It’s been said that everything old is new again. The steady, almost relentless growth of imported beers is proving that your father’s beer (heck, your great-grandfather’s beer) is just as appealing to new Gen-whatever drinkers as it is to dear old dad. Building on a solid foundation of heritage, authenticity and fairly well-established distribution networks, imported beers are starting to flex their marketing muscle and compete head-to-head with bigger domestic players.
Import category growth last year was just over 10%, and its share of the overall industry grew just over 9% from about 8.5% in 1998. Growth slowed somewhat in the fourth quarter last year due to price increases taken by most import brands, but sales appear to be back on track this year. In fact, last year’s growth is pretty much in line with how the category has performed for years.
“Over the last 30 years, the average annual growth rate of the category has been 10.8%,” said Tom Cardella, vice president of marketing at Labatt USA. Imports, in fact, showed a decline in only one of the two recessions occurring during that time, according to Cardella. That decline, in 1990-91, was largely due to an increase in the federal excise tax. “There’s been a consistent pattern of 10% growth for 30 years. I expect to see the same growth this year.”
On the surface, the category’s consistent volume gains seem to be driven by growth of major brands — Heineken for many years, and more recently Corona. Many imported brands have had their share of ups and downs over time, but lately, the rising tide is lifting everyone’s boat.
The red-hot economy is the gravitational pull that’s causing that tide. With consumer confidence still high and economic indicators pointing to continued good times, consumers are spending freely.
“The economy is definitely a factor,” said Peter Favilla, Molson brand manager, Molson USA. “People are trading up in lots of categories, including beer, and a strong US dollar makes imports even more affordable.”
“Last year, without a doubt, was the healthiest year the beer industry has seen in a long while — at least 10 years — and that was with prices 2% to 4% higher to boot,” said Steve Davis, vice president marketing, Heineken USA. “Consumers continue to treat themselves with affordable luxuries. It sounds trite, but people are drinking less, but better, which has helped us.”
The birth, growth, and even decline of the microbrew and craft segment also have had a tremendous impact in imports. Initially seen as upstart competition by some importers, craft beers ended up being one of the best forms of advertising imported beers could hope for.
“The micro and craft beer segment woke consumers up to the fact that there is a wider range of products to choose from than domestic lagers,” said Bill Hackett, president of Barton Beers, Ltd. “It’s been a real plus for us as people have recognized their increased choices and have demonstrated their willingness to spend for quality.”
More than anything, craft brewers substantially raised the level of sophistication of American beer drinkers. In their efforts to educate them about the products they were making, craft brewers taught consumers about brewing styles, techniques and ingredients. They also gave consumers lessons in what different beer styles should taste like.
“Micros actually helped the industry, particularly imports,” said Bill Yetman, president of Beck’s NA. “There was huge interest in the category, which educated consumers on the quality of beer. Consumers realized after some bad experiences that for the kind of money they were spending, they should get the kind of quality and heritage that imports offer.”
Consumer interest in craft beers convinced distributors to carry 30 or 40 brands. As consumer experimentation has declined, distributors have culled slow movers from their portfolios, but in some cases have replaced them with stronger brands, not simply cut the number of brands they carry.
Craft brewers also conditioned consumers to pay higher prices for beers they perceive to be higher in quality. As the micro craze has waned, consumers have increasingly added imported beers to their portfolios because of the heritage and authenticity they offer.
A boon to the entire beer industry last year also bodes well for imports. The baby boom echo is starting to swell the ranks of entry-level drinkers for the first time in more than a decade. Like their domestic counterparts, importers have spent a lot of time and resources in recent years making their brands more relevant to younger drinkers. As a result, imports are expanding their consumer base.
To reach more consumers, imports also have dramatically increased their spending on marketing in recent years. Increased sales, resulting in greater critical mass, have enabled many brands to justify more spending. “Imports have never invested as much across the board as in recent years,” Hackett said. “This kind of forward investing will reap a reward in the marketplace. Greater spending means better support and communication at both the wholesale and retail level.”
That kind of spending and support is only likely to increase as the brewers behind the brands get larger and larger. Perhaps the biggest news in the import segment so far this year has been consolidation. First came the announcement that legendary Pilsner Urquell would be bought by South African Breweries. The purchase made SAB Central Europe’s largest brewer and the third largest brewer in the world behind Anheuser-Busch and Heineken. In March, French food group Danone announced that it would sell its beer business to Scottish & Newcastle, including Kronenbourg, Belgium’s Alken Maes and its 24% stake in Peroni. Not to be outdone, two Brazilian beverage companies announced their merger this spring. The new venture, called AmBev, combines 18 beer brands and a number of soft drinks in one company. AmBev’s beer business bumped SAB out of the number three spot after only a few weeks. However, few of AmBev’s brands are exported to the US.
The hottest import brands continue to come from south of the border. Grupo Modelo brands, led by Corona, continued to grow at a blistering pace. Though Corona’s growth is slowing, the brand still finished up more than 21% last year. A consistent message coupled with tried and true marketing programs has contributed to strong growth. What’s different this year is media spending which is double that of two years ago.
Corona also will include other Modelo brands in promotions to boost their visibility. A lot of Corona’s p-o-s material this year features Corona Light, and brands like Negra Modelo and Pacifico will share the limelight during bigger promotions.
Other brews from south of the border are moving to capitalize on Corona’s popularity. Sol, imported by Labatt USA, is expanding its distribution beyond southern California and Texas to most of the Southwest and Northwest, and Atlanta and Florida in the Southeast. Directly challenging Corona with similar clear-bottle packaging, Sol is positioning itself as the beer that keeps your life simple. New creative is tagged “live one cerveca at a time.” Spring promotions have urged consumers to drink it “naked” (without lime). A two-part summer promotion leads up to the summer solstice, then offers consumers a chance to win a vacation house for use in summer of 2001. Other Mexican beers in Labatt’s portfolio also are doing well. Dos Equis was up 16% last year, and Tecate grew about 18%. With its positioning finally set, Dos Equis is focusing on a local marketing strategy, playing to aspirational consumers who like things a little off the beaten track. The brand’s “EXXplore” campaign leverages the brand’s “XX” icon.
Tecate is targeted against young Mexican-American males as a brand “that’s here to stay,” symbolizing their rite of passage to the US. Five new tv ads will be shown primarily on Hispanic television. Extensive p-o-s and merchandising materials are centered on soccer.
From north of the border, Labatt’s Canadian brands also are enjoying healthy growth. Labatt Blue was up a respectable 13.5% last year. Its positioning is being refined to be a little more aspirational to distance it from more mainstream beers. The brand’s new ad tag is “Look up, see Blue.” Labatt Blue Light is getting renewed emphasis with new packaging, a first-ever television campaign featuring the tag, “Where the Light is Blue,” expanded media spending and expanded distribution beyond traditional core markets. A joint promotion this summer offers consumers “the best of Canada,” including a chance to win a Canadian lodge.
Molson’s fortunes in recent years have been tied to Molson Ice. When ice beers were the rage, Molson’s sales soared. As the ice beer craze has waned, so too have Molson sales. The brand hopes to turn that trend around this year with a focused effort behind Molson Canadian and Molson Golden. The brand will be back on television for the first time in more than a year with a new campaign breaking in June that links the brand to Canada. New radio ads also will remind consumers of Molson’s great quality. A “Cool Summer” family promotion is being supported with an array of p-o-s materials, including display enhancers such as beach chairs, inflatable pools and more. Consumers will be offered chances to win everything from concert trips to beachhouse weekends.
Turning Euros Into Dollars
Though Heineken may no longer be the number-one import, it’s still a force to be reckoned with. Like a number of other imports, Heineken has spent the past few years repositioning itself to appeal to a younger group of consumers. Examples include the tie to last year’s “Austin Powers: The Spy Who Shagged Me” and this year’s sponsorship of the Grammy Awards.
“A lot of things we’ve effected in the last two or three years are coming into play,” said Davis, “making the brand more relevant for a younger drinking age group. Ads, promotions and tie-ins with movies like the Austin Powers and James Bond films got us talked about.”
Davis said that movie tie-ins would likely continue if the right properties come along. In the meantime, Heineken has a Rock and Roll Hall of Fame tie-in scheduled this summer, its annual U.S. Open sponsorship featuring spokesperson John McEnroe and new “Ball Boys” ads, and six to eight new television spots.
The brand is eschewing any type of flanker brands in favor of packaging for all channels. Last year’s limited edition keg cans will be back. C-stores will be targeted with 16-ounce cans and 24-ounce bottles. Heineken also is focusing a more concerted effort on ethnic markets where the brand does very well.
Amstel Light grew 15.4% overall last year, but experienced 30-35% growth in markets where it got more support and push from the sales staff. The “Beer Drinker’s light beer” will again focus on a summer beach program and its support of skiing in winter. New this summer are 16-ounce cans.
Holland’s other import, Grolsch, has undergone a packaging change this year. New green bottles have paper labels. Grolsch Amber now comes in clear bottles, and Summer Blond has been renamed simply “Blond” to recast it as a permanent, rather than a seasonal, sku.
Beck’s has had a more aggressive marketing program in the past few years. This summer it is reprising its successful “Putt & Win” contest, raising the prize money to $10 million from $2 million and tying in with Taylor Made for other prizes. Actor John O’Hurley serves as spokesperson and will coach the final four contestants who will be flown into Lake Tahoe for the NBC Celebrity Golf Tournament in July. Beck’s also is pushing new Beck’s Light hard with print, radio and outdoor support, as well as a substantial media buy on ESPN.
St. Pauli Girl has found a younger audience, too, in the past two years by selecting a different Playboy Playmate each year to represent the brand. This year, in addition to making posters featuring new “St. Pauli Girl” Angela Little available to consumers, the brand offered a sweepstakes winner a trip to Hollywood for lunch with Little and a tour of the Playboy Mansion. Next up is a golf tie-in with Callaway, including giveaways of trips to Kiawah Island golf resort in South Carolina.
After being reintroduced last fall, Lowenbrau will get additional support this year from Labatt. Brewed to the original Munich formula, Lowenbrau will leverage its heritage. Ads will feature the familiar “Here’s to good friends” music in a variety of formats.
Paulaner plans to stick to its specialty niche, according to Jeff Coleman, president of Paulaner NA. The brand will focus on building a greater presence in the on-premise segment to drive sales both on- and off-premise.
The original pilsner, Pilsner Urquell, is making a go of it on its own after breaking away from Guinness Beer Import Co. With backing from SAB, the brand’s future looks bright, but for now, it is getting back to basics. It is hiring its own sales force to help build relationships with distributors and retailers, according to George Rais, president of Pilsner Urquell USA. The brand has already readjusted pricing downward somewhat, but still maintains a premium over Heineken and Beck’s. New this summer will be 12-packs on both coasts.
Carlsberg, which also was acquired by Labatt USA after languishing in A-B’s portfolio for years, is getting support in targeted markets. The Danish brand is a major promoter and sponsor of soccer leagues around the world, especially in Europe. Carlsberg has tied into about 250 bars across the US that telecast league games by satellite. Off-premise, the brand is sponsoring a “Taste the World” promotion to link beer with foods from around the world, creating a number of cross-merchandising opportunities.
Stella Artois, brewed by Labatt parent company Interbrew, is making inroads into major markets like New York and Boston and is expanding into five new markets this year.
Capitalizing on tremendous growth in the past few years, UK and Irish beers are looking to become even more mainstream to gain greater visibility in the beer aisle.
Now that GBIC has shed all brands unrelated to Ireland or the UK, it is focusing on evolving recently developed strategies for its core brands, Guinness and Bass. For the past few years, Guinness has concentrated on demonstrating the perfect pint to consumers. Programs that helped it achieve strong growth, such as the Irish pub giveaway, didn’t change mainstream consumers’ perception of stout as a heavy, bitter beer. The new “Refresh your spirit” campaign aims to change consumers’ minds with new television, radio and print ads, more energetic sponsorships in local markets, and a push to get consumers to drink Guinness cold.
Bass continues to use ties to comedy festivals to communicate brand messages, a strategy it began last year. The two brands will be more strongly linked this year in a summer program that pushes the theme of refreshment. Like other imports, Guinness and Bass will leverage consumer interest in golf with a golfing theme and a sweeps that offers golf-related prizes and a trip to London and Dublin. The two will again offer a “Black & Tan” promo around Halloween. Caffrey’s, now in its second year of distribution, gets new ads and plays a part in GBIC’s fall portfolio program, details of which haven’t yet been announced. Murphy’s has taken a back seat to higher priorities at Heineken USA in the past, but that will change, according to Davis. “If we have issues to solve, it’s a matter of handling our third priority as something more than an afterthought,” he said. “We’re up against an 800-pound gorilla, so we need to be patient and work hard to build our core strengths in key markets. It’s a one-million-case brand, so it’s legit.”
Davis promises more grassroots in-market activity, a new 12-ounce four-pack and a 12-ounce six-pack of Murphy’s Amber to help build facings and display opportunities.
At Scottish & Newcastle, the news has been all good. Many accounts ran out of product this spring as a result of a big effort on St. Patrick’s Day to raise awareness of Beamish Stout. Newcastle Brown is focusing more attention on off-premise this year after building awareness last year. The brand is putting a 12-pack into wider distribution. Media spending will increase, with most devoted to radio and radio promos. Two national promotions are planned this year, but details haven’t been announced. The brand also has a new interactive website.
McEwan’s has been repackaged as India Pale Ale, deleting references to “Export” to more clearly tell consumers what to expect from the brand. The change will be supported with new p-o-s, wearables and sampling events. At Barton, Tetley’s is leveraging its association with rugby in the UK to build awareness here.
Beer brands from the Pacific Rim have experienced mixed results. Tsing Tao, imported by Barton Beers, was up slightly last year, but continues to be constrained by performance of the Chinese restaurant segment. The brand hopes to expand beyond Chinatown to the bigger Asian segment. Japanese beers such as Kirin and Sapporo are facing the same constraints. New Zealand’s Steinlager continues to perform fairly well, growing off a small base.
The big growth story from Down Under continues to be Foster’s. The brand’s campaign to teach Americans “how to speak Australian” has resulted in six consecutive years of double-digit growth. With the world’s eyes on Sydney this summer for the 2000 Olympics, Foster’s expects to receive even more attention. The brand gets eight new ads in the “how to speak” campaign.
Consumers will get a chance to win a trip to the Summer Games in Foster’s “Take a Shot” promotion by submitting a photo that demonstrates why they deserve the trip. Also new this year are longneck bottles to replace the current stubby bottle package.
Overall, imports should continue to do well, especially in the current economic climate. Growth may be slower than in the past, but the market still offers a lot of opportunities.
“I still feel there’s a lot of room for growth,” said Ron Christesson, vice president of marketing at Gambrinus, “but a lot will come from distribution, new channels of distribution and distribution of new packages.”
No one can predict what the next trend in the beer industry will be, but for now, imported beers rule.
Michael Sherer is a Seattle-based writer and consultant specializing in beverges and foodservice.
Leading Brands of Imported Beer
|Brand||Brewer/Supplier||Origin||1998||1999||% change ’99/’98|
|Labatt Blue||Labatt USA||Canada||11,100||12,600||13.5%|
|Guinness Stout||Guinness-Bass Import||Ireland||8,731||9,577||9.7%|
|Foster’s Lager||Molson USA||Canada||7,950||8,820||10.9%|
|Beck’s||Beck’s North America||Germany||8,500||8,808||3.6%|
|Molson Ice||Molson USA||Canada||9,500||8,265||-13.0%|
|Bass Ale||Guinness-Bass Import||UK||6,350||6,873||8.2%|
|Amstel Light||Heineken USA||Netherlands||5,200||6,000||15.4%|
|Total Leading Brands||161,887||182,278||12.6%|
|Total Imported Beer||226,059||249,630||10.4%|
|Source: Adams Handbook Advance 2000|