STABILIZED AT ABOUT 4% OF THE U.S. BEER MARKET, THE ICE BEER SEGMENT IS SOLIDIFYING ITS POSITION.PHOTO: COBI, PRODUCTIONS NYC
The ice beer phenomenon hit the U.S. a few years ago with the suddenness and fierceness of an Arctic Express out of Canada. When sales slowed, and even declined, many expected that the ice beer category, like the polar ice caps, would melt from the global warming of industry competition.
Within a year of the introduction of ice beers in the U.S., there were more than 45 beer brands with “ice” in the name. While there was tremendous initial trial, consumers soon became confused by the number of brands and what clear benefits they offered. Sales that had spiked during the category’s honeymoon leveled off and even retreated a bit.
But ice beer has proved resilient, and though future growth may be at a glacial pace, the category is in no immediate danger of evaporating. In fact, several brands have posted significant growth so far in 1998, keeping the category as a whole on an even keel. Some of the brands posting the biggest gains, not surprisingly, aren’t brands that helped establish the category. What is a surprise is the strong performance of popular-priced ice beers at a time when sub-premium beers in general haven’t fared that well.
Over time, the most successful ice beer brands have carved out both a geographic and marketing niche, and now are fine-tuning their marketing strategies to defend their turf. That turf, however, is constantly shifting, posing challenges for some and opportunities for others.
The two brands that started it all, Labatt and Molson, initially pursued somewhat dissimilar strategies. Molson introduced Molson Ice with a lot of fanfare and strong support in an effort to take the brand — and the Molson name — mainstream quickly. Though Labatt claims to have invented, and patented, ice brewing technology, the introduction of Labatt Ice was a little quieter and relegated to Labatt’s core markets.
With strong sampling, Molson Ice came out of nowhere and jumped into third place on the list of best-selling imported beers behind Heineken and Corona. By the end of its first year in U.S. distribution, sales of Molson Ice also were nearly triple those of Molson Golden, accounting for the lion’s share of the brand’s volume. When competition grew tougher and ice beer sales declined in subsequent years, Molson Ice took a hard hit. But the brand has changed its strategy and said that 1997 was a turnaround year. The sales decline for Molson Ice slowed dramatically last year, and as a result of repositioning this year sales are stabilizing. And the brand is still ranked third among imported beer brands. The repositioning includes new packaging that more effectively ties Molson Ice to the rest of the brand family (with the graphic use of a red maple leaf), and advertising support from the McKenzie Brothers, who also are pitching Molson Golden and Molson Canadian. The idea, according to the brand’s marketing team, is to shift the brand’s image from a stand-alone ice beer to that of a Canadian import, giving it broader appeal.
All of Molson’s advertising ties the brand more closely to its Canadian roots, using the McKenzie Brothers to add humor. Molson Ice, however, is positioned as “an adventure in every beer,” while Molson Golden gets a more laid back image. Instead of its own “Polar Beach Party” promotion, which ran for several years, Molson Ice will participate in the two-phase Molson family promotion this summer, “Camp Molson.” During the first half of the summer, consumers get a shot at sweepstakes prizes that include Canadian vacations or adventures. In the latter half, consumers will have a chance to win a tricked-out Winnebago RV that will also be used by Bob and Doug McKenzie in ad spots.
Labatt has kept Labatt Ice a little closer to home over the years, which has helped the brand franchise in two ways. Labatt Ice has carved out business in some key geographic markets, and it has raised consumer awareness of the rest of the Labatt family.
“If you go back and look at the development of the Labatt family, what Ice did was bring a number of new drinkers to the family, so as ice declined somewhat, our other brands picked up,” said David van Wees, director of Canadian brands at Labatt USA. “Ice is still a pretty important part of our portfolio — it’s about 20% of our volume — but it’s strongest in key markets.”
As a result, Labatt Ice has a lot of support, but only in a tight geographic area. Television advertising in western New York, for example, features edgy black-and-white images with a contemporary music track that revolves around the theme, “It’s your night.” The brand is taking a whole entertainment package, including live music and dancers, sidewalk chalk artists and other entertainers, to key on-premise accounts. “It’s a huge sampling vehicle that we hope will translate to off-premise sales, too,” van Wees said. The brand also is sponsoring a “Break the Ice” program that offers both men and women pick-up lines to help break the ice in bars.
Labatt Ice also still is a significant player in the brand’s successful “Canadian Outfitters” program. The summer promotion gives consumers a chance to purchase and win camping, hiking and outdoor equipment.
After a couple years of “stealth” marketing, Icehouse from Miller’s Plank Road unit cranked up the volume with television advertising and more recently, big promotions. The brand grew at double-digit rates last year and has seen sales expand beyond its traditional market in the Southeast.
The Plank Road gang continues advertising forays into new territories outside the brewery. New spots introduced this spring show the guys telling tall fish tales, and giving advice over the phone to the lovelorn. As usual, they know more about brewing than they do about the situations in which they find themselves.
The brand has underwritten its first sports sponsorship this year with a NASCAR tie-in. The Icehouse name will appear on Bobby Ray Hull’s NASCAR truck, and the brand will offer a year-long program with the theme “Makin’ a Beer Run.” The brand’s big news is its summer promotion. Following last year’s truck drop, the brand has come up with a new idea that’s equally outrageous. The brand has created a 35-foot tall Icehouse “Keg-a-pult,” a wooden catapult capable of flinging beer kegs about 150 yards. Later this year, 20 sweepstakes winners will get to travel to Key West, FL, to heave kegs of Icehouse at a target truck with the Keg-a-pult. The 10 closest tosses will win new trucks; runners-up get Icehouse refrigerators. An 18-foot tall “mini” version of the catapult will travel to key accounts in the South throughout the summer to raise awareness for the promotion. Support also comes in the form of television spots and point-of-sale materials.
One of the reasons Icehouse has grown has been aggressive pricing in the past year. Bud Ice, which has seen its share erode in the past couple of years, is now matching that pricing on bottles, and saw sales increase 9% in the first quarter of 1998.
Bud Ice continues its association with professional hockey through sponsorship deals with the NHL, IHL, AHL and East Coast Hockey League. “Hockey allows us to do a lot of things tailored to local geography,” said Tim Murphy, Bud Ice brand manager at Anheuser-Busch. “We’ve taken it out of the rink.”
The brand also continues to use the nefarious penguin in its ad campaign and overall strategy. The penguin has been directly linked to hockey — even making off with the NHL’s Stanley Cup trophy in an ad last year — but serves the brand well in markets that don’t have hockey and in the off-season. A new “thermal chromatic” label on the ice chunk bottle, for example, reveals the penguin and the words “Ice Time At Game Time” when the bottle gets cold enough, supporting the hockey tie-in. Bud Ice will air television spots featuring the penguin in prime time and late night programming throughout the summer, though, when hockey is on sabbatical.
Popular Price Ice
The aggressive pricing of both Icehouse and Bud Ice is truly indicative of where the category is headed. Brands that have posted the biggest percentage gains in volume are below-premium priced brands like Natural Ice and Busch Ice Draft.
Natural Ice was rolled nationally last year, and has experienced strong double-digit growth, despite the fact that the brand offers only limited p-o-s materials and no other marketing programs to speak of. Busch Ice Draft, too, is seeing double-digit growth, but is still in limited distribution. The brand is available in 12 states in the Northwest, Midwest and South.
“Great brand parents are why Busch Ice and Natural Ice have done so well without much support,” said Bob Francischelli, senior brand manager for the Busch and Natural brand families. “Busch Ice is a quality beer at an affordable price with the Busch image. Natural Ice has a good name, but also benefits from a great price. And synergy from being displayed with a family is a real benefit to both brands.” Marketing support for the entire Busch family, in fact, was cut dramatically this year to fund a bigger push behind A-B’s flagship Bud. But Busch still has a NASCAR sponsorship and fairly extensive outdoor support, which has positive rub-off on Busch Ice Draft. And both brands have attractive packaging and excellent distribution.
“You have to know your customer and your brand,” said Francischelli. “We don’t need to get too fancy. They’re quality brands at a great price. But we monitor how often we have to feed the image bank more heavily.”
As to why popular-priced ice beers like Busch and Natural are doing so well, Francischelli postulated that they were pulling from a variety of areas, “some price beers and malt liquors, and to a degree from ‘all others.'”
A-B brands aren’t the only ones benefiting from the trend. Milwaukee’s Best Ice has made significant contributions to the recent turnaround of the Milwaukee’s Best franchise, according to Miller Brewing. And Stroh is taking another shot at the category by sprucing up Old Milwaukee Ice with a new label and developing regional promotions for the brand which will break later this summer.
Popular priced brands, in fact, are projected to account for about 50% of the category’s volume this year.
While there are still a tremendous number of beer brands with ice in their name, the category has seen several dominant brands emerge in the past few years as sales have stabilized. As consumers continue to narrow their focus on brands based on product attributes or price, competition may weed out the category.
“I think consumers were confused by all the brands that came out with ice in the name,” van Wees said. “My hope is that there will be a shakeout and people come back to the one or two originals.”
It’s not likely the category will be reduced to one or two players. With the category holding a fairly steady 4% of the beer market, there’s plenty of ice to keep everyone cool this summer.
Explaining Ice Beer
What ice beer is depends on whom you ask. Authentic Canadian-style ice beer is brewed at cooler temperatures, then chilled to below freezing to form ice crystals. The ice crystals are filtered out of the brew, resulting in a beer that is slightly higher in alcohol content than regular beer (approximately 5.5% by volume instead of about 5%).
Labatt’s ice brewing technology uses rotating screens to filter out the ice crystals. The company says that it believes bitter-tasting proteins are removed with the ice crystals, resulting in a smoother-tasting beer.
Molson Ice is brewed to nearly 6% alcohol, then chilled, filtered and diluted with pure Canadian water to lower the alcohol content back to 5.6%.
Several domestic brands chill their beers long enough to form ice crystals, but don’t filter them, so the alcohol content remains the same as regular beer.
The Canadians actually borrowed the idea of ice brewing from the Germans. When refrigeration techniques began being applied to the brewing industry, German brewers experimented with freezing beer and eventually produced what was called “eisbock.” But those German eisbocks bear little resemblance to the ice beers now made by Canadian and domestic brewers.