warehouse Project, and have done so for the past five years, and “partner each other providing the finest delicacies that the world of electronic music has to offer, and refreshing partygoers with the finest quality cider”.

The Warehouse Project

The company has recently signed a distribution deal with SAB Miller, the world’s second largest brewer, to increase the number of countries they export to.

Rather than fighting Goliath, David now has him on board. The future is bright for Kopparberg.

This was posted in Bdaily's Members' News section by Graham Vincent .