The British were once synonymous with beer drinking, but results from the world's biggest brewers confirm that our love affair with lager has lost its fizz.
The beer market is in decline in the UK as Britons turn their back on what is these days often seen as an unhealthy and downmarket drink. The trend has not been helped by a host of factors this year, as the recent round of brewing figures has revealed.
Not least there is the dreadful summer weather that has dampened customers' thirst for both beer and cider, despite the latter's recent resurgence in popularity.
Magners cider maker C&C has lamented the recent wet weather which caused a sudden decline in cider sales - set to leave half-year underlying operating profits as much as 35 per cent lower. The gloom for the Dublin-based company came in what should be a boom season for cider sales.
Foster's and Kronenbourg brewer Scottish & Newcastle has also warned that it may not meet full year targets as demand waned amid the lashing rain seen in June and July. But the group noted that the smoking ban introduced across the UK since last March was adding to the weather-related trading problems, predicting that the legislation could knock the entire UK beer market by up to two per cent.
Many brewers were hoping that the ban - which came into effect in Scotland in March 2006 followed by Wales, Northern Ireland and finally England on July 1 - would be felt less in the summer, with drinking outside pubs expected to hold up in the sunny weather. The rain, however, emptied pub gardens.
Then there are the tough comparatives for beer firms to beat, driven by last year's football World Cup. Analysts note that football tournaments and hot weather are two main factors that can help create a positive blip in the otherwise downward trend for beer swigging in the UK. The absence of either, combined with the smoking ban, is bad news for brewers.
Results out so far from the sector only span the period leading up to the July 1 introduction of the smoking ban in England, although the effects are already thought to have been felt. Guinness maker Diageo reported a three per cent dip in UK sales of the black stuff in the year to June 30, with volumes down five per
cent. While it is unclear how much of this decline was down to the UK-wide smoking bans, it is worth remembering that in 2004, the group blamed a six per cent drop in sales of Guinness on the Irish smoking ban, which came into effect in March that year.
Stella Artois brewer InBev also gave little away on the effects of the ban, but its UK sales figures show a market under pressure. The Belgium-based group saw volumes fall 11 per cent in the UK from April to June, driven largely by weaker demand for Stella.
The market this year has been hit by a detrimental mix of factors, but the UK is now notoriously tricky for beer sales and the big players have been making moves to help mitigate losses. One tactic has been to start positioning beer brands in the premium end of the market in a bid to counteract the "lager-lout" image often associated with beer and lager.
This strategy has worked wonders for cider, previously regarded as cheap and tacky, but now enjoying something of a renaissance. Magners maker C&C has capitalised on the surge of interest in the drink, marketing it as a long drink to have over ice. The group saw sales rocket by 264 per cent in the year to February, although it struggled to meet the surge in demand.
Heineken appears to have used this push to premium to good effect, reporting earlier this week that its repositioning of the lager drove a 27 per cent increase in UK volumes in the first half of the year. InBev has also benefited from an increase in popularity of its more premium brand products, with second quarter sales volumes leaping by nine per cent for Belgian ale Leffe and 14 per cent for Beck's.
Rob Mann, consumer analyst at Collins Stewart, said in the UK, brewers were trying to reposition beer and cider as an accompaniment to food, hoping to steal market share from the
booming wine market. This is a move that is also being made with the new smoke-free pub market in mind as bars are increasingly offering food to boost profits.
"Brewers are trying to look at 'drinking occasions' to try and encourage people to drink beer with food," he said. "Bars over here have done a poor job of promoting beer in the past, but brewers such as InBev in particular are trying to reposition it by taking it out of the traditional pint glass and giving it a sense of occasion."
Drinks giants are also diversifying away from the beer market altogether. Diageo, which makes Johnnie Walker whisky and Smirnoff vodka, said a decision to concentrate on spirits in the UK instead of beer led to an overall net sales growth of one per cent in the second half. Sales of Smirnoff lifted by 11 per cent. Foster's, too, has been toasting its move into other areas, with the recent relaunch of its Rosemount wine brand seeing a 60 per cent surge in second half sales volumes, helping lift UK performance by 26 per cent. It added that wine now accounts for 40 per cent of group earnings.
The most noticeable measure taken by these groups has been to switch focus away from the UK and other poor performing regions to emerging markets. And the plan seems to be paying off. Diageo, for example, reported net full-year sales in Africa up 19 per cent and up 22 per cent in Latin America, leading to a nine per cent rise in group-wide underlying earnings, at #2.16 billion.
InBev meanwhile delivered an 18 per cent increase in half-year earnings, at 2.19 billion euros (#1.48 billion) thanks largely to impressive volume hikes across regions such as Central and Eastern Europe, up 15 per cent in the second quarter alone.
The UK is far from insignificant to these groups, but its importance has dwindled. The UK and Ireland represents only around 15 per cent of Diageo's earnings, while the UK contributes just six per cent of InBev's global revenues.
Market experts have found it difficult to pin-point why exactly beer drinkers have gone-off the tipple in the UK, given that consumers are a fickle bunch and tastes do change.
Mr Mann suggests that lager's cheap availability has done nothing for the drink's reputation, let alone the profit margins for brewers. Treated as a loss-leader by UK grocery giants, beer is often placed in front of the fruit and veg aisle and sold at bargain prices.
The Stella Artois slogan may be that it is "reassuringly expensive", yet it is a difficult image to maintain when shoppers can buy it for 60p a can next to the lettuce in their local supermarket. This damage to "brand equity" is, said Mr Mann, likely to be the greatest threat of all to the UK beer market and a more long-term issue than simple shifts in consumer tastes.