Last year about this time, beer importers were cautiously optimistic about their fortunes. This year, you can almost hear the collective sigh of relief as they get ready for their busy summer selling season. The imported beer category isn’t exactly on fire, but it survived the recession and has come out the other side in perhaps much better shape than the domestic beer business.
‘I think retailers have found it difficult,’ said Trevor Burnell, vice president of Moosehead USA. ‘When things go up it doesn’t last forever, and they have to remember that when they go down it’s the same. The economy has been unsettled for a prolonged period, so people get into a mindset. Certainly there have been some winners and losers the past few years, but if you look at craft and import beers together they now account for a 30 share in grocery outlets’20% imports and 10% craft beers. That’s pretty good.’
‘Imports and high-end beers have definitely bucked the trend of the overall beer market,’ said Rick Oleshak, director of Belgian imports at Anheuser-Busch InBev. ‘Even though consumers are cutting out unnecessary spending, imported beers are an affordable experience. Consumers are still treating themselves on occasion.’
In a relatively flat industry, sales in the imported beer category rose 1.0% in 2011, according to the 2012 Handbook Advance, published by the Beverage Information Group. Even more telling was that the top 10 leading brands, which account for 75% of total import sales, grew 1.8% last year, a strong showing compared to the overall industry. But that doesn’t tell the whole story.
In the past, imports tended to move as a group. In good times, a rising tide lifted all boats. In downturns, consumers cut back discretionary spending and purchased less imported beer as a result. Coming out of this recession, the maturing category perhaps now better reflects the industry as a whole. Once rock-solid brands have seen their sales and shares slip, and ‘newly discovered’ brands are experiencing strong growth.
Category growth, to a degree, is still dependent on how the overall economy performs. ‘The macro-economic factor that most affects us is employment,’ said Herb Heneman, imports director at Tenth & Blake. ‘With unemployment still high we’re not out of the woods yet, and it’s affecting all beer sales not just imports. It’s a matter of disposable income. But the category also ranges from a Labatt Blue to Chimay, so it’s unfair to say all imports go the way of the category.’
That maturation of the category, so that it now includes brands that appeal to just about every consumer taste and price point, brings up another reason for the mixed results among brands. The traditional progression from beer to spirits and wine and from domestic beer to imported beer as consumers’ get older has changed.
Imported beer has competition from craft beer and microbrews as well as wine and spirits. That may seem like a no-brainer ‘ competition among different types of beverage alcohol has always existed ‘ the competition now is coming from unlikely places.
First off, entry level drinkers ‘ those marketers sometimes call the ‘Millennials’ ‘ have been into spirits in a big way for nearly a decade. Rather than start with domestic beer and move to more flavorful products, young consumers have opted to make their drinking more occasion-based. Flavored spirits and a renewed cocktail culture have spurred spirits sales to new heights. When they choose to drink beer, they often choose micro or craft beers.
Older consumers, while they have developed a palate for more flavorful beers and often have the money for higher end products like imports, tend to drink more wine and spirits.
‘We have to be focused on consumers, and if the consumer is making choices outside the beer category, we have to pay attention and do something about it,’ said Bill Hackett, president of Crown Imports, LLC. ‘Wine and spirits have been relatively aggressive in finding new consumers with different flavors and experiences. We can’t just throw styles and flavors out there. We have to build the brands we have and make sure we’re where consumers are when they opt to drink beer.’
‘I’m definitely more concerned about wine and spirits than other beers,’ Heneman said. ‘Wine and spirits have done a better job of helping consumers shop by ‘intrinsics.’ Beer has to do a better job of demonstrating what styles pair well with different foods ‘ an ale with a hamburger, or a crisp lager with calamari, for example. We have to take an example from Amazon and tell consumers, ‘If you like that then you might like this.’ Or rank beers on a bitterness scale.
‘We offer a better value proposition than wine or spirits, so it’s a question of how we get share of stomach back.’
The good news is that many import brands, at least, are attracting consumers, including older consumers, back to the category.
‘It’s a battle for younger consumers with crafts and spirits and mixed drinks,’ said Jeff Coleman, president of Paulaner/HP USA, ‘but with older consumers, 26 to 49, we’re seeing a resurgence of imported beer drinking along with a move into wine.’
Finding A Niche
Younger consumers, because they consume more on more occasions, are still the prize, and import marketers know that attracting their attention is no easy task these days. They’re savvy, sophisticated and more knowledgeable than their counterparts from decades past. The Internet has put a wealth of information at their fingertips and social media has enabled them to trade both information and opinion instantly.
Importers have found it increasingly important to understand their target audiences and play to their brands’ strengths. As the economy improves and consumers loosen their wallets, brands are fine-tuning their pitches to take advantage of growth opportunities. In many cases, they’re already seeing positive results.
‘Millennial and multicultural consumer segments are gaining in size and influence,’ said Scott Blazek, senior vice president sales for Heineken USA, ‘and estimates indicate they will drive more than 70% of beer growth in the next ten years. We’ve focused our attention on these core demographics with marketing campaigns that resonate with these consumers.’
Corona, still the leading import, was up 0.5% in 2011, but is gaining momentum as it gears up for summer programs. ‘We’re going to be disciplined on how we approach the year,’ Hackett said, ‘and fill in opportunity gaps without getting too far ahead of ourselves. We’ll continue to play with the creative on the theme of how consumers can create their own ‘beach’ experience. We want to let them decide where and when that is, but think about Corona more often.’
The brand launched the first of its new ads, ‘Spotlight,’ in March, and unveils another called ‘Taxi’ this summer. Four different outdoor ad executions depicting beaches in unexpected places started appearing in May in ten key markets. The ‘Find Your Beach’ theme extends to a new and improved ‘Win Your Beach’ summer promotion from May through July at retail that offers consumers a chance to win a wide range of prizes.
Corona also had great success last year with the 32-ounce ‘La Familiar’ bottle in limited distribution. Targeting a specific set among a Mexican demographic, the brand will expand its reach. Corona Light also has plans to find new ways to build and support awareness after about 1.0% growth in 2011. Crown is testing Corona Light draft in Miami and Philadelphia and looking at ways to translate its experience to more off-premise sales.
Modelo Especial, the number-three import brand, saw sales rise 14% last year, with volume continuing to expand this year. Marketing efforts to date have primarily targeted Hispanic audiences, but the brand is putting resources against both Hispanic and general market consumers this year. A new campaign targeting the latter was in the works this spring and expected to break this summer. In the meantime, Modelo Especial has expanded support of its summer soccer program by adding a Mexican spokesperson in addition to the USA’s Clint Dempsey.
Crown had great success with its introduction of Victoria here, a well-known dark beer in Mexico. The brand is available in 14 markets. Rather than expand to additional markets, Victoria will target general market consumers and build its presence in those markets.
And Pacifico is expanding its draft product into several new markets this year, such as New York, to build awareness and encourage more off-premise sales.
Heineken saw brand volume decline last year by 3.6%, with Heineken Light off 2.6%, but sales turned around in the last half of the year, particularly the fourth quarter.
‘We’re very encouraged by the momentum we saw in the second half of last year,’ said Blazek. ‘Heineken Lager has now returned to growth, and Dos Equis continues to be on fire. Overall, the beer market is stagnant, but the upscale segment is showing steady growth. This is the space where Heineken brands play.’
The brand will continue to leverage the successful ‘Legends’ campaign with a bigger investment in both digital and traditional media. A new execution ‘ a tie-in with the new James Bond film ‘Skyfall’ ‘ bows in September. The tie-in features participation by Daniel Craig, who has played Bond in the last two films in the franchise. This year marks the 50th anniversary of the James Bond films.
‘At retail this summer, Heineken will launch Heineken Summer Voyage,’ Blazek said, ‘a program that includes unique content and special cross-merchandising offers as well as the chance for consumers to win one-of-a-kind festival and event experiences offered worldwide. We’re also introducing two limited edition Heineken Heritage can packs this year.’
Summer Voyage, supported with a range of media, gives Heineken and Heineken Light consumers the chance to attend events like the Ultra Music Festival, TrBeCa Film Festival and U.S. Open, as well as win prizes, including instant rebates and mail-in rebates, where legal, on Heineken, Heineken Light and select grocery products.
The ‘world’s most interesting man’ has been a hit with consumers, as evidenced by the fact that Dos Equis sales were 14.3% last year. The brand is leveraging that momentum with increased media spending, a Cinqo de Mayo program just ending, the return of the ‘Most Interesting Academy’ this summer and the Dos Equis ‘Masquerade’ at Halloween. Also coming is a ‘Beers of Mexico’ 12-pack which includes Dos Equis, Dos Equis Lager, Ambar, Tecate and Sol.
Tecate, which saw sales slip 2.8% last year, has devised a new strategy that is turning sales around again. ‘Our growth for several years was driven by new packaging and Tecate Light,’ said Felix Palau, vice president, marketing. ‘When we stopped innovating in ‘09, there was no new news. Couple that with the economy, and it was a double-whammy for the brand.
‘Last year we changed our strategy to define our target not only as new immigrants, but third generation Hispanic-Americans. We changed our communications from a serious tone and the recognition of new citizens to a celebration of all Hispanics.’
The brand is creating more synergies with what it’s doing in Mexico, such as sharing creative work, giving it more universal appeal. ‘It’s more about having character than being Hispanic,’ Palau said.
The brand will continue to use boxing as its primary platform, but has added a summer soccer program, bringing Mexican teams across the border to play exhibitions in the U.S., and creating an amateur ‘Tecate Cup’ in a half dozen markets with a playoff in L.A. before a league game.
To further reinvigorate the brand, Tecate unveiled a new label in May, but is reminding consumers of its past with ‘retro-packs’ emulating ‘40s, ‘50s and ‘60s packaging this summer. Tecate also is launching two new products. Tecate Michelada, traditionally a beer with lime, salt and Maggi or Worcestershire sauce, is expected to launch in September.
The other is a dark beer called Indio that will compete with Victoria. Targeted to a generation of young Hispanic change agents that don’t think of themselves as Mexican or American but see themselves as independent, the beer will launch in select markets California and Texas as well as Chicago. The launch will be supported with a series of outdoor wall murals and a cross-cultural concert series that gives musicians on both sides of the border the opportunity to collaborate.
Also new to Heineken USA is Amstel Wheat, which tested in on-premised accounts in select markets beginning last September. The new beer will expand to additional markets this year. ‘Innovation is a crucial component to executing against our strategy,’ Blazek said.
Playing off their heritage, a number of imports have let consumers ‘discover’ their brands. They typically appeal to both consumers who appreciate both the flavor and authenticity of different beers in the same way they appreciate craft beers, and ‘badge’ drinkers who want to associate with the status of drinking a well-crafted import.
‘Discovery beers are driving growth for the industry,’ said Sheila Stanziale, president of Diageo Guinness USA, ‘which is a perfect fit for Guinness. American beer consumers are showing their demand for more interesting, flavorful products. They’ve opened up to new products with different taste profiles while demanding better, more quality beers like Guinness. These discovery brands also deliver on the demand for richer stories and legendary background and heritage.’
Guinness Draught is doing well in both on- and off-premise accounts, with sales up 1.0% last year. But the brand’s big push this year since St. Patrick’s Day has been Guinness Black Lager. This spring, Guinness sponsored reigning US Open golf champion Graeme McDowell, and finishes up the Guinness Black 9 golf promotion at retail in May, giving consumers a reason to buy refreshing Black Lager through the summer.
Stella Artois, from Anheuser-Busch InBev, has perhaps been the most successful at the ‘discovery’ strategy in recent years, rising to the number-seven spot on the list of best-selling imports. Brand sales surpassed 1 million barrels last year, according to Oleshak. The brand plays off its Belgian heritage, since consumers recognize Belgium as one of the great beer-producing nations. Its ‘chalice’ campaign has added a halo of sophistication to the brand, and its ‘chalice factory’ execution just ended in May, distributed 100,000 engraved chalices to consumers through the end of March.
Coming off its mint julep chalice tie-in with the Kentucky Derby, Stella plans a Belgian sample pack in both 12-oz. and 24-oz. packages in June. Throughout the summer, Stella will take advantage of experiential platforms such as events sponsored by Food & Wine magazine in Kohler, Wis., and Monterey, Calif., where it can engage consumers and talk about beer flights, food pairings, the importance of pouring and more beer lore.
At the holidays, starting in October, Stella Artois will offer retailers a special fireplace display to help merchandise a 750 ml bottle of Stella in a red, gift-wrapped package. Oleshak expects the promotion will spur a lot of holiday gift-giving.
Hoegaarten and Leffe, two other Belgian ales, will piggyback on Stella’s activities throughout the year, substantially boosting their continued growth. Hoegaarden’s volume was up 12.6% last year, and Leffe’s, with both brown and blond ales, was up a whopping 49.5%.
A-B InBev’s German brand, Beck’s, plans a summer promotion to celebrate some of today’s most original artists. From early May through July, their artwork will be displayed on a series of six limited-edition art bottles in six-, 12- and 24-packs. Artists include Grammy-nominated singer M.I.A., Aerosyn-Lex from New York, Will Chyr from Chicago and Geoff McFetridge from L.A. among others.
SABMiller’s Tenth & Blake unit also has a portfolio of occasion-based beers that the importer puts in places where consumers can discover them.
Italian beer Peroni, for example, was up about 8% last year, according to Heneman. ‘I look at ‘like’ brands,’ Heneman said, ‘such as Peroni and Stella Artois, or Pilsner Urquell and Guinness. Stella Artois has really validated that there’s a drinker seeking a level of status on certain occasions. Peroni is the same kind of badge brand.’
Peroni is bringing in Italian brand ambassadors this summer in key markets and will focus on young designers at fashion events. Consumers can expect to see the brand in places like the Hamptons this summer, for example, instead of New York City. Peroni also is more focused on digital media and beautifully shot cinema advertising to show how stylish the brand is.
Pilsner Urquell appeals to craft beer drinkers, in the same way Guinness does, Heneman said. To keep the product as fresh as possible on its journey from Europe, the brand is taking steps to make sure consumers here experience a product that tastes as close as possible to one they can get in the Czech Republic. The brewery is now shipping product in 32-degree containers.
The brewmaster will travel to the U.S. this summer for an extended tour to talk to accounts about how the beer is made. He’ll also judge the second annual Master Home Brewer competition in New York, Chicago and San Francisco. Brewers of the best pilsener in each market will win a trip for two to Prague and Pilsn.
Grolsch is getting renewed focus in key markets. As with its Polish and South American beers, Tenth & Blake is concentrating its efforts with Grolsch on specific markets or even neighborhoods.
Even for well-established brands that tout heritage and authenticity, staying relevant is key to survival and success. New this year from Tenth & Blake are two more beers with the kind of heritage and authenticity that marks the rest of the portfolio. From Belgium comes St. Stefanus, a blond ale fermented in the bottle with three yeasts. Originally brewed by a Belgian monastery since the 1500s, the Abbey-style ale will be available in three maturations, from the lower-alcohol blond aged for three months to a Grand Cru cellared for a minimum of nine months.
From Burton-on-Trent comes Wm. Worthington White Shield IPA, brewed with the original recipe from the 1700s. Like other ales from the area, one of the ingredients that distinguishes this hoppy ale is the mineral flavor of the hard water used for brewing.
‘Intrinsics like water are what set brands like Pilsner Urquell and Wm. Worthington apart,’ Heneman said. ‘Pilsn has practically the softest water in the world, and Burton-on-Trent some of the hardest. Only brands with demonstrated quality and a consumer perception of brand differentiation will make it in this market.’
Others are taking note. Last year, for example, Heineken USA’s Newcastle Brown Ale released four limited edition beers: Newcastle Summer Ale, Newcastle Werewolf, Newcastle Winter IPA and Newcastle Founder’s Ale. All were extremely popular. Werewolf, for example, sold three months’ of inventory in three weeks. All go into national distribution this year. And now the brand has announced its first-ever national TV ad campaign, themed ‘No Bollocks.’ Besides TV spots, which began in April, Newcastle’s media mix also includes digital, in-bar advertising, branded events, social media and PR activities.
Even import brands some would consider just a step above domestic premiums are finding ways to position themselves as a step out of the ordinary. Moosehead from Canada, for example, sees its brand as a less expensive import that can attract new consumers to the category.
Burnell said, ‘We want to be seen as an import, not compared to a domestic premium, which means we have to be relevant and careful about how we spend our dollars. Like craft beers, we’re real; certainly in terms of heritage we’re very authentic. Kind of like the Yuengling of Canada, we’ve been around since 1857.”
The brand is featuring special ‘Equip Your Outerself’ 12-packs from April through June that have a PIN consumers can use to find out if they’ve won aspirational outdoor gear from kayaks and canoes to tents and camping gear.
Moosehead recently purchased the Hop City Brewery in Ontario, and will introduce a new beer from that brewery in select markets this October. Barking Squirrel Lager gives Moosehead the craft brewing credentials it seeks with the price point and selling proposition to match. Molson and Labatt, the other two major Canadian imports, both continue to support hockey and focus their efforts on the northern tier states.
Even small brands like Warsteiner, or Paulaner, Hacker-Pschorr and Fuller’s keep their brands relevant through a variety of programs. Warsteiner, from Warsteiner-USA, is the Official Beer Supplier to the PGA European Tour. Here in the U.S., consumers will have chances to win VIP tickets to the KLM Open in Amsterdam in September.
Hacker-Pschorr Weisse, from Paulaner/HP USA is now available in 12-oz. cans, giving consumers more occasions on which to enjoy the refreshing wheat beer this summer. And the importer’s efforts to implement just-in-time distribution in the past few years has meant faster turns and fresher beer for consumers even on small brands like O’Hara’s.
Summer’s the perfect time to merchandise beer, and consumer demand for high-end, high-profit imports is back.