Growth Engine


When it comes to growth, imported beer is the big engine that does. 0204ge

When you think of institutions that symbolize reliability, a few come to mind. Swiss trains are known for their punctuality. The Royal Canadian Mounted Police always get their man. “Neither snow, nor rain, nor heat, nor gloom of night” keeps the US Postal Service from delivering the mail.

Add imported beer to the list. Not a war, nor an economic downturn could stop the imported beer category from posting significant growth last year. While other industries were left in disarray by events last fall, sales of imported beer slowed temporarily while the nation reflected, then not only recovered, but surged in the final weeks of the year.

The category finished the year with sales of an estimated 23.8 million more cases than the year prior, a gain of 8.6%, according to Adams Handbook Advance 2002. While slightly lower than its typical annual growth of about 10%, within the category were stellar performances by a number of brands. The top 10 brands alone posted average growth of 11%.

The economic downturn seems to have had little effect on imported beer sales.

“If there ever was a business that is almost recession-proof, it’s imports,” said John Lennon, president of Beck’s NA. “They’ve experienced only one down year in nearly 20 years since I’ve been in the business, and that was in 1991 when the federal excise tax doubled.” Corona

“Consumer fundamentals haven’t changed,” agreed Bryan Semkuley, vice president of marketing at Labatt USA. “Their choices are still based on quality and heritage.”

Even domestic beer prices have held in the face of the downturn, and some brewers are talking about raising them even more. If industry leader Anheuser-Busch raises prices, then some imports, especially those already more competitively priced, may be likely to do so, too.

“The pricing environment will be interesting in context of the economy and people being laid off,” said Steve Davis, vice president of marketing at Heineken USA, “but it’s not like a new Mercedes. Imported beer is still affordable. If domestic beer pricing goes up significantly, that opens up a lot of opportunities to either raise import prices or get more competitive.”

The slow-down in travel since September has had some effect on brands that rely on on-premise sales. Consumers are eating out less, so on-premise sales have suffered. Off-premise sales may be even stronger as a result, however, as more people stay close to home.

“From the consumer brand standpoint, things are getting back to normal,” said Don Mann, group director, Modelo brands at Gambrinus Co. “But September 11th affected on-premise sales much more than off-premise, and smaller brands were more likely to be affected. Corona, for example, now sells 75% of its volume in off-premise, so it hasn’t hurt us much.”

Southerly Neighbors

Corona, in fact, was on fire last year, and continued to drive the category. Sales of Corona Extra were up 14.9%, giving the brand as much incremental case volume as the next nine import brands combined.

“In 2000, our growth slowed a little, and people thought it was the end for us, that we’d hit a saturation point,” Mann said, “but last year and this year we’re back with double-digit growth again.”

Corona’s success has been due, in large part, to a very consistent strategy that has changed little in 20 years. It also has benefited from a growing Hispanic market. What is different is the increasing amount of support the brand has gotten as it has grown.

“It’s nothing revolutionary,” said Bill Hackett, president of Barton Beers, Ltd., “just evolutionary, and we’re spending more money to fund both local and regional programs, as well as enhancing our communication with retailers.”

“Corona’s positioning is somewhat different in that it not only competes with imports but domestics as well,” Mann said. “It’s a casual import. That positioning is time-tested and as unique as ever, so we’ll continue to refine and polish what works for us.”

The brand will enhance its sponsorships, including its 18-year association with Jimmy Buffet, the CART racing series, and motorcycle racing, with incremental spending and local market programs. In western states, for example, it sponsors a program that supports Hispanic artists.

Corona Light is on an even faster track. The brand grew more than 30% last year, demonstrating that consumers are embracing what was once considered a non sequitor, imported light beer. Much of the focus will be on Corona Light this year as both Gambrinus and Barton take it to the next level.

Marketing efforts will include an expanded outdoor campaign, first-ever print ads and new radio and TV ads that kick off this spring. The brand’s theme — “miles away from other light beers” — will be expanded in an early summer promotion that will feature a humorous light beer challenge.

LEADING IMPORTED BEER BRANDS

(000 2.25-Gallon Cases)

BRAND SUPPLIER COUNTRY OF ORIGIN 2000 2001p
% Change
Corona Extra Barton/Gambrinus Mexico 74,000 85,061 14.9%
Heineken Heineken USA Netherlands 54,000 58,000 7.4%
Labatt Blue Labatt USA Canada 14,106 15,269 8.2%
Tecate Labatt USA Mexico 11,024 12,026 9.1%
Guinness Stout Guinness UDV Ireland 10,035 10,690 6.5%
Foster’s Lager Miller Brewing Canada 8,956 10,196 13.9%
Beck’s Beck’s North America Germany 7,938 8,135 2.5%
Amstel Light Heineken USA Netherlands 7,100 8,000 12.7%
Bass Ale Guinness UDV UK 7,338 7,690 4.8%
Modelo Especial Barton/Gambrinus Mexico 5250 6,656 26.8%
TOTAL LEADING BRANDS 199,747 221,723
11.0%
OTHERS 77,603 79,427
2.3%
TOTAL IMPORTED BEER 277,350 301,150
8.6%

(p) 2001 Preliminary.
Source: Adams Handbook Advance 2002

Grupo Modelo’s other brands, including Modelo Especial, Pacifico and Negra Modelo, also continue to grow at a brisk double-digit pace. Modelo Especial has moved onto the top-ten bestseller list with a 26.8% jump in volume last year. Supported by a strong outdoor campaign, the brand is beginning to take root with consumers outside Hispanic communities. Both Pacifico and Negra Modelo will spend more heavily this year on existing programs. Negra Modelo is even looking at the possibility of a new campaign later this year.

Tecate, imported by Labatt USA, saw respectable growth of 9.1% last year, making it the fourth largest import. Growth was slower than in recent years due to price increases, according to Semkuley, but the brand is back on track this year. The brand focuses on the Hispanic market through programs that support soccer, music, CART racing and fiestas. New “Chicas Tecate” point-of-sale for all these programs features something as near and dear to Tecate drinkers’ hearts as soccer — beautiful Mexican ladies.

Dos Equis also saw double-digit growth last year and will continue its recent “Explore” campaign that capitalizes on the brand’s trademark red XX. Promotions this year will include “Cancun Adventure” and “Adventure Indexx” consumer sweeps that will offer chances to win Cancun trips and a Dos Equis edition Jeep Liberty.

Labatt USA’s other Mexican brand, Sol, will position itself more distinctively from Corona this year with programs focused on Cinqo de Mayo and the summer solstice in key markets.

Heineken, though pushed into the number-two import spot by Corona a few years ago, is still a formidable force in the category. Slower growth of only 7.4% last year still added up to about one-sixth of the category’s incremental volume.

“When people tighten their belts and don’t travel or go out as much, it has an effect,” said Davis.

Because of that, Heineken is focusing this year on making the brand more relevant to more consumers on more occasions and giving them more opportunities to purchase the product.

“We’re expanding channels beyond on-premise to more off-premise locations like grocery stores, c-stores and gas stations,” Davis said. “We have more packages for more occasions, like our new 24-pack keg-can case. This summer we’ll launch a new 24-ounce keg can.”

Promotions this summer will focus on the keg can with party themes that run from Memorial Day through Labor Day. Write-in offers will give consumers a chance to get coolers, tubs and other party-related merchandise.

For ethnic markets, the brand has tied in with VH1 to produce compilation CDs featuring a variety of urban music groups.

Amstel Light is now in its fourth year of a successful turnaround. The “Utopia” program — an intense focus on programs in key markets — has contributed to strong double-digit growth, including a 12.7% gain last year. Already in a dozen markets, the program will roll out to a few more this year.

Guinness and Bass both posted strong single-digit gains last year. Both brands are getting new ad campaigns this year to build on the consumer base they’ve established.

Guinness has had tremendous success with its Guinness Draught widget bottle, giving consumers yet another way to enjoy the product. The brand’s “Join The Guinness Party” program is wrapping up on St. Patrick’s Day. Encouraging consumers to “Party Like The Irish,” the brand hopes to remind people what the essence of being Irish is really about. 6803PRD10

The long-running Great Guinness Toast moved to November from February and is tied to a pay-per-view concert featuring the Bare Naked Ladies.

For its part, Bass has debuted vibrant new packaging, and is sponsoring a spring promotion that features an on-pack special edition of “Outside” magazine.

German beers had weaker performances last year than some others, but still posted positive gains. Beck’s remains in the top 10 with a 2.5% volume increase. St. Pauli Girl, too, had record sales volume last year. Lowenbrau, reformulated and repositioned after being acquired from Miller Brewing by Labatt USA two years ago, is still struggling, but is starting to show potential. Specialty beers like Paulaner and Warsteiner have been affected by the decline in on-premise business. TecateCC

Beck’s, though recently acquired by Interbrew (parent of Labatt USA), continues to pursue it’s “Build Beck’s” strategy, concentrating more heavily on its top 10 markets. The brand is by no means ignoring the rest of the country. After its recent Valentine’s Day promotion, upcoming national programs still include Beck’s $10 million summer “Putt & Win” contest and golf sponsorship, Formula One racing program supported with a specially designed can, and Oktoberfest.

A new ad campaign breaks in April, along with redesigned, more elegant long-neck bottles. New radio and television ads for Beck’s Light have helped Beck’s, too. Media buys will shift focus from concentrated buys on ESPN to more spot buys that extend the brand’s reach in major markets. 6803PRD23

St. Pauli Girl will capitalize on its annual selection of a new brand representative with a media tour to supplement the traditional poster program. This year’s pick, 1999 Playboy Playmate of the Year Heather Kozar, will do media interviews throughout the year.

Lowenbrau is positioning itself as a German biergarten in a bottle. This summer the brand will encourage consumers to replicate the experience at backyard barbecues, offering grills and other barbecue-related merchandise to retailers as display enhancers and consumer incentives. For Octoberfest, the brand will be offering a trip to Munich.

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