For beer importers, it should be the perfect storm: consumers are still trading up for quality products, but at the same time, they’re trying to drop unnecessary calories.
So why are imported light beers still struggling?
According to Global Information, Inc., imported beer sales increased 58 percent between 2001 and 2006. Consumers, the market research firm reports, are shifting from the purchase of domestic to imported beer, favoring its quality and branding appeal.
“The trade-up factor that is everywhere in consumer goods these days is definitely a part of the beer phenomenon,” says Maryanne Origlio, director of corporate communications at Origlio Beverage, a distribution company in Philadelphia, Pennsylvania. The onslaught of specialty brands in almost every product category is also coming into play. “Because specialty brands are growing, I think people are more aware of quality these days. Quality and authenticity have become more important to people.”
As consumers seek products perceived as more sophisticated and of higher quality, imports have gained ground. The beer category has been no exception to this trend, demonstrating that more and more, shoppers are turning to products that aren’t produced on their own turf.
Still, statistics gathered by Nielsen show that imported beer sales in supermarkets are slowing. From March 21 to April 21, imports gained a tenth of a point in case share, with Corona Extra losing three tenths of a point of case and dollar share, and Heineken losing one tenth. Heineken Premium Light did gain twotenths of a point of case share, but it’s hardly the massive growth the product took on last year, when it stormed onto the market to gain nearly 3 percent of the category share. And a lot of imports’ thunder has been stolen by the craft segment, which has seen fast continued growth.
The light import segment has come to encompass about 15 percent of the category’s dollar share, but very little of that extends beyond three brands: Corona Light, Heineken Premium Light, and Amstel Light.
Nevertheless, beer industry insiders remain confident that the trade-ups that have fueled import growth will continue to result in more consumer uptake of light import brands.
“What is happening in the imported light beer segment of the marketplace is very similar to what is occurring with imports in general,” says Don Blaustein, senior vice president of sales at Heineken USA in Atlanta, Georgia.
“It’s no different from why people are interested in imports,” he states. “People are interested in imports because they are more full flavored, they have a better image, and they have more character. There is a trade-up going on in society across a number of categories. The same thing is happening with light beer.”
In fact, with the demonstrated success of those three top import light brands, brewers seem steadfast in their focus on this market. Beck’s continues to sell its own light product, while Heineken recently renewed its agreement with FEMSA, resulting in its continued status as importer of Dos Esquis, Tecate, Tecate Light, Sol, Bohemia and Carta Blanca in the United States.
That begs the question, however: With the increase in imported light beers being introduced into the marketplace, is there room for all of these brands?
Industry insiders answer with a resounding “yes,” citing consumer demand as the driving force. “When Miller Lite started this whole thing, people laughed at them, but the category has been growing, and as long as the consumer is obsessed with healthy living and how to become better at eating and drinking, they will look for alternatives – whether it’s low-carb or lowcalorie,” says Tim Jacobi, former senior brand manager at the Pabst Brewing Company, who is currently working in procurement at a U.S.- based grocery chain. “I believe that the light beer category will continue to grow, and that growth can be fuelled by imports.”
The growth of micro- and craft brews should actually help light import growth, adds Origlio.
“I think by people being exposed to [craft beer],” she says, “When they want to drink a light beer, they will look for something that not only represents not only more quality, but a little bit more sophistication.”
So what’s holding light imports back from a sustained take-off? A great deal of the problem is with execution, according to Jacobi.
Jacobi notes that most brewers – save for Budweiser and Miller – treat their light beer brands as extensions of their core brands, which can pose a challenge to retailers. “A lot of these brewers do not treat their light brand as an independent brand with an independent advertising campaign,” he says. “The packaging is always linked. However, they attract very different consumers. Not funding their campaigns sufficiently to make that distinction is causing a lot of problems.”
In stocking products according to sales, brands like Bud Light, for example, usually receive most shelf space in prime, eye-level real estate.
“I would be interested to see if you put Bud Light elsewhere, and put the smaller brands, like Tecate Light, if that becomes a focus for the retailer, smack in front of the consumer,” Jacobi challenges. “Bud Light has a very loyal following. The consumer will find that beer. They will look for it, whether it is in the middle shelf, top shelf, or lower right hand corner. At this point in time, few consumers will seek out a Tecate Light or a Heineken Light.”
But that might change, he says, with better placement for light imports. It may be starting to happen, but more slowly than is perceptible, according to other experts.
“To their credit, more and more retailers are increasing sales and profits by fully leveraging the imported light beer category,” notes Bill Hackett, president of Crown Imports. But, he adds, more help needs to come from manufacturers, as Jacobi argued.
Off-premise retailers recognize the importance of carrying a wide variety of brands, but Hackett believes that importers – and other channels – can help stores sell the entire category, by recognizing the brands that are driving sales, and assigning space and promotion to them. “In the off-premise, retailers who want to commit to the category and its strong sales and profits should consider offering a wider selection of brands to the consumer. It’s not just about one brand, but about offering a variety of brands to the consumer.”
Aside from the attraction to drinking beer comprised of fewer calories, a large portion of the consumer appeal behind imported light beers is driven by image: driving a Porsche versus a Mustang produces very different feelings, and the same concept can be applied to beer. “People are branded by what they drink, and besides the taste, they like to stand and hold a product that is perceived as higher quality,” Origlio says.
When brewers succeed in communicating why their beer is special, different and of better quality, Jacobi adds, people will pay for it. “That means more margins for the brewer, more margins for the distributor and more margins for the retailer. People equate price with quality: if it’s expensive, it must be good.”
The investment that both brewers and retailers are making in the imported light beer category will continue to drive its growth in the coming years, Hackett believes. “There’s only one place this category is going, and that’s up,” he declares.
“As retailers continue to focus on the imported light beer segment, and consumers continue to trade up to imported light beers, the category is poised for great things in the short and long term. The consumer is clearly embracing these brands, and we expect that to continue, especially as investment in the segment continues.”IMPORT BRAND BRIEFS
Tsingtao – This summer, Tsingtao Beer has invited consumers to “Enjoy It All Together” with a new off-premise promotion that features a food pairing theme designed to leverage cross-merchandising display opportunities in the fresh vegetable or seafood department in chain grocery stores. The program supports Tsingtao Lager (nationwide) and Tsingtao Pure Draft (select markets) in June and July.
Spaten – Spaten, one of the leading imported German beers, has a new 12 oz. bottle. The new bottle design is now available across the U.S. on the entire line of Spaten beers: Spaten Premium, Spaten Optimator and Spaten Oktoberfest. Subtle changes have also been made to the label, 6-pack and 12-pack to fit the new bottle. Spaten is widely known as one of the oldest breweries in Germany with a 600-year brewing tradition. All Spaten beers are brewed in strict accordance with the Bavarian Purity Law of 1516. Spaten has also packaged three great German beers, Spaten Premium, Spaten Optimator and Franziskaner Weissbier in an easy-to-carry 12-pack.
Corona – Corona and Corona Light offer listeners a “getaway” during commercial breaks with a new, unconventional radio campaign. The new campaign’s 60-second ads deliberately sound like a musical interlude rather than a typical talk-driven commercial, thanks to more than 50 seconds of music-only listening time. Created with a predominantly African-American audience in mind, the new radio spots present music tracks from today’s hottest urban adult contemporary recording artists. Corona Extra hopes the ads’ relaxed vibe and smooth sounds will bring to life the laid-back Corona lifestyle.
A brief tag line at the beginning of each ad will identify it as a Corona Commercial Getaway before launching into songs performed by artists, including Brian McKnight, Ne-Yo, Ruben Studdard, Joe, Musiq Soulchild and a Tony Bennett/Stevie Wonder duet. The campaign will run this summer in 25 markets nationwide.
Fuller’s – Two of Britain’s best-loved icons of taste and privilege are joining forces. Fuller, Smith & Turner, the brewery behind highly acclaimed London Pride and Fuller’s ESB, has won the exclusive rights to use the name “Real British Open” and is launching a series of marketing efforts promoting Britain’s venerable golf tournament.
To promote the partnership, Fuller’s “Real British Open” claret jug tap markers are joining the line-up at upscale country clubs and sports venues. Fuller’s is also offering a trip for two to be the VIP guests of Fuller, Smith & Turner’s at the 2008 British Open. The consumer sweepstakes is being promoted with display cards and on-premise posters and entry forms. Consumers of legal age can also enter the contest at www.greatbeersweepstakes.com. The contest runs from June 1 – July 19, 2007, the final round of the British Open. Fuller’s was also chosen as the best regional brewer at the Oscars of the flourishing British pub industry, the Publican Newspaper Awards.
Hacker-Pschorr – Deeply tied to Oktoberfest, Hacker-Pschorr has a new promotion identifying it as part of Oktoberfest since the first celebration in 1810, when the first celebration took place. Hacker-Pschorr’s ‘The Difference is Inside’ tagline will be branded on all paper POS, including pennant strings, window posters, table tents, temporary tattoos, menu cards, coasters and case/price/easel cards. Additionally, authentic Oktoberfest banners, flags and 1 L glass mugs from Munich, Germany, will be available, where legal. Hacker-Pschorr is also offering consumer mail-in rebates at off-premise accounts, where legal, for $8 off a case (or equivalent) and $4 off every 12-pack (or equivalent).