During the heady days of specialty beer growth just a scant few years ago, imported beers were quietly posting their own impressive volume gains.
Though the import segment’s percentage gains haven’t been as spectacular as those of specialties, imports have played like Dow Jones blue chip stocks to the specialty segment’s NASDAQ internet high-flyers. While scores of specialty beers soared only to crash and burn, imports continue to rack up solid numbers.
According to the Adams Handbook Advance 1999, the segment grew an estimated 15.6% last year, following several years of double-digit growth. Imports, in fact, accounted for most of the overall industry’s growth last year of about 1%. Still a small share of the entire U.S. beer market at about 8.5%, imports nonetheless also are growing in importance to wholesaler and retailer profitability.
A strong economy is one big reason imports are doing so well. Consumers continue to trade up, and imports are a very affordable luxury. But import growth this past year also has been marked by subtle changes.
In the past few years, marketers started lumping imports and domestic specialties into a larger “better beer” category. As domestic specialty growth has slowed and even declined recently, imports are coming back into the spotlight. Two years ago, segment growth was driven primarily by major brands. Last year, import growth was up almost across the board, with a number of smaller brands also showing signs of more aggressive growth.
Another change is the way imported brands are being marketed. The top brands are gaining momentum and spending more. So are smaller brands as they begin to acquire critical mass.
“The micros are having the greatest impact on imports,” said Jeff Coleman, president of Paulaner NA. “They [micros] have lost volume and numbers in terms of actual breweries. It’s becoming much more competitive. All the major importers are increasing their media budgets [to pick up sales lost by micros].
“Also, consumers are much more open to imports,” he continued. “It used to be they wanted individuality, but now they accept mass-marketed imports.”
Specialty beers and micros also introduced consumers to a wide variety of beers styles and fostered experimentation. Consumers now are experimenting with lesser-known import brands that aren’t likely to disappear the way many micros have. They’re turning to classic examples of different styles — Newcastle Brown, Paulaner Doppelbock, Hoegaarden Belgian, Negra Modelo — as well as traditional brands.
“I think imports have grown for the traditional reason that in a strong economy, imports do well,” said Bill Yetman, president of Beck’s NA, “but over the past two years there’s been a return to classic imports like Beck’s, Heineken and many others.”
The Mexican Evolution
Beers from south of the border posted the strongest gains last year, led by Corona Extra’s phenomenal growth of more than 37%. Corona’s consistent marketing program of the past decade and laid-back fun in-the-sun positioning have helped it leapfrog to the top of the best-selling imports list with 1998 sales of 54 million 2.25-gallon cases.
The brand continues its successful relationship with Jimmy Buffet as well as traditional promotions. Though Corona will build promotions around key dates celebrating Mexican heritage, such as Cinco de Mayo and September 18, they’re designed with bigger windows in mind. That gives retailers and consumers more time to take advantage of special offers, pricing or displays.
Media spending will increase substantially this year, and Corona Light, which gets new packaging in May, will be supported with new ads on network and spot television.
Corona’s growth last year was nearly matched by the other Grupo Modelo beers, which all showed impressive sales activity. Modelo Especial grew 26%, reaching sales of 3.3 million cases, while Corona Light grew 38.1% to 2.9 million cases. Pacifico grew 16% and Negra Modelo passed the 1 million-case mark last year.
Labatt USA’s portfolio of Mexican beers also is doing very well. Tecate’s sales jumped 20% to 7.26 million cases, and Dos Equis grew 19.7% to 3.65 million cases. Tecate began national television advertising last year and will add a new spot and get more media this year. The brand signed on as sponsor of professional soccer on Hispanic television and will promote a six-city U.S. tour of Mexican soccer teams.
Dos Equis changes its “Viva la Revolucion” campaign this year to one more closely tied to Mexico. New radio ads and a consumer sweepstakes dubbed “Go There” will promote Mexican destinations, such as Cancun.
Sol, which was reintroduced in southern California and Texas last year, has been repositioned in the Mexican segment to compete more aggressively with Corona.
Anheuser-Busch, though it owns a substantial stake in Grupo Modelo, continues to try to get in on the Mexican beer craze with its own brands. Azteca, which is produced in a small independent brewery in Tecate, Mexico, competes directly with Corona and Sol in southern California and Texas. Azteca is packaged in clear glass like Corona and Sol, but A-B hopes its “microbrewery” roots will differentiate it from its rivals.
[In February, A-B launched another brand, Tequiza, nationally. Tequiza, though it uses imported ingredients, is brewed in New York, so it doesn’t really qualify as an import.]
European brands also are cashing in on segment growth. Well-known trademarks are working hard to make themselves more relevant to young adult drinkers, while going back to their roots at the same time. “We’re seeing a continuation of the trend of the past two or three years,” said Steve Davis, vice president of marketing, Heineken USA. “People drink less, but better. The industry is flat, but drinkers are trading up. For our part, we’re trying to make ourselves more relevant on more occasions.”
In addition to a bigger media buy this year, Heineken is putting together a big consumer promotion this summer. As part of its strategy to make the brand more relevant to drinkers ages 21 to 34, the brand is tying into this summer’s Austin Powers: The Spy Who Shagged Me. Writer and star Mike Myers wrote Heineken into the script.
Heineken also is line-extending the brand via packaging to get into more distribution channels, according to Davis. New packages include a 16-ounce can in 12-packs and cases, and a 12-ounce “keg” can.
Amstel Light, also from Heineken USA, is now seeing double-digit growth after years of ho-hum performance. The introduction of full-calorie Amstel brands and the short-term “Garrison Boyd” ads drew some attention to the brand. The new campaign — “the beer drinker’s light beer” — puts the focus back on the core Amstel Light product.
Another Dutch beer gaining ground is Grolsch, imported by the Seagram Beverage Co. The brand’s unique stopper-bottle packaging and the introduction of Amber have given the brand a lot of presence on store shelves in the past year.
German beers have seen growth rates improve in the past two years. Top German import Beck’s changed its U.S. strategy more than a year ago, breaking away from the brewery’s global positioning. New this year are outdoor, taxi-top and bus shelter advertising. Nationally, the brand will advertise on radio, television, billboards and in print. Ads revolve around the theme of “Beck’s, the best of what Germans do best.”
St. Pauli Girl has seen its momentum build, too, according to Barton Beers president Bill Hackett. The brand just introduced a new package design with an updated image of the St. Pauli Girl icon.
An International Presence
In addition to its Mexican and Canadian brands, Labatt imports a number of European beers. Labatt officially takes over another well-known German beer trademark on October 1. Lowenbrau, which was licensed and brewed by Miller Brewing for decades, will be relaunched as a true import during Octoberfest, although it will be brewed in Canada, not Germany.
Labatt also imports Carlsberg, which it took over from Anheuser-Busch last year. In addition, the company markets a number of Belgian brands. Hoegaarden and Leffe have tended to do well in the specialty beer market. Last month, Labatt introduced the more mainstream Stella Artois in New York.
Other European imports continue to do well, too, including the Italian beers, Moretti and Peroni. Pilsner Urquell’s popularity as the originator of the pilsner style has been growing as the brand becomes available in more outlets. Last year’s package redesign gave the brand a more contemporary image.
Perhaps nothing has taken the U.S. by storm since the Beatles quite like British and Irish ales. Consumer exposure to different beer styles, especially domestic specialty brands fashioned after English and Irish ales, has given them a taste for the real thing. Drinkers who first sampled an IPA from Grant’s, a pale ale from Shipyard or a stout from Rogue now are trying Newcastle Brown, Fuller’s IPA and Beamish Stout.
“If you look at the way we’ve grown in the last five years, we did well when micros did well,” said Bill Wetmore, commercial manager for Scottish & Newcastle. “We were helped by consumer experimentation and their quest for fuller flavor. Imports are still growing because of the quality, consistency and heritage they offer. You can get a Newcastle, Heineken or Beck’s anywhere. You may not be able to get a micro that’s limited to regional distribution.”
The most well-known British brands come from Guinness. Like Corona, for several years Guinness has consistently built upon successful programs to keep sales rising at double-digit rates.
For the past few summers, Guinness has been expanding its Irish music festival. The “Fleadh” started in New York, but has quickly grown to encompass more markets. Harp has shared the event with Guinness for the past two summers, raising brand awareness and contributing to 30% growth.
Heineken USA has been pushing Murphy’s Stout and Murphy’s Irish Amber as an alternative to Guinness and Bass. Both brands are retrenching this year, focusing on adding value to existing accounts and trade support in key markets rather than trying to expand distribution.
Beamish Stout, however, has received a good response from consumers and media. Widget cans, which were introduced last year, are now available in 20 states and will be expanded to more markets this year. To help create synergy, Beamish importer Scottish & Newcastle is pushing the stout along with John Courage Amber Lager and lead brand Newcastle Brown.
Newcastle Brown had tremendous growth last year, thanks in part to new 12-packs and success breaking into chain accounts. This year, the brand will initiate more national promotions.
Other importers are having good success with British ales as well. Fuller’s, imported by Paulaner NA, is seeing stronger interest in niche products, such as its seasonal Summer Ale, holiday Vintage Ale and London Porter.
Boddington’s, from Labatt USA, continues to capitalize on the popularity of widget cans with its own.
Barton Beers introduced Tetley’s English Ale in five Northeast states last fall. Distribution of both kegs and nitrogen cans will be expanded this year. Barton will continue to distribute Double Diamond in markets where it does well, but will focus support on Tetley’s, which has a more mainstream flavor profile.
Brands from our northern neighbor also have been faring well. Though sales of Canadian ice beer brands have been shrinking faster than an iceberg at the 30th parallel, growth of more traditional brands is making up for it. Labatt Blue is the segment’s big success story.
“We feel blessed with our portfolio” said Tom Cardella, Labatt USA’s vice president of marketing. “The Canadian segment is up only 2% [because of the decline in ice], but our portfolio is up 20%. Labatt Blue surpassed Molson Ice and Beck’s to land in the number-three spot.”
Labatt Blue has been helped by strong, consistent Canadian imagery for the past several years. Ads have been themed around hockey, and the summer “Canadian Outfitters” program has tied the brand to Canada’s great outdoors. Heavy media spending this year is behind new advertising developed specifically for the U.S.
Molson has seen its fortunes dim somewhat with the decline in Molson Ice. Like Labatt, however, it has been shifting attention for the past year or more to core brands Molson Canadian and Molson Golden. The Hockey Hall of Fame program, now underway, has been a good fit.
Moosehead also is making a comeback after years of languishing. Importer Gambrinus restaged the brand in the spring of ’97 at a higher price point to reestablish its former high-class image. The brand’s promotional push comes late next month with Moosehead Summer Camp.
Up, Down Under
Foster’s is yet another example of a brand that is trying, with great success, to closely link product with its country of origin. The brand’s “How To Speak Australian” campaign cleverly and humorously does just that, reminding consumers that Foster’s is Australian for beer.
New ads this year bring the number of executions to more than 20, so they’re less likely to wear out with consumers. As the 2000 Olympic Games draw closer, heightened consumer interest in Australia is likely to give the brand even more attention.
Other Pacific Rim beers continue to use their origins and heritage to boost sales. Japanese beers, such as Kirin, Sapporo and Asahi, sell successfully in Japanese restaurants. And innovative packaging, such as Sapporo’s 4-ounce. cans, has helped at retail, too. Tsingtao, from Barton Beers, was up 3% last year after being hurt in previous years by declining business in Chinese restaurants. But recent growth of “pan-Asian” restaurants is reversing the trend.
The best part of the success of all these import brands, of course, is the higher margins they offer retailers. And just as good is the fact that imports are expected to grow in the foreseeable future.
“We feel bullish on the segment,” Labatt’s Cardella said. “It will continue to show strong growth of 11% to 13% for the next five years. In 2002, the import and specialty beer business will represent 17% of the industry and about 25% of distributor gross profit.”
A bold prediction, but given recent performance, one that retailers can look forward to.
LEADING IMPORTED BEER BRANDS
|Labatt Blue||Labatt USA||Canada||9,300||10,900||17.2%|
|Molson Ice||Molson USA||Canada||10,800||9,500||-12.0%|
|Beck’s||Beck’s North America||Germany||7,396||8,442||14.1%|
|Guinness Stout||Guinness Import Company||Ireland||7,000||8,250||17.9%|
|Foster’s Lager||Molson USA||Canada||6,800||7,900||16.9%|
|Bass Ale||Guinness Import Company||UK||5,750||6,500||13.0%|
|Amstel Light||Heineken USA||Netherlands||5,400||6,000||11.1%|
|Total Leading Brands||137,796||161,752||17.4%|
|Total Imported Beer||194,885||225,220||15.6%|
Source: Adams Handbook Advance 1999
Selling More Imports:
What Retailers Can Do
- Give customers an incentive to try different imports. Let them mix and match six-packs or purchase individual 12-ounce bottles. Offer “international” 12-packs at a special promotional price.
- Educate your customers about the imported beers you carry. Use case cards or shelf talkers to describe each beer or beer style. Post reviews from magazines to let customers know what the products taste like.
- Cross-merchandise imported beers with other products in your store. Display imported beers with food, or German beers with German wines, for example.
- Create distinctive shelf sets. Arrange brands by country and keep brand families together to create more impact on the shelf.
- Use colorful and interesting signage to set your import section apart. Hang flags of different countries over each section.
- Make it easy for customers to find the style of beer they like. Color code your stock from the palest lagers and ales to the darkest stouts and doppelbocks.
- Start an Around-The-World Beer Club. Award customers special prizes, such as T-shirts or glassware when they purchase a certain number of the brands you carry.
- Communicate with customers by newsletter. Tell them about new items in stock, tastings and other promotions.