Once upon a time, the imported beer category was a small niche of above-premium beers that offered affluent drinkers a more flavorful alternative to domestic lagers. Today, the category more closely resembles the industry as a whole. Importers now offer a wide range of products, from more modestly priced lagers with mass-market appeal to vinous ales with prices to match their viticultural cousins.
Consolidation within the industry in recent years has meant globalization of the beer industry. That, along with the recent recession, has been a double-edged sword for brewers. On the one hand, it’s produced economies of scale for brewers, enabling them to compete more nimbly. And it’s been a boon for consumers, since it’s now almost as easy to get a Trappist ale or South American lager in Boise as it is to get a Budweiser in Moscow.
But fewer brewers importing more brands has increased competition in the category, and the more closely the category mirrors the industry, the more pressure there is on individual brands to capture the hearts and minds of consumers.
‘In terms of the broad picture, every brewery globally wants to grow in the next guy’s back yard,’ said Jeff Coleman, president of Paulaner HP USA. ‘It’s really become a global business.’
The good news is that as the economy continues to recover from the recession, import sales are on the rise. Imported beer sales were up about 4.8% last year (according to the Beverage Information Group’s preliminary 2010 statistics), positive news given that industry sales were down more than 5% in 2009. Most brewers see the trend picking up steam this year.
‘We’re not out of the woods yet,’ said Herb Heneman, brand director of imports at Tenth & Blake Beer Co., Milwaukee, SABMiller’s import arm, ‘but validated by growth of the craft segment is the fact that upper income folks are not as affected by the downturn. We’re still bullish; we’re not predicting massive growth, but conditions were better in 2010, and we see more improvement in 2011.’
Like the U.S. beer market as a whole, though, the import category consists of a couple of major players that make up the bulk of the market, and everybody else. Those big brands now tend to compete more directly with domestic mainstream brands, so they took a bigger hit than the rest of the category during the recession.
‘The major imports are going to have to continue what they’re already doing’aggressively cutting prices, rebating and promoting to recapture market share,’ said George Witz, president of Lhasa Beer USA. ‘The current market is more price sensitive for long established brands, and the major imports are now competing head to head with mainstream labels as meaningful value alternatives.’
Despite some consumers’ willingness to pay higher prices for high-end beers, they also look for value propositions when they can. The significant growth of both the craft and imported beer segments in the past 20 years has created a dramatic increase in both awareness and knowledge of beer-making, beer styles and brands.
That growing sophistication has expanded beer drinkers’ repertoires to include a wide variety of beers, not just one or two. But their beer knowledge coupled with the economic uncertainty of the past two years has created a more value-conscious consumer.
‘The unstable economy has caused consumers to be more savvy in their purchase decisions, demanding more value, quality and variety,’ said Sheila Stanziale, president of Diageo-Guinness USA. ‘Because of this, they are much more willing to experiment with new brands, products from different regions and new flavors. We have been seeing these trends influence the beer category, and imports specifically. With this comes the increased interest we’ve seen in what I call the discovery category’sophisticated brands with quality credentials.’
This idea of letting consumers ‘discover’ brands on their own has really taken hold, especially among smaller brands that can boast about brewing history along with other unique product attributes.
‘We use a discovery marketing model for our imports,’ said Heneman. ‘We want people to discover our brands. It could be a craft drinker looking for authenticity and heritage, or it could be a person into the latest style.’
‘For imports, the potential is really in the smaller, more unique brands,’ said George Witz, president of Lhasa Beer USA.. ‘That is where the real action and promise are. The demographic is shifting, and younger consumers are less inclined to drink their fathers’ beer than to go out and find their own. They are less price-sensitive when they are exploring the affordable luxury of new imports. So this is really a double advantage for the newer and smaller brands. They offer new experiences and also don’t have to be quite so aggressive on pricing.’
The Right Fit
Whether through discovery marketing or more traditional marketing programs, brand building and establishing a rapport with consumers has become increasingly critical.
‘Repertoires are expanding and people are trying more and more beers, so brands are becoming more important,’ said Steve Ward, vice president of national accounts for Heineken USA. ‘The top five craft/micro beers account for about 50% of sales in the segment despite a huge number of brands. The top five imports account for about 80% of sales. We talk to retailers about the ‘upscale’ beer opportunity’micros, crafts, imports and domestic superpremiums’and what’s right for their market.’
Brewers are getting smarter about focusing on markets where their brands will play well, rather than simply loading the distribution pipeline and hoping product will move. By offering a mix of products and packages that provide the greatest appeal, they hope to ultimately move more product, faster.
‘Consumers are collecting brands based on unique product propositions, from Bud Light Lime to Bohemia,’ said Felix Palau, vice president of marketing for Bohemia and Tecate. ‘It’s all about differentiation; that’s the name of the game going forward. There is no more one-size-fits-all. It’s a real challenge, but we see great opportunities.’
The recession and subsequent downturn in import sales served as a wake-up call to some, forcing them to look more carefully at where their products are selling and why. The result may have been a shift in how some brewers approach the market.
‘The contraction on some brands has been healthy,’ said Heneman. ‘It forces us to provide fresher beer to shelves where brands will really move.’
Industry consolidation also gave most importers a portfolio of beers that offers a good range for both retailers and consumers. That gives retailers a lot of options when it comes to catering to their clientele.
‘Our portfolio offers a terrific range,’ Ward said, ‘from Heineken to Newcastle, which plays more like a craft beer, to Dos Equis, the fastest-growing import brand right now. But we also talk to retailers about focusing on key packages rather than loading the shelves. Heineken 12-pack sales, for example, are bigger than the top 10 craft beers.’
‘Channel and SKU prioritization have become extremely important,’ Palau said. ‘We have to select the right pack for the right distribution channel. In 2011, we’ll look even more closely at how we prioritize to meet the needs of target consumers in each market.’
As the economy emerges from its rough patch, look for importers to be fairly conservative in terms of marketing. Most aren’t fixing what isn’t broken, which means you’ll see familiar programs. Competition for share among the big brands that were most hurt by the downturn will continue to be fierce, with discounting and rebates the rule rather than the exception. And smaller brands will still fight for homes in the distribution channel and wholesalers’ attention when they find them. But overall, the market for imports should be vastly improved this year.
‘The beauty for imports,’ said Coleman, ‘is that consumer demand for diversity has not changed.’
Here’s what just a few of the hundreds of imported beers are doing this year to support you and drum up consumer interest.
Crown Imports LLC
As the Corona business fell entirely under the aegis of Crown Imports in the past couple of years, the brand fought off both the rising tide of competition and the economic downturn. Coming through the reorganization, the company took a hard look at the market and Corona’s place in it.
‘The critical part of our analysis confirms that this is the place to be even though we took some hits,’ said Bill Hackett, president of Crown. ‘As business and the economy stabilize, we’re in a good place, but it didn’t just happen. We reorganized and reframed our sales force last year as well as restaged our marketing to get better at our approach to the market and consumers. We’re also spending more money.’
Corona Extra continues its ‘Win the Beach’ program this year, capitalizing on the mindset that represents the brand’s unique selling proposition. This summer, consumers will again have a chance to win a vacation in Mexico. But Corona will be seen off the beach, too, to give consumers license to enjoy the product on other occasions.
To help, the brand will continue to expand its draft beer program and distribution of its ‘Familiare’ one-liter bottle, the best-selling package in Mexico. Demand for the package has been high on the west coast.
Corona Light, the number-one imported light beer, has gotten its own voice finally with a new ad campaign that addresses what consumers can do with their time once they reach the beach or get into the laid back Corona mindset.
Modelo Especial, which saw sales rise 17.9% last year to more than 31 million 2.25-gallon cases, will walk a fine line on pricing, continuing to offer value but at a premium to reinforce its image.
Crown also will expand distribution of Victoria, an amber Vienna-style lager that’s been in test in Chicago. The beer, Mexico’s oldest and known as its best-kept secret, will roll out to Colorado and Texas this year.
To round out its portfolio, Crown also has Tsingtao, which just wrapped up a Chinese New Year promotion, Singha beer from Thailand, and St. Pauli Girl, which makes its traditional push in the fall with ‘Oktobeerfest’ and a Halloween St. Pauli Girl dress-alike promotion.
‘We need to be where our consumers are,’ said Ward, ‘More and more are spending time in social media, so we’re spending more money online. Beer is a natural fit with social media. Consumers chat about what they’re doing, where they’re going for the evening. Beer fits into that chat.’
In addition to a bigger presence on sites like Facebook, Heineken has been experimenting with Shot Code technology that allows consumers to capture product codes by waving their smart phones in front of a shelf. The brand then sends them music-related messages.
The brand’s focus on music has shifted a bit to more alternative acts to help reach target consumers. Heineken will support and/or sponsor concert events like Coachella and Outsidelands in San Francisco, and the DJ Tiesto and Red Star Stage tours. The brand will continue to support tennis during the summer, culminating in its involvement at the U.S. Open.
New this month is a straight-wall can with tactile ink that offers consumers an interesting feel when cold. In a shift from its iconic ‘keg’ can, the brand hopes to deliver a premium feel and image just in time for summer. The 24-oz., 16-oz. and 12-oz. cans also will be used for Amstel and Heineken Light.
Newcastle is offering seasonal beers this year for the first time, expanding its range. The brand plans to work with retailers on more value-added opportunities such as cross-merchandising cheese with beer where appropriate.
Dos Equis will continue to expand its successful ‘world’s most interesting man’ campaign, and connect with consumers through online media. The brand gained an impressive 20.9% last year.
Tecate is expanding its consumer target to include a much broader segment of the Hispanic population. Rather than targeting just Mexican newcomers, the brand will speak to second- and third-generation Hispanic Americans. Boxing is again its main platform, but for the first time, Tecate will include communication in English in its marketing mix and expand distribution beyond traditional Mexican retail outlets.
About 70% of the brand’s volume is in 11 core markets, primarily in the West and Southwest. It’s now looking to expand in both the Northeast and Southeast, in markets like New York and Tampa.
Bohemia is positioning itself as an artisanal, small-batch brewer with a focus on the product itself. To draw attention to the ‘fine art of Mexican brewing,’ the brand plans a series of artists’ labels, the first one of which will feature Frida Kahlo. Programs will focus on in-market efforts that typically involve food and well-known personalities like Chicago restaurateur Rick Bayless.
‘We have a diverse import portfolio of European beers which includes brands such as Stella Artois, Hoegaarden, Leffe, Beck’s and Bass,’ said Adam Oakley, director of import brands at Anheuser-Busch.
The company’s most successful import is Stella Artois, which had sales gains of 15.2% in 2010. Last year, the brand introduced a new campaign’’She is a thing of beauty.’ The campaign continues this year, just coming off a clever Valentine’s ‘Menage Artois’ promotion and a new ad execution during the Academy Awards.
As in previous years, Stella Artois is linking to events and sponsorships that link the brand to high-end consumer experiences. The brand is a sponsor of the Sundance Film Festival and this year plans a ‘Bring The Cannes Film Festival Home’ promotion that offers consumers downloads of Cannes films. Retail support at includes film-related POS items like directors’ chairs and wooden chalkboards, and cross-merchandising programs with seafood and glassware.
Food tie-ins also are important to the brand, and it will continue to support and play a role in Food & Wine festivals. A consumer sweepstakes offers a chance to win a trip to one of the festivals in Aspen, Colo., Kohler, Wis., or Pebble Beach, Calif. A-B’s other Belgian brands, Hoegaarden and Leffe, also are featured at these events.
New products this year include a plastic chalice cup designed to resemble a full glass of Stella Artois, and a 14,9-oz. chalice can available in 4-packs and 10-packs. Both are designed to offer retailers an opportunity to capitalize on summer sales where glass isn’t permitted.
‘We built great momentum in 2010 with our new ‘Bold’ marketing platform for Guinness,’ said Sheila Stanziale, president of Diageo-Guinness USA.
This year, Guinness is extending the ‘bold’ campaign from football to basketball. And this month the brand gets a double punch by leveraging both St. Patrick’s Day and the start of the NCAA basketball tournament.
Guinness Foreign Extra Stout, launched last year, will get a full year’s support giving it more opportunities to make inroads among craft drinkers where it’s been well received. And Guinness Black Lager, recently in test in Chicago, will be rolled out to new markets.
‘Right now, growth in the discovery category, where our brands Guinness, Smithwicks and Red Stripe play, is offsetting declines on the larger mass import brands,’ Stanziale said. ‘We expect that trend to continue well into 2011 and even 2012.’
‘The primary battleground for early adopters is the on-premise market,’ said Tenth & Blake’s Heneman. ‘There it’s about waitstaff education and exposure to our brands to give them a reason to believe and build a solid foundation. We translate that to off-premise by connecting with the consumer through things like food pairings. We continue that education in the off-premise market, too. Liquor retailers, for example, who talk very knowledgably about spirits and wine are also talking about beer.’
Among their brands, Peroni’s focus is on the ‘aperitivo’ routine of small plates and the first drink of the night.
Pilsner Urquell this year is sponsoring a homebrew competition to reinforce the brand’s heritage as the original pilsner beer.
Grolsch is all about the swing top. ‘It has a ton of heritage and bold, hoppy flavor that I think would appeal to a lot of craft drinkers,’ Heneman said. ‘We have an awesome opportunity to market this beer and it’s about focusing on places where our type of drinkers hang out.’
The importer’s South American and Polish beers also are on the rise.
At Molson, part of the company’s MillerCoors operation, this is the 225th anniversary of the opening of John Molson’s first Montreal brewery, the oldest in North America. Molson got a big boost from the Winter Olympics in Vancouver last year, and the brand capitalized by revamping its Molson Canadian label so that packages look the same globally as they do in Canada. This year, the label change will extend to Molson Ice and Molson Golden.
Hockey continues to be the big driver behind Molson Canadian, but to extend that leverage point into the off-season, the brand is taking a page from its ad campaign romancing Canada itself and celebrating its great outdoors. The brand plans a bigger summer program based on a ‘Canadian Summer’ experience. A consumer sweeps will offer a chance to win a summer vacation in Canada.
North American Brewing
Speaking of our neighbors to the north, Labatt USA also experienced growth last year (up 3.8%), partly due to interest in Canada generated by the Olympics.
‘Our go-to-market plan is about going to consumers,’ said Jason Drewniak, brand manager for Labatt USA. ‘We know who’s drinking Labatt and who’s drinking Labatt Blue Light.’
Labatt Blue gets a new label this April, and a loyalty program that kicked off last year gets a four-pronged approach this year. For every 18-, 24-, and 30-can or 18-bottle case, consumers can earn points. Points can be redeemed at a website for merchandise ranging from hats and T-shirts to mini refrigerators.
Now through April the promotion is themed around hockey and features hockey merchandise. This summer, the promotion will revolve around grilling with prize packs and merchandise geared toward summer backyard barbecues.
A new ad campaign kicks off for Blue Light in April. The focus will be on showing consumers that Blue Light is a refreshing beer that’s easy to drink. ‘Consumers told us what’s important to them and how they want to connect to beer brand like Blue Light,’ said Drewniak. The brand is running TV, outdoor and online ads.
Paulaner HP USA
‘We’ve increased our sales organization, since we’re largely responsible for selling the first box ourselves,’ said Coleman. ‘We’re sticking to small geographic areas to build the brand, even pockets within an urban area.
‘We’re also moving to on-demand warehousing. Our forecasts have to be spot on, but the positive side is that distributors are taking smaller shipments of each SKU, so our beer is as fresh as it can be.’
The importer also is focusing more on 12-pack sales with more emphasis on chain accounts. ‘Single-bottle sales have fallen,’ Coleman said. ‘Ten years ago they were a sampling tool, but consumers know what they like now. We’re selling more 6- and 12-packs, and the growth of cans is substantial for those brands that offer them. We can ship twice as many cans as bottles for the same price.’
Fuller’s started selling London Pride in cans last year. Paulaner will come out with cans this spring.