The vice president of national accounts for Heineken USA says the company is reaching Millennials with social media and other marketing initiatives.
Grocery Headquarters: What is the state of the beer category right now? What is driving sales?
Steve Ward: According to research from The Nielsen Co., total beer growth in the grocery category in the U.S. was up 1.6% in 2010. This was driven largely by the upscale beer category—in which Heineken plays a major role—that was up 5.1%.
Heineken USA experienced gains in several areas across its broad, high-margin portfolio in 2010. The Heineken USA Mexican portfolio grew 2.5%, driven by Dos Equis, which experienced 18.5% growth. The Newcastle family increased 10.1%, spurred by expansion of the DraughtKeg as well as 24-pack bottles. In the Dutch business, Heineken 18-packs sparked strong growth at 20.1%.
Coming out of the recession, consumer focus has shifted toward real products and real craftsmanship as they look for simplicity, authenticity and honesty in their beer and other goods.
Although there is a large emphasis on value, this sentiment means more than just price. Consumers may actually be willing to spend more, as long as the product offers enhanced flavor and better ingredients.
Tell us about how imports are faring against domestic beers?
Since the 1990s, import brands have been more strongly impacted by the economy than domestics. Our customer research reveals that import brands tend to have a larger multi-cultural consumer base than domestic brands.
That being said, there is a huge opportunity with multi-cultural consumers. The demographic is growing rapidly—by 2020, ethnic consumers will account for more than 70% of all the growth in the beer market, much of this driven by multi-cultural Millennials.
What do retailers need to do to boost sales and profits from this category?
It is important that retailers continue to discover ways to strengthen relationships with their consumers by carrying and promoting high-end products and allocating the proper amount of space to those items. Upscale point-of-sale merchandising and a clean, brightly lit atmosphere are also critical to success.
In addition, retailers should set up displays in the most effective manner. As display space is limited, we recommend retailers focus on fast-moving SKUs such as the Heineken 12-pack.
Warm displays are particularly effective in bringing attention to the added value cross-merchandising offers we often make available on our brands.
What is Heineken doing in terms of new products and merchandising to help growth?
This year, Heineken introduced new aluminum cans featuring raised ink printing technology that casts a visual impression of condensation on the outside of the can while making it more pleasing to grip.
Along with the redesign of our cans, we have also replaced the 2-by-6 fridge pack with a new 3-by-4 suitcase. This will make our packages easier to stack and display at retail.
This summer, we will also be communicating our Heineken VIP program on pack. The Heineken VIP program runs throughout the summer and gives consumers the opportunity to win VIP access to one-of-a-kind intimate performances by major musicians.
In 2011, we will be doubling the number of weeks of national Heineken TV advertising to drive greater awareness and encourage consumers to stock up when at their local supermarket. In 2011, Heineken USA will debut television versions of our hit Web ad “The Entrance,” Heineken’s centerpiece of its global “Open Your World” campaign.
As we are focused on connecting with the Millennial consumer who is spending more time actively engaged in the digital space, we are also planning above the line and social media support for the roll out of the new can range.
We are currently working with grocery retailers on a number of initiatives to promote beer/food pairing. Newcastle Brown Ale is participating in the “Aprons” program, which offers Publix shoppers recipes and full meal recommendations to make home dining occasions more special by paring fine beer with their meal. We also worked with Kroger to develop a program pairing our full portfolio with complementary cheeses.
What does the future look like for the category?
We see 2011 trends for the import segment continuing the improvement they have shown in the second half of 2010, driven by the lead brands, including Heineken and Dos Equis.
In 2011, Millennials will also continue to drive more multi-cultural diversity in the US. Our brands resonate with these targets and we have the initiatives in place—including highly relevant social media platforms—to benefit from this trend.