Passport to profit

A well-merchandised imported beer case can add traffic, sales and panache to the beer aisle.

Here is some “import”ant information: A well-stocked selection of imported beers is just what is needed to attract both discerning young of-age millennials and upscale baby boomers to the beer aisle. That is because astute retailers are realizing that imported beers—after taking a beating during the recession—are coming back, as consumers seek chic, upscale affordable luxuries.

“Imported beers declined fairly substantially in 2009 when they were down about 10%, but they slowly came back in 2010 with a 4% growth rate and a little bit over 1% growth rate in 2011,” says Gary A. Hemphill, managing director at Beverage Marketing Corp., based in New York, 2012 figures have not yet been released.

The resurgence reflects the growing sophistication of consumers, say industry observers. According to Chicago-based Mintel’s Beer December 2012 report, younger women aged 21-34 are drinking more imported beers when socializing with friends, and 93% of imported beer consumers like to discover new beers and adjust their choice of beer depending on the time of the year.

“The upscale consumer in the U.S. has come back to the market,” says Adam Oakley, vice president of import, craft and specialty, at Anheuser-Busch, based in St. Louis. “There are more consumers interested in taste, variety and quality. Our import brands, like Stella Artois, have a cachet and sophistication that appeal to these consumers.” He cites the company’s “Belgian Trio” of Stella Artois, Hoegaarden and Leffe as the types of high-end imports that every retailer should stock.

Retailers can sell more imported beer by cross-merchandising—where legal—with corresponding ethnic foods, like a side stack of Corona near the salsa verde or a few cases of Tsingtao near the La Choy, manufacturers say.

“One of the things we are focused on is creating multiple points of interruption for consumers around the store,” says Bill Hackett, president of Crown Imports, the Chicago-based importer of Corona, Modelo Especial, Negra Modelo, Victoria and Tsingtao. “One of the points of communication that we’re taking to market as we visit with our retail partners is that consumers have an appetite to purchase throughout the total store experience. It is not about just having the product available in the beer section, but taking Modelo Especial and merchandising that within the Mexican food category. It is the presence of mind, so when the consumer is thinking about purchasing those categories, beer flows very well into that purchasing decision. We’re taking the lessons learned from the wine industry and taking that to the beer business.”

Also building sales is the fact that imported beers attract the more upscale consumers, say manufacturers.

“Upscale imported beers are an affordable luxury, and cater to today’s consumers of age who are more discerning and are looking for the best quality beers,” says Steve Ward, vice president of national accounts at White Plains, N.Y.-based Heineken USA. “Thanks to the craft explosion, the industry has been flooded with beer enthusiasts who have a greater passion for the product and brewing process,” he says.

“Heineken USA’s entire portfolio fits well with these consumers’ preferences because we provide a higher quality beer experience from start to finish,” Ward says. “In addition, the growing multicultural and millennial demographics are becoming even more important within the upscale segment.”

According to Doug Campbell, brand director, Guinness, at Diageo USA, based in Norwalk, Conn., “Today’s better-beer consumer seeks more from his beer choices—more flavorful, interesting brews made by master craftsmen who have honed their art over time. As a brewer of an iconic, velvety smooth stout with over 250 years of brewing expertise, Guinness fits that demand perfectly, and we strive to delight our consumers in new ways all the time.

“Its unique character and flavor and our ongoing commitment to producing high quality beer has set Guinness apart from many beer brands currently available in the marketplace,” Campbell says.

The Guinness family includes Guinness Black Lager, Guinness Foreign Extra Stout and Guinness Extra Stout. In addition to its unique character and flavor, part of Guinness’ appeal is the brand’s philanthropic efforts, Campbell says.

“Through St. Patrick’s Day, Guinness will continue the brand’s centuries old tradition of philanthropy by dedicating itself to a cause that is important to every local community across America: raising money for firefighters,” Campbell says. Partnering with the Leary Firefighter Foundation, Guinness will donate $1 per pledge received via text or online at www.GuinnessGiveBack.com to help fill the “wish lists” of thousands of firehouses across the country.

Diageo’s other import brands include Smithwick’s, imported from Ireland, and Harp, brewed in Canada.

South of the border
Canadian beers are the third largest imports, behind The Netherlands and Mexico, which accounts for more than half of all imports, according to Beverage Marketing.

“Corona is our largest brand, but the fastest growing brand in our portfolio, including the grocery channel, is Modelo Especial,” says Bruce Jacobson, executive vice president, national sales, at Crown Imports. “That brand has been on a nearly 20-year growth curve. It just continues with double-digit growth. Modelo is pretty much known as a Hispanic brand, but what we’re seeing with select packages, like bottles, is some very nice crossover into the general market.”

“The Modelo portfolio really has been the engine behind the overall growth of the import category and that continued through 2012,” adds Hackett.

The growth of Cinco de Mayo in the U.S. has given Mexican brands a jumpstart on the summer beer season.

“The great thing about Cinco de Mayo is the weeks leading up to it,” says Pat O’Dea, vice president, national accounts, off premise, at Crown Imports. “The presence of Corona and Modelo Especial on the floors of retailers and inside their feature activity starts rolling out in mid-April. We develop plans with our retailers to accustom to what their needs are.”
Heineken also works closely with retailers to help them figure out how to maximize sales, says Ward.

“There are literally thousands of beer SKUs out there but usually only room for at most 200 in any given store,” Ward says. “Ultimately operators will win the upscale consumer by optimizing assortment and by offering variety while avoiding duplication. The key is to understand which packs actually drive incremental volume and which are substitutable.

“Promotionally, the optimal strategy is to lead with the biggest upscale import brands such as Heineken and then fill-in with high-lift growth brands like Dos Equis, Newcastle and local crafts,” Ward says.

Heineken has high hopes for its new Heineken Star Bottle, which has a long neck and a “classic cool look,” according to Ward. “Heineken is an iconic brand so this is not a change we took lightly,” he says. “We talked to consumers and they all loved the new bottle. The transition is a great opportunity to increase trial and conversion among non-loyal Heineken drinkers and substantially increase distribution.”

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