We want it all. Today’s consumer can be hard to crack. We are looking for brands with provenance, an interesting story to tell, something that we can relate to and connect with; brands that we can ‘discover’ and share with our friends. We are looking for brands that are ethical and socially responsible. We want to be spoken to, but in a certain way. No more in-your-face advertising. We want brands that are premium, but affordable, and available at the click of a button (most times).
It’s no wonder that some of the big brands that once ‘ruled the world’ are finding challenges re-inventing themselves to connect with Millennials and Generation Z.
The beer category in particular has been experiencing challenges. Imports, however, have continued to perform particularly well: In fact, last year, import beer was among one of the handful of segments that performed positively in the U.S., according to IRI, a Chicago-based market research firm that reports retail data. Imported beer grew 7.4 percent to more than $7 billion, the firm reported.
“The beer industry is evolving, and consumers are looking for more premium, high-end options that deliver on quality and an elevated experience,” notes John Alvarado, Senior Vice President, Brand Marketing, Constellation Brands Beer Division, producer and marketer for the Corona and Modelo portfolios. “Brand quality and the emotional connection consumers feel towards the brands play a role in what’s growing and what resonates with today’s consumer who is valuing quality over quantity.”
At the top of the pile are Corona and Modelo with $2.37B and $1.97B in sales, respectively, according to Statista for the 52 weeks ending Dec. 30, 2018, making up more than half of total import sales in the U.S.
For these brands, consistency has been key. Consumers know what to expect and what they are getting when they order or purchase a Corona or Modelo. While the brands continue to evolve, they have maintained their identities and core messaging.
“Consumers view the Corona brand specifically in conjunction with carefree enjoyment and a relaxing experience,” says Alvarado. “For Modelo, it represents a reward for those who embody the fighting spirit. Each of these brands have benefitted from an ownable market positioning and a consistent brand message year after year.”
John Holl, beer industry journalist and author of “Drink Beer, Think Beer: Getting to the Bottom of Every Pint” and co-host of podcast Steal This Beer, notes that the Mexican imports have managed to continue to resonate with the younger legal drinking age consumer as easy-drinking lifestyle brands — even in the face of the wide variety of beers available today.
“There’s little stopping the Mexican imports on growth,” he says. “I think it helps that younger drinkers see it as a ‘healthier’ alternative; they are seen as light and refreshing—a sign of good times on a beach. So the appeal is being light in flavor, color and taste, which sits outside of the heavier IPAs or imperial stouts.”
Corona has been helping consumers “Find their Beach” in the U.S. since 1981. The brand’s producers/ marketers feel that the key to Corona’s long-standing success is a result of patience, persistence and continued investment to not only keep the consumer connection alive, but relevant for the time.
Modelo’s Fighting Spirit campaign, which features new ambassadors and heroes that embody the Fighting Spirit delivers the message that it doesn’t matter where you come from, but what you are made of. This year, the campaign features relevant faces fitting for the time including UFC Fighter Brian Ortega, bar owner Christopher Mullins, U.S. Army veteran and professional triathlete, Melissa Stockwell, and current firefighter / retired smokejumper Jon Hernandez.
According to Holl, the competition at home is nevertheless growing as craft brewers continue to bring new and interesting brews to market.
“At one point the imports shelf at beer stores across the country was the place to find exotic beers. These days they are kind of dusty,” he says. “With so much American choice and with the rise of brewery taprooms, there’s a big focus on drinking fresh and local. Imports can’t compete with that.”
This could make it challenging for smaller imports to establish themselves in the U.S., particularly if they don’t have the backing of big companies like Constellation Brands or Diageo.
Import beer brands have tried to play small themselves, stepping up their offerings to better compete in today’s landscape.
Last summer, Guinness’ Open Gate Brewery & Barrel House in Maryland opened its doors. The $90M investment by Diageo is a world-class brewery, barrel house and visitor center, and development of packaging and warehousing operations. It’s home of Guinness Blonde, along with new Guinness beers created for the U.S. market.
In the taproom, visitors can try innovative American beers—more than 15 are available at one time—and get a taste of Irish-inspired dishes, tapping into Guinness’ heritage.
“Whether a beer is brewed in the U.S. or anywhere else around the world, it comes down to establishing distinctiveness through an authentic brand identity and compelling, meaningful product stories. Different brands have different stories to tell,” says Nikhil Shah, Guinness brand director. “At Guinness, our story has been consistent, regardless of our status as an import – we are an iconic Irish brewer with an underlying purpose to help build bonds between us all.”
While the facility is just a year old, it has launched more than 80 new Guinness brews including Guinness Blonde and Guinness IPA. However, some fell flat, notes Holl.
“Some of the beers the brewery has released to the marketplace like the Blonde, or IPA or some of the other forgettable offerings that came and went quickly were, I think, a play to diversify their portfolio and not just be seen as the Irish stout brewery. It didn’t work on a large scale because it’s tough to change people’s minds,” he says.
“That’s one reason AB-InBev bought craft breweries that specialized in IPAs or stouts, because it was going to be a tough sell to their existing lager customers to branch out even with the strength of the Budweiser name.”
What the facility does have, however, is opportunity. The opportunity to get visitors to sample new beers backed by the Guinness name that will help change the perception of the brewery, Holl says, and be more open to different styles of beers from the brand.
He adds: “For larger imports like Heineken or Guinness I suspect they will continue to see loyal customers, but they will likely continue to face challengers here in the U.S. who try to make similar beers or compete in the style categories. No matter where you are in the beer category, however, domestics, imports, or American craft, there’s no denying the popularity of hard
seltzers. That’s eating into everyone.”
While domestic premium beer is the largest segment (imports come in second) dollar sales declined 4.2 percent to $12.6 billion. The other segments that saw a rise in sales include domestic super premium, craft beer, flavored malt beverages and cider.
To keep relevant and compete in an ever-growing crowded space, innovation has become crucial for some brands to bolster sales.
Like Guinness, Heineken, the third top-selling import beer in the U.S. realizing sales of nearly $795M last year, according to Statista, has also looked to innovation to bolster sales. Heineken Light, introduced five years ago, and more recently, Heineken 0.0, have both been well received in the marketplace, and lean more in the direction of the hard (or soft) seltzers than they do in the direction of high-octane craft offerings.
Heineken USA relayed that this innovation was brought to market to meet consumer needs that include living a balanced lifestyle. As the non-alcohol space continues to gain momentum, Heineken 0.0 offers consumers a choice for different drinking occasions. Backed by the Heineken name, the company did not want this brew to compromise on quality.
“For the U.S., the time has come for an innovation that disrupts the category and offers a new take on how people drink and enjoy beer,” said Jonnie Cahill, Chief Marketing Officer, Heineken USA when the product was launched.
At a time when brand loyalty is being challenged, products being introduced into the marketplace need to deliver on all fronts.
IRI beer analyst, Cara Piotrowski says: “In today’s retail environment, most if not all consumers expect quality – it’s table stakes for trial and long-term repeat. Consumers want a meaningful connection with a brand, so it is critical to not only deliver quality, but to fit within the consumer’s lifestyle, to ultimately trigger purchase.”