Beer companies have ramped up their efforts with new products, increased promotion and creative packaging to help retailers lift beer sales.
As if the competition between beer brands was not tough enough already.
For the past couple of years, beer sales have remained relatively stagnant while wine and spirits sales have enjoyed significant growth, costing the beer category market share in the adult beverage arena. The overall trend has not been lost on brewery executives.
“Beer needs to close the innovation gap with wine and spirits,” says Dolf van den Brink, president and CEO of Heineken USA, based in White Plains, N.Y. “There is no reason the beer category can’t do what the wine and spirits people have done. It is just up to us to figure out how.”
The innovation can come in different forms, including new products and brands, creative marketing campaigns and promotions, and modernized packaging. Innovation also means attracting new beer drinkers—women, Millennials and various ethnic groups—and expanding beer drinking occasions.
Though the overall category has struggled, the segments considered upscale—craft and imports—have actually performed quite well. According to Chicago-based SymphonyIRI Group, for the 52-week period ended Feb. 19, craft beer dollar sales at food, drug and mass outlets (excluding Walmart) were up 16.9% and case sales were up 14.6%. Import sales were up 6.3% in dollars while case sales were up 4.8%.
The success of the crafts and imports provides an opportunity for retailers to innovate the way they present their beer offering to consumers. Industry observers say crafts and imports generally attract the upscale beer drinker, who is closely aligned to the wine consumer. They suggest retailers make these upscale brands available in the wine section to generate incremental sales.
Dan Wandel, senior vice president, beverage alcohol client insights, for SymphonyIRI Group, says early 2012 data shows continued growth in the craft and import segments as well as improved results for the category overall.
“I am bullish on innovation,” says Wandel. “2011 was the third consecutive year of volume sales decline driven by new beer brands in supermarkets. I think this is going to be a much better year for innovation in the beer category.”
On the product side, Anheuser-Busch started things off in January with the launch of Bud Light Platinum. According to Mike Potthoff, vice president of large format for the St.Louis-based brewer, the brand has delivered better than expected results since its rollout. In the craft segment Anheuser-Busch released its second year-round offering of its Shock Top brand with Shock Top Wheat IPA.
“The Shock Top family was among the fastest growing craft beers in 2011 and continues to grow in popularity,” says Potthoff. “We think bringing new styles into the family will allow us to leverage the brand’s current success and cater to beer drinkers who look forward to new offerings.”
In time for Cinco de Mayo, Heineken USA is launching its newest brand, Indio, which officials say is the fastest growing brand in Mexico. Indio, an authentic dark lager, is geared toward the young-adult alternative Hispanic consumer and the initial rollout will be in select markets across the country.
Heineken USA is also making its limited edition Newcastle Brown Ale available nationwide. They also launched a national advertising campaign, a first for Newcastle Brown Ale.
On the packaging side, Heineken USA’s flagship brand Heineken is honoring its history. Starting in July packaging will feature Heineken-specific facts celebrating its birth in Amsterdam and return to the U.S. after the end of Prohibition. Promotionally, Heineken is partnering with the James Bond 007 franchise and in September Daniel Craig, the current James Bond, will be featured drinking Heineken.
Crown Imports is building on its “Find Your Beach” promotion for the Corona Extra and Corona Light brands. “Last year we sent winners to Mexico,” says Bill Hackett, president of Chicago-based Crown Imports. “This year consumers can decide what their ‘beach’ is. It could be a ski vacation, fishing trip, whatever the beach of their choice is, so to speak.”
Part of the idea, says Hackett, is to get consumers to think about drinking Corona somewhere other than on a beach. The promotion is designed to drive consumers to retailers and is supported with package specific graphics. It runs through the end of July.
Hackett adds that Crown’s Modelo Especial brand, has performed extremely well in the Hispanic community and has been supported with Spanish language advertising for years. “This year we realized it is crossing over to general market consumers,” he says. “So for the first time awe are running English language creative to support it.”
Beyond crafts and imports, observers say discovery beers and progressive adult beverages (PAB) are also driving sales. Brad Essig, vice president beer and PABs for Diageo North America, based in Norwalk, Conn., says the segments are growing because they play into the trends that consumers want today: variety, distinctive tastes, authenticity and new experiences.
“These two segments have significant innovation,” says Essig. “Discovery beers continue to offer new, distinctive taste experiences and styles, while PABs continue to drive more format and liquid experiences that can cater to a broader audience, such as women and multi-cultural consumers who may want a slightly different experience but still the access and casual vibe of a beer.”
Getting people to drink more beer can be difficult. One way is to generate more drinking occasions. Many craft brewers are doing so by introducing product in cans. “Producing [craft] beer in cans makes them more appropriate for outdoor occasions,” says George Ward, director of off-premise for Samuel Adams, brewed by Boston-based Boston Beer Co. “This is still a very small part of the craft business but it is growing.”
In addition to offering cans, from May through July, Sam Adams is “Celebrating Independence” with a program that Ward says delivers excitement to retailers through thematic red, white and blue point-of-sale materials and creative cross-merchandising ties.
“A lot of excitement and incremental sales are also being driven by new beers,” says Ward. “Products like our Latitude 48, Whitewater IPA and Barrel Room Collection are seeing a lot of excitement. Our new Alpine Spring has had a terrific reception from consumers and you see that same excitement with Sierra’s Ruthless Rye.”
A sub-segment within craft, gluten-free beer sales are growing at a faster rate than craft itself say observers. Brian Kovalchuk, CEO of Minneapolis-based Bard’s Beer, brewer of the Bard’s Gold brand, which is brewed with sorghum to make it gluten-free, says there is great potential for the category as retailers are beginning to warm up to the idea of gluten-free beer.
“When we started we had to convince the distributors and the retailers,” says Kovalchuk. “Now the retailers are telling us ‘this is great, gluten-free is here to stay. Do you have any more product?’ Three years ago we were fighting hard just to get a spot on the shelf. Now we have retailers telling us they want the whole door of the cooler with our products.”