Beer Going Fiat?
Craft brews, some imports show growth as big brands aim to boost their bubbles.
Is beer losing its fizz? Depends what you’re drinking.
Total beer sales in U.S. food, drug, liquor and convenience channels surpassed $27.4 billion for the year ending Jan. 7, according to Schaumburg, Ill.-based Nielsen — just 0.6 percent over last year’s sales. Among the subcategories, light beer sales fell 1.2 percent, while sales of regular beer rose 2.7 percent.
In fact, most of beer's subcategories went flat or sagged over the past year, Nielsen data shows. A few notable exceptions: Sales of craft beers jumped more than 17 percent, to more than $2.15 billion, capping three years of steady growth. Among imports, Belgian beers did best, experiencing a 25.5 percent increase in sales, followed by Asian imports (up 8.3 percent) and Australian imports (4.1 percent).
Even the country's major brewers can't ignore craft beer's strength, despite its being the smallest beer subcategory. "Craft beers continue their healthy momentum," acknowledges Ross Lipari, VP of sales-grocery at Chicago-based MillerCoors.
Craft beer sales are being driven by "consumers' thirst for rich, unique flavors and beverages that are not mass produced," according to Chicago-based Mintel's December 2011 executive summary on the beer category. As such, larger brewers have been getting in on the game. "We're working closely with retailers to grow the size and value of their beer categories by differentiating craft in a way that aligns with their retail positioning and strategy," Lipari says. For example, MillerCoors has helped grocers integrate craft beers like Leinenkugel's and Blue Moon into grocers' produce aisles to merchandise beer and produce in a compelling manner.
"One of the most successful grocery retail solutions is also one of the most intuitive: the pairing of Blue Moon and oranges," Lipari says of the Belgian wheat beer that pairs well with the citrus fruit. "Grocers that have merchandised Blue Moon and oranges together — even without reducing price and margins — have experienced exceptional growth not only on the beer, but also oranges."
Beer sales in supermarkets totaled $8.3 billion in 2010, with category growth of 0.5 percent, Mintel reports. Some chains, such as Wegmans, Jungle Jim's and Giant Eagle, are giving the category a gourmet twist by emphasizing food pairings and beer education.
Among craft brewers, Sierra Nevada Brewing Co. is focusing on increasing variety to help create space at retail and take advantage of new growth opportunities such as seasonal beers and high-end specialties. "Retailers have plenty of space for the hot new up-and-coming craft brands, but many aren't positioned to take advantage of them," says Bill Manley, product and communication manager at the Chico, Calif.-based craft brewer, "because they are working on outdated category paradigms that don't let them build the proper assortment for their local markets."
To usher in the release of its first canned beers, Sierra Nevada will unveil its "Where Can You Go" campaign to highlight the portability and mobility of canned craft beer. "The program will have a strong impact at retail with in-store displays, but works primarily in social media channels and encourages consumers to share photos of themselves enjoying our beer in an outdoor environment, in exchange for prizes," Manley says. "All across the board, there seems to be a trading-up in terms of flavor and intensity," Manley adds, noting that India pale ale (IPA) is poised to become the top-selling craft beer style sometime this year; Sierra Nevada's Torpedo Extra IPA is the No. 1 IPA in the country, with sales up 54 percent last year.
Optimizing Growth
But successful retailers recognize the value of having a balanced approach to the beer category, asserts Mike Potthoff, VP large format at St.
Louis-based Anheuser-Busch (A-B).
"They understand it's about having the right brand mix for their shoppers. Winning retailers are focused on the items that are driving incremental sales — not just more variety of brands," he says, noting that less than 7 percent of the craft SKUs represent 80 percent of the dollar volume in the craft segment. "Retailers need to be careful they don't overlook revenue and profitability in premium and value beer segments."
Potthoff says it's important for retailers to "focus on how the beer looks and feels to the consumer in the store — and differentiate their store from their competitors'. It's critical — now more than ever — that retailers strategically use their floor, refrigerator, display and ad space effectively to make an impact."
A-B advises retailers on how to optimize their beer cooler offerings and focus on products that are contributing to volume and growth. "Margins erode when slow-velocity beers tie up refrigerator cold space," he says. "Every new SKU has to earn its space with criteria that these SKUs bring incremental sales via velocity, new shoppers, differentiation or come with support."
Looking to the Cellar
Mintel forecasts overall beer dollar sales to grow 27 percent in current prices and 16 percent in inflation-adjusted prices during 2011-16.
"We must offer the consumer new choices across various segments," A-B's Potthoff says. "In addition to new liquids, we also need to continue to develop packaging innovations."
Sierra Nevada's Manley says people are looking for high-quality products with a great story and an authentic feel. "Retailers are still focused on the global mega-brands, but are missing significant growth opportunities with consumers eager to try new, high-end, flavorful beers," he says. "Using the bold and unique flavors in high-end beer and pairing them well with new and adventurous flavor in food offers advantages in both the food and beer categories."
MillerCoors' Lipari suggests beer aisles need to be more like the wine department. "The most progressive grocers are putting wine, spirits and beer aisles as close together as possible, and even cross-merchandising beer in wine aisles and wine in beer coolers," Lipari says. "There is an enormous opportunity for grocers to elevate their beer aisles by making them more inviting, engaging and educational."
One of MillerCoors' shopper focus groups, Lipari notes, described grocery beer aisles as "sterile" and "morgue-like" when they should be "fun, cool and engaging."
"Winning retailers are focused on the items that are driving incremental sales — not just more variety of brands."
— Mike Potthoff, Anheuser-Busch
Heineken Promos Pervade Portfolio
Heineken has extended its 15-year partnership with the James Bond franchise with a global marketing campaign to support the launch of the upcoming 23rd Bond film, "Skyfall."
Launching in September, the program will include a wide range of promotion and activation rights in and around the film, including the participation of actor Daniel Craig. It will also leverage global relationships with Facebook and Google to ignite digital conversations about the film consumers.
This year marks the 50th anniversary of the Bond franchise, providing Heineken with the opportunity to engage consumers in more than 170 countries where the beer is marketed.
Among other Heineken brands, Newcastle Brown Ale has released its fourth limited-edition brew, Founders' Ale. Available nationwide for a limited time, this classic bitter ale honors the heritage of Newcastle's five founding breweries and marks the expansion of all limited-edition brews — Founders' Ale, Summer Ale, Werewolf and Winter IPA — which are now available nationwide on a rotating basis throughout the year.
Newcastle Founders' Ale will be available nationwide through April in 6-pack and 12-pack bottles. In addition to Heineken and Newcastle, White Plains, N.Y.-based Heineken USA Inc. markets the Amstel Light, Buckler, Tecate, Dos Equis, Sol, Carta Blanca and Bohemia brands.
How to Keep Beer Connections Bubbling
The path to influence purchasing decisions is intensifying as shoppers expect brands to act more human and be authentic with their intentions. Instead of focusing on how to genuinely engage with consumers, some beer marketers are pushing stale tactics in an attempt to temporarily capture attention.
How can marketers break through this white noise and connect authentically?
For marketing experts' three tips to help you stand out from the crowd, read "How to Keep Connections Bubbling with Beer and Spirits Consumers" at www.progressivegrocer.com/top-stories/ expert-columns/.