Breweries Toast Health in 2005

Beer manufacturers hoping for a strong year may not find the going easy. For one thing, they face increased competition from spirits makers. So much so that some marketers suggest that their competition isn't against fellow brands but the beer category versus spirits.And retail floor space -- to no one's surprise -- isn't growing. Big domestic companies are locked in their perennial battle for space and attention, and, as always, their smaller counterparts with more limited budgets must figure out how to compete.In 2005, to get their feet in the door, onto shelves, and into aisles, freezer cases and the shopping carts of consumers, large and small brewers alike are coming to market with new products aimed at fit consumers, including low-calorie brews and formulations infused with guarana and ginseng. They're also engineering simple-to-assemble displays that please retailers and reduce headaches for their wholesalers and distributors who, due to consolidation, have little time to wrangle with complex merchandisers. And although they're thinking big, they are increasingly aware of the need to market regionally and locally.Heated CompetitionThe fact that competition is fierce amongst breweries doesn't surprise the marketers we interviewed, even in the wake of Miller Brewing's lawsuit against Anheuser-Busch, in which Miller claimed A-B was defacing its products and displays and engaging in deceptive advertising. "I definitely think competition is heated more now than ever, but that's pretty much limited to the major domestic breweries," says Dan Holmes, national retail promotions manager for Barton Beers Ltd., Chicago. "There are always going to be those kinds of fights that go on in-store among the companies; it's kind of the nature of our industry, but I wouldn't say there is a major problem." What concerns him and others, however, is competition from spirits. "It's beneficial to all," Holmes says, "to position the beer category as a whole and to look at how we stand in the overall alcohol category. Spirits and wine have made inroads over the past couple of years, and it's going to be in everybody's best interest going forward to first look at the entire beer category and focus less on the individual quarrels that are going on within the category."Bryan Semkuley, global marketing director for InBev USA, Norwalk, CT, agrees: "I believe it's getting more competitive at retail because the beer companies are competing with one another, but beer is also competing with many other categories within the store environment, as well. Companies are trying to pursue the best executional excellence in all of their point-of-connection activities."As for smaller brewers, the challenge is simply keeping up with the heavy hitters. David Casinelli, chief operating officer of D.G. Yuengling & Son, Pottsville, PA says, "It's difficult because we don't have the resources that the big guys do. They have deep pockets, extensive programming reach, and they can get into complex displays and provide all the support that goes into making the programs successful, including national media campaigns that back some of it up. They have manpower out on the street supporting it and they have strong wholesaler networks. Everybody knows they're good at it."Nonetheless, Casinelli says, "We have a saying here that we like to do the things that the big guys don't like to get their hands dirty with, including micro promotions and more community events where at the end of the day, we may not have sold a ton of beer, but we've connected with a lot of consumers."Bold New ProductsNew Century Brewing's MoonShot is reportedly the first beer with caffeine. A light-bodied, pilsner-style brew, it contains 45 mgs of natural caffeine, which is the equivalent to a half cup of coffee. Rhonda Kallman, founder and CEO of the Boston-based company, says this product was designed to fill an unmet need in the beer industry. "We saw the growth of Starbucks, Red Bull and even Mountain Dew in the soda category, but there was nothing like that in beer," she says. "More and more young adults are drinking the Red Bull and vodka mix. Meanwhile, beer continues to lose share, so we decided to give consumers what they are looking for but only do it with beer."Although the company doesn't provide extensive in-store support to retailers, Kallman says it is easier to walk into a store with some type of support in hand. "I find that what retailers are looking for from suppliers is support in any form. If we don't have a mass advertising campaign, then they want to know what we do have. They know P-O-P costs money, but it gives the brand a personality. It's a good thing to walk in with for sure."The product launched in Boston, Milwaukee and Denver last year in a green bottle with a label featuring a World War II-era picture of a girl on a rocket in front of the moon and the tagline, "The Beer with Caffeine!" Since its launch, Kallman says the company has learned that MoonShot consumers drink a high volume of domestic beer. "I think the bottle is pretty cool, but the reality is that my beer drinkers are domestic beer drinkers and it's an alternative for those consumers who are drinking a lot of beer that want a pick-me-up." The brand was slated to expand to New York City and Austin, Texas, on Memorial Day, and will now be sold in a more contemporary brown bottle.Kallman says her philosophy about P-O-P is less is better. "If we can execute on one or two pieces correctly, that's all we really need, at least at the start. We want it to be innovative and catchy because the brand itself is consistent with that -- it's innovative, it's modern, and it should look new and fresh."Consumers will get a similar effect from one of Toronto-based Molson Canada's newest products, Molson Kick. Launched recently to Canadian consumers, the classic-tasting lager has the essence of guarana, a natural source of caffeine. The product became available in retail stores in a brown glass bottle, and at bars and clubs in a fast-chilling aluminum bottle."This is a true innovation in Canada," says Nathalie Masse, manager, corporate affairs, speaking of the aluminum bottle. "It's the first time we're using this type of packaging. We look for innovation that will set us apart and the aluminum bottle has a sleek look. It's doing quite well across the country -- we're actually having a hard time keeping up with the demand."P-O-P materials focus mainly on the bottle. Posters, banners, pennant strings, tent cards, backlit signs, metal tacker signs, bottle openers and a mini beer fridge were all created to support the launch.Toasting 'Healthy' DrinkersAlthough the low-carb craze has waned in the last year, beer marketers are still inviting carb-conscious consumers to imbibe. However, the focus has shifted to overall health and fitness."The low-carb category is going to be challenged over the next year or so to maintain its relevance in the marketplace," says Lon Schwear, president of TraceyLocke, a Wilton, CT-based global promotional marketing company. "It was perfect for beers because carbs are an important part of the beer profile, but it's a passing trend that has already started to phase out in the food industry where it started."It's more about the wellness proposition," he adds. "Everybody is health-conscious and image-conscious. Consumers are trying to be better about how they approach things that are more of a sin than a salvation. The light beer category is still a very viable and very robust opportunity, and will continue to be an important part of the industry, just as diet sodas are in the soft drink industry."While total beer consumption was up only 0.7% to 2.8 billion 2.25-gallon cases in 2004, sales of light beers rose 3.9%, according to reports from Adams Beverage Group, Norwalk, CT, and marketers hope it doesn't stop there. Coors' Aspen Edge, Anheuser-Busch's Budweiser Select and Beck's Premier Light are some of the newer brands that offer low calories and low carbs, similar to successful brands Michelob Ultra and Rock Green Light.The malternatives category doesn't seem to be the buzz anymore, either. "We saw several new products enter the market in 2004 that did relatively well, but they cannibalized sales from those products that were introduced the prior year," says Tiziana Mohorovic, research analyst for Adams Beverage Group, adding that the segment was down 4.6% overall from 2003.When Labatt USA and Beck's North America joined forces last September and became known as InBev USA, the company was enjoying a successful first year for its Rock Green Light, which finished as the number two low-carb presented brand in the marketplace for 2004. But when the company developed a similar product under the Beck's umbrella, the marketing team chose to market it a bit differently.Beck's Premier Light launched a few months ago with a stronger emphasis on its low-calorie delivery (only 64) as opposed to its low-carb delivery. "Health and fitness will continue to be an ongoing level of consciousness for our consumers," says Semkuley. "We learned through 2004 that low-carb as a communication tool was suffering a bit from almost overexposure, but caloric communication has been around for a very long time and seems to be perceived as much more substantive and maybe less trendy than low-carb."For its initial launch, the company created "a lot of paper point-of-sale materials, specifically communicating the introduction of the product and also focusing on its low-cal delivery" for in-store placement, says Semkuley. More semipermanent pieces were created for on-premise environments, including tap handles, draught communication and signage. Plans are also under way for a program of family displays that will merchandise Premier Light with Beck's pilsner. When Adolph Coors Co. (now Molson Coors Brewing Co., following a merger of equals between Molson Inc. and Coors in February) launched Aspen Edge last April, the focus of its merchandising was also targeting fit consumers."The carb craze has kind of hit a plateau and broadened out, and it's more around overall fitness and people who watch carbs as part of a number of different types of diets," says Ted Glauth, director of merchandising solutions for the Golden, CO-based Coors Brewing business unit. While the company's newest P-O-P mentions the beer's low-cal, low-carb profile, it also focuses on providing consumers a point of difference. "A lot of our P-O-P is product-based right now. We're trying to position ourselves in the category as a product that doesn't taste like a low-carb beer. Our latest thrust has been product comparisons based on strong color and flavor characteristics." Not everything can get placed, however. "There is such explosive growth, and we aren't accordions; we can't expand and contract based on new products, as good as they might be," says Jeff Lenard, director of public affairs for the National Association of Convenience Stores (NACS) in Alexandria, VA. "The real trick for our channel is to manage what's in the cooler doors, and if a new product comes in, something else has to go out. It's challenging to carry everything that everybody wants in a limited space."Simple Gets Set UpThe beer marketers interviewed for this story indicated that although they would like to push the envelope on innovation and create upscale pieces similar to those of their counterparts in the wine and spirits industries, yet such retail realities, as well as wholesaler and distributor consolidations are making it difficult."As far as P-O-P goes, simplicity is winning right now," says Holmes. "In terms of innovation, we're actually fighting a war against ourselves because a lot of the wholesalers are down to just two distributors within a given territory. The big fight is not at the store level, but often in the merchandising room or in the warehouse cage itself. Wholesale merchandisers' time is usually stretched, and the simplest, most time-efficient pieces are the ones that are winning the fight.""It's always a challenge getting stuff in the store," agrees TraceyLocke's Schwear. "There's a lot to do in a day for the route drivers, and getting them to always get pieces up and keep them there has been a challenge -- and it's not shifting in a positive way.""I think a large percentage of the P-O-P that is invested by these breweries doesn't get used," says Yuengling's Casinelli. "We're finding that reps are overworked in a lot of markets today. They don't have enough time to be creative and build the displays. They want things that are simple, easy and fast. If I come out with a display that involves an hour and a half to put together, it's not going to get done."Yuengling is focusing on outdoor fun this summer, with a beach/backyard theme. "It's kind of about our family meets your family," says Casinelli, adding that the P-O-P, signage and display enhancers created will feature "great graphics and good creative, but they're simple things."Also available will be an Adirondack chair, with a "Jimmy Buffet-Margaritaville" type feel to it, Casinelli says. "It's very wild, eclectic and cool, but we designed it to basically come assembled because if a rep has to go in with a hammer and wrench, it isn't happening. We want pieces that are impactful because if the retailer is excited about it and it's useful, then sales reps will gravitate toward it to keep their customer happy."Retailers want our brand to stand out in new and innovative ways," he continues. "At the end of the day, retailers love it when we can bring value to them. Everybody wants to sell more products and when we do, we all make more money."Semkuley says InBev is using "refrigeration units, backbar presentation items or unique serving buckets" in an attempt to present the brands in a more engaging manner to the consumer. "We have a number of those types of pieces that are in the final stages of development and ready to hit the market for the summer time period," he says."There is the need and desire to keep things fresh and topical as it relates to occasion-based marketing," Schwear says. "That alone makes it very difficult to invest in expensive P-O-P that is only going to stay up for a couple of weeks during a key promotional time period. The beer industry is all about being relevant, being fresh, and creating an in-store image and retailtainment that pulls consumers in." (Business Trend Analysts' report states that the summer and holiday periods are the most active for beer advertising.)Think Globally, Market LocallyCustomizing P-O-P is helping marketers to maintain this relevance and freshness. Heineken USA's regional marketing personnel often will take extensions of national programs and bring them down to a local level, says Robert Sassano, merchandising manager for Heineken and Amstel Light. "If there is a local event somewhere where they can tie in one of our national programs, they will do a local extension and sometimes create their own P-O-P to fit that program. Whenever we can tie in to a local event and gain more floor space with our P-O-P, that's a great thing." "So much more emphasis is being placed on that from a consumer noticeability standpoint," agrees Barton's Holmes. "Maybe it's down to the regional level, maybe it's down to the city, or maybe down to the account, where legal," he says. He notes that this might be "two, three or four times more expensive," but says "we're getting a perceived value from both our field sales personnel and our wholesalers that that road is worth going down."Additionally, Holmes says, "there's an increasing amount of P-O-P that's being created on a smaller level to fit the specific needs of our customers." The company, he explains, will sometimes go out of its way to produce case cards that already have price points imprinted on them, for example."Retailers are demanding more of this in an effort to make sure their stores maintain a clean look," he says. "It used to be the merchandiser grabbed a case card and a magic marker and headed out for the day." Now, he says, Barton provides more preprinted materials.Sending a Responsible MessageSince companies began participating in the industry-wide "Drink Responsibly" campaign, the overall public has a 20% more favorable opinion of the beer companies, according to a report published at the end of 2003 by Commack, NY-based Business Trend Analysts.More and more companies are including logos and taglines on product, packaging and P-O-P in an effort to curb teen drinking and binge drinking. "It's a corporate responsibility for these companies -- the necessity to perpetuate that as an industry while still maintaining the fun of the brands," says TraceyLocke's Schwear. Dan Tearno, vice president of corporate affairs for White Plains, NY-based Heineken USA, says, "The beer industry has been involved with responsible consumption activities for probably 40-plus years. The U.S. Brewers' Association was talking about beer as the beverage of moderation back in the '40s, and that's quite a bit different from any other industry, including tobacco. We didn't do this because we had to; we weren't required by law or court settlements. The beer industry has been doing this because it felt it was the right thing to do."Heineken's website, www.enjoyheinekenresponsibly.com, and the 888-Heineken number, now appear in a green and white rectangular box on the labels of all the company's 12-ounce bottles and cans, 16-ounce cans and 24-ounce bottles. The site has been live since last August. "This is a responsible consumption website that is very straightforward, very non-judgmental and that we feel provides information about what's good and bad about alcohol and the effects alcohol can have on an individual," Tearno says. "We're the first beer company in the world to have this type of logo on bottles and cans."The company is in the process of finalizing how it will use the logo on its international merchandising, says Tearno. "We want to make sure that message is provided properly on all P-O-P. We have so many different types of executions, and we want it to be as effective as possible on each one." The packaging, he notes, is a good start. "We now have more than one billion messages out there because of the number of containers we sell."Barton Beers recently added the tagline "relax responsibly" to all merchandising pieces for its Corona brand. A corresponding image is being incorporated "into all of our P-O-S, outdoor and print advertising," says Holmes. While the company began adding a "Please drink responsibly" tagline to everything it produced across all brands starting last year, "relax responsibly" was created this year in an effort to step up the company's responsibility messages.Similarly, InBev's version, "Always enjoy responsibly," is being instituted on all newly created materials in the U.S., says Semkuley. "We wanted to continue to put ourselves in the best light from a corporate responsibility perspective, and this is another way to ensure that we are communicating with our customers in the most responsible manner."

Breweries Toast Health in 2005

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