Steve Ward, vice president of national accounts for HEINEKEN USA, says retailers are winning with an offering of upscale beers.
What are the latest consumer trends within the beer category?
Steve Ward: Today’s trends are largely driven by the growing and increasingly influential Millennial and multicultural consumer base. By 2023, Millennials will represent nearly 40% of Americans aged 21 and older, and by 2050, the majority of these consumers will be multicultural. These consumers tend to equate cost with quality and prefer to shop the upscale beer segment where quality, variety and image play a key role. Within upscale, imports are uniquely positioned to benefit from the strong growth of the multicultural demographic segment. Multicultural consumers spend more on beer and almost 40% more on imports, the highest of all segments.
If upscale products are the future, what is HEINEKEN USA doing to gain consumer awareness, sales and profits?
HEINEKEN USA is dedicated to winning in upscale through upscale, badge brands. Our portfolio has national, mass appeal, as well as higher loyalty and repeat purchase rates. Demand for upscale imports is growing and while the lifecycle of craft brands is relatively short, badge import brands are positioned for steady, sustainable growth over the long haul. In the past three years, imports have contributed similar volume growth as crafts, and do this more efficiently with fewer SKUs. With breakthrough aspirational and experiential campaigns on a national level that crafts cannot reach, HEINEKEN USA’s brands keep consumers coming back for more. From jetting off to a new adventure through Heineken’s Departure Roulette to meeting the Most Interesting Man at Dos Equis’ Masquerade event and finally sitting with the latest celebrity trendsetter at a Strongbow Golden Hour gathering, consumers are engaging with our brands in memorable and buzz-worthy ways.
What key steps can retailers take to maximize beer category sales and profits?
Retailers should focus on optimizing variety versus duplication to drive incrementality—how much an added item truly grows the category without stealing sales from other category brands. The more unique and differentiated an item is versus items already on the shelf, the more incremental volume that item will add to the assortment.
Retailers can also protect the cold box by merchandising fast turning brands for the grab-and-go shopper and create a well-merchandised warm section to offer variety and occasion-based packs. A well-merchandised warm section adds more variety and interest for shoppers and reduces out-of-stocks on key packages. Finally, retailers can optimize features by leading with high reach, high lift brands such as Heineken and fill in with high growth and regional brands.
What are the advantages for retailers focusing on upscale products?
HEINEKEN USA’s proprietary Growth & Profit Solutions (GPS) research clearly demonstrates retailer’s ultimate path to category growth is with upscale. Upscale shoppers shop more frequently, generate larger basket rings during their shopping trips and provide retailers more true profit than any other segment. Among the retailers that are growing the beer category, 93% of them are leading with upscale and growing upscale faster than mainstream. What is more telling, however, is that 18% of these retailers are growing the category with upscale alone since their mainstream segment continues to decline, suggesting that the clearest path to category growth is by leading with upscale beer. Upscale 12-packs, such as Heineken and Dos Equis, are very efficient from a space optimization perspective and are great to optimize assortment.
Are beer sales seasonal and if so, how should it be handled by retailers?
There are several key beer consumption periods during the year, where beer sales spike, such as Memorial Day, Fourth of July and Labor Day to name a few. In the weeks leading up to these key holidays, retailers need to optimize variety and lead with high lift, high reach brands that will help drive sales and growth. Upscale imports do particularly well during the winter giving season as consumers invest a little more for holiday gatherings and gift giving. HEINEKEN USA’s portfolio includes three of the top 10 selling upscale beer brands during the key beer consumption holidays. Our brands not only elevate the consumer’s experience, they also generate more retail traffic, repeat purchase and incremental profits for retailers.