What is the current state of the beer market and what is driving sales?
Steve Ward: Last year was a turning point for the beer category. It was the first year in many that the beer market grew, up 2% in volume, and 5.3% in value. Much of this growth is in thanks to the recent craft explosion, which has cultivated an even more passionate and discerning beer enthusiast that truly cares about the quality and story behind his or her brew. The craft segment is growing at a phenomenal rate, but the latest trend figures indicate that imports are generating just as much absolute growth. The beer category is closing the growth gap with wine and spirits, making the industry more competitive.
Brewers are becoming more dynamic by introducing different brands, new flavors and more pack sizes than ever before. While this is bringing tremendous variety into the category, Heineken USA has found that smarter, more thoughtful innovations such as the Heineken Star Bottle, Newcastle Limited Editions and Tecate Michelada are what are winning over today’s consumers.
Tell us about the import marketplace. How is it faring?
Overall, imports represent a 15% share and growing, in part due to their appeal to the rapidly growing and increasingly influential multicultural consumer segment. While the beer recovery was broad base with all segments showing positive trends, the import segment led the charge, growing 6% and accelerating the overall category by more than 3%, or 8 million incremental cases. Import brands invest more per case and generate higher gross margin than their domestic and mainstream counterparts.
Furthermore, wherever beer is growing, upscale beer is driving that growth. Over the past four years, the upscale segment has contributed $1.25 billion in growth; 1.5 times that of the mainstream and value segments combined. Paired together, trends indicate that consumers have an increased willingness to trade up to affordable, quality luxuries, which uniquely positions upscale imports for future growth—and where Heineken USA products play.
Tell us about your new packaging strategy. What type of consumer are you seeking and how does this help?
Heineken’s new Star Bottle represents a more modern take on the brand’s iconic green bottle, while featuring the same legendary taste. Introduced to the U.S. this year, the new packaging reinforces the brand’s upscale status, and presents a “once in a lifetime” opportunity to reintroduce the brand to consumers and retailers in the on- and off-premise. The shift to the Star Bottle here was a decision we did not take lightly. Our research found that the new packaging resonates with Heineken’s confident and progressive millennial multicultural consumers, as we saw an increase in interest from loyal and first time consumers. Heineken Light will also now be sold in the Star Bottle and its secondary packaging will be in the same style as Heineken but with a totally different color palette. This will increase the impact of both brands when on display. They look fantastic together and they really stand out in store.
How are you helping retailers get the message out to consumers in regard to your new efforts?
Heineken is furthering the conversation in the retail segment by bringing the brand and bottle to life virtually with an Augmented Reality promotion. Impactful point-of-sale items and displays will remind shoppers in store to pick up the new Star Bottle and download our innovative Heineken STAR App. Through the app, consumers can scan the Star Bottle to be taken to an augmented reality world where they can earn chances at grand rewards around the globe as well as daily instant rewards of retailer cash cards, driving consumers back in store throughout the summer. Through TV, digital and traditional media support, as well as multi-tiered daily prizing and relevant offers, we are helping create a premier summer destination in store for shoppers, starting with the Heineken Star Bottle.
What does the future look like?
The dynamic changes taking place across the category signal that consumers are more willing than ever to consider beer, and specifically upscale import beer, as a viable option when making their beverage selection.
This year, we are excited to add Strongbow cider to our portfolio. Strongbow will be supported by “Golden Hour” influencer events as well as retail display programs that will position the premiere cider brand as the catalyst for a great night, driving trial and mass awareness for this powerhouse brand.