6 Surprises From Heineken USA’s 2017 Distributor Conference
By Steve Holtz on Oct. 30, 2017DALLAS -- As a branch of one of the largest beer brewers in the world, Heineken USA finds itself in an intriguing position in the modern beer world. Imported beers make up the most successful segment of the beer category in the United States—up double digits in all channels, including convenience stores—but consumers are increasingly embracing “local” as a primary selling point, as evidenced by the growth of craft-beer sales across the country.
The challenge for Heineken USA (HUSA) is how to meet those trends in the middle to boost sales across the company’s portfolio.
“We play in the high end, the part of the business that is growing,” said Ronald den Elzen, president and CEO of HUSA, during the Heineken USA National Distributors Conference. “This market is changing; the sheer amount of smaller brands that are growing is amazing.”
HUSA’s volume growth declined by midsingle digits during the third quarter of 2017, according to an earnings report, and the company is anxious to get back to its days of double-digit growth in the U.S.
It’s convinced it can do it with the products in its parent company’s portfolio today.
“Today’s consumer isn’t asking for something new. They’re asking for something that is locally relevant,” den Elzen said.
And with more than 250 beer brands from around the world in parent company Heineken N.V.’s portfolio, White Plains, N.Y.-based HUSA is anxious to bring relevance to its brands and its consumers.
Here’s a look at some of the highlights from the conference held in Dallas Oct. 24 and 25 …
1. Five Points
HUSA’s most adventurous play is with its new Five Points Trading Co. subsidiary, a branch of the company established at the beginning of this year and dedicated to incubating popular global beers in the United States.
One of its first efforts was to relaunch Singapore's Tiger Beer in Asian neighborhoods in the U.S.
Five Points General Manager Chas Littlefield used Haitian beer Prestige Lager as an example of how the new marketer will operate on an even smaller scale.
It’s difficult to find Prestige in the United States, but it’s nearly synonymous with beer in Haiti. And it will generally stay that way, unless you live in a heavily populated Haitian neighborhood in the U.S. Similarly, for expats from Britain, it might be Newcastle Brown Ale, for Jamaican immigrants, Red Stripe, etc.
“We can drill down not just to the city or even the ZIP code. We can get down to the block or the exact address and really target consumers that grew up with that brand,” Littlefield said. “2018 is going to be our breakout year [as we] offer a taste of home” from countries around the world.
Den Elzen said Five Points is a significant new strategy for HUSA.
“If we can take these local brands and make them locally relevant [in the United States], that’s important,” he said. “We’re not going to sell Prestige in Dallas [or other markets] tomorrow or even next year. … But Prestige is the second-biggest brand in Miami with only one SKU."
2. Tecate
The Tecate beer brand has become nearly synonymous with professional boxing in the United States as an exclusive sponsor of fight night. As a result, the brand has grown 11% year-to-date through Sept. 30, 2017, according to Nielsen data.
Most of that growth comes on the back of Tecate Light, which grew nearly 40% in c-stores in 2016, according to IRI, Chicago.
“Tecate Light is the fastest-growing light in the U.S.,” said Esther Garcia, vice president of the Tecate brand. “We are bringing growth to a category in decline.”
With a goal of doubling its sales through 2020, HUSA is taking the Tecate beer brand—original and light—national in 2018 and growing its media spending by 50%.
In 2016, Tecate was the eighth-best-selling imported beer in convenience stores, down 7% in case sales, while Tecate Light was No. 11, according to scan data from IRI.
3. Dos Equis
Quinn Kilbury, senior director of the Dos Equis beer brand, said HUSA is going to bring fun back to beer in the brand’s effort to “get back to double-digit growth.”
Dos Equis was a darling of beer scene for a few years, capitalizing on the popularity of its Most Interesting Man in the World marketing campaign and helping drive the imported beer category to new heights. But in recent months, sales growth has slowed, and now HUSA sees fun as the way back on top.
“As a category, we are giving fun away to spirits,” Kilbury said. “There are a lot of beers out there, but typically they’re all in the same place [in their marketing]; they’re embracing relaxation.” With a new ad campaign—much of which can’t be described here by agreement—Dos Equis wants to become the fun premium-import brand in the U.S. market.
The brand also will underscore beer-cocktail opportunities for Dos Equis, such as the Dosarita and Michelada.
In 2016, Dos Equis was the fourth-best-selling imported beer in convenience stores, growing 5.5% in case sales, according to data from IRI.
4. Heineken
The Heineken beer brand will take a three-pronged attack to get its sales growing again. Total brand sales were flat in the first half of 2017, according to Nielsen data, on Heineken Lager’s 1% growth.
“Heineken Light is hurting,” said Felix Palau, senior vice president of the Heineken brand.
To get back on track, the brand will focus on:
On-premise: “We have let [A-B’s] Stella grow for too long,” Palau said. The company will focus on “cool” bars to get the brand into the hands of millennial drinkers.
Innovation: Heineken recently extended its brand with the launch of a limited-time, on-tap-only brew called H41. First in a new Wild Lager series, the line of familiar beers is made with a yeast found in nature. Other recent innovation includes the cooler pack, a 12-pack box designed to hold ice, and the magnum bottle, a limited-edition 50.7-ounce corked bottle “to share with friends and family on the gift list during the season of giving.”
Soccer: HUSA will maintain its multiple soccer sponsorships, which reached nine teams this season with the addition of the new Los Angeles FC Major League Soccer team, which will join the league in 2018.
In 2016, Heineken was the No. 3 best-selling imported beer in c-stores, up 1.2%, according to IRI data, and Heineken Light was No. 17, down 20%.
5. Strongbow
Strongbow wants to capture the wine drinker.
With the cider category in decline (down 11.5% in c-stores in 2016, according to IRI), Strongbow believes it can boost growth by stealing share of stomach from the wine category.
“There are more than 35 million nonbeer drinkers that we can reach,” said Jessica Robinson, vice president of portfolio brands for HUSA. “We can’t let these wine drinkers continue to steal our share.”
To do that, the cider brand will launch a rose-flavored hard cider in spring 2018, the first of what could be several wine-inspired ciders that offer easy drinkability and portability, and complete the brand’s variety of a sweet-to-dry portfolio of flavors and styles.
To get the drink in front of consumers, Strongbow will repeat its minican campaign. In 2017, Strongbow placed 5 million four-packs of 5-ounce cans in stores for a $1 introductory price, encouraging consumers to try the brand. For 2018, HUSA will offer 7 million of the four-packs, including the new rose style.
In 2016, Strongbow was the fifth-largest cider brand family in c-stores, with sales up 2%, according to IRI.
6. Amstel
In 2018, HUSA’s Amstel team will pit its new Amstel Xlight beer against Anheuser-Busch’s Michelob Ultra and Constellation Brands’ new Corona Premier, touting the low calories but full flavor of the brew, the company said. Xlight is HUSA’s first entry into the lifestyle beer segment, one intended for active beer drinkers but not necessarily those that live in the gym.
“We are looking to be the first fitness beer for the everyday consumer,” said Robinson.
Fifty-three million U.S. consumers drink domestic light beers, and Robinson believes Xlight, with its full flavor and only 2 carbohydrates and 90 calories—fewer than key competitors Michelob Ultra and newcomer Corona Premier—can capture a good share of that audience.
Xlight, launched in March, is currently available in three states: Arizona, Massachusetts and Texas.