Is imported beer being taken for granted?
In the shadow of media darling craft beer, this larger and faster-growing beer segment deserves its due.
Sure, craft beer is having a great run. The high-end brews, as a subcategory in c-stores, have grown an impressive 9% in volume sales and 12.4% in dollar sales this year alone, according to IRI figures. This is on top of 26.5% growth in 2015.
But imported beers—especially those from Mexico—have quietly become the bigger story. No, imports don’t deliver the small-business angle, the intriguing flavors or the David-vs.-Goliath allure of crafts.
But imports are growing faster on a larger base than craft beer without the same word-of-mouth, ultra-local promotion, making them much more appealing to retailers.
What’s the secret? It’s a combination of moderate flavors, smart packaging, targeted marketing and the allure of the unknown.
Hitting the Flavor Mark
“There’s a sweet spot that those beers are capturing,” says Tom Fox, beer retailing expert and partner with CM Profit Group, Troy, Mich.
According to Fox, there’s a middle ground between consumers’ desire for more flavor in their beer and the heaviness or bitterness of craft IPAs (India pale ales), porters and stouts.
“There are people who want something more but they don’t want to go up to the heavier craft [beers],” Fox says.
Imported beers fit that category to a T, running an intriguing gamut “from light and easy-drinking/sessionable to somewhat more assertive,” says Donna Hood Crecca, associate principal for Technomic, CSP’s sister research firm. These are attributes that “pair well with spicy foods that are trending” without overtaking the taste buds, she says.
“Consumers in general are interested in imported beers, and the Mexican beers are very appealing due to flavor profiles,” she says. Manufacturers have also made it easier to enjoy Mexican beers with a wider variety of packaging and package sizes.
Take Corona Extra, the star of the subcategory. The lager—owned by Anheuser-Busch InBev but marketed in the United States by Constellation Brands' Crown Imports, Chicago—was once synonymous with clear bottles, an attribute that made it stand out on the shelf among imported beers, most of which are packaged in brown or green bottles.
Corona was introduced in cans—including a 24-ounce single-serve size—in 2000, making it more accessible to the characteristic Budweiser and Miller drinker. And the recent redesign of the cans just last year to an attention-getting white can paid additional dividends.
“Mexican beers are very appealing due to flavor profiles.”
“Corona cans represented only 2.5% of volume prior to launch of our newly redesigned can,” says Mike McGrew, vice president of communications for Constellations Brands’ beer division. “Now, cans account for about 6% of our Corona volume, more than doubling the volume for this package in a year.”
The new can has seen significant gains in convenience stores, McGrew says, and there’s reason to believe more growth is expected. “We’ve made great progress, but competitors have a can mix around 15% to 20%, so we believe there is significant opportunity for growth for the Corona Extra can,” he says.
Constellation Brands also has U.S. rights to Modelo Especial beer, which has grown a significant 22% in volume sales in c-stores so far this year.
Marketing Smart
Corona also has found a sweet spot in its advertising, making the brand synonymous with escaping the day-to-day rut with its “vacation in a bottle” theme.
And Constellation’s not alone in creating alluring campaigns: Heineken USA’s 9-year-old Most Interesting Man in the World campaign nearly tripled its Dos Equis business.
This year, when Dos Equis sent The Most Interesting Man to Mars as his final most-interesting adventure, sales of the beer in convenience stores grew 5.4% in volume. While it’s a slowdown from 2015’s 13.3% growth, according to IRI, the brand is nonetheless the fourth-largest import beer in convenience stores. Some chalk up the tremendous growth in 2015 to the Most Interesting Man campaign hitting its zenith.
And Heineken USA’s Mexican import bench is deep.
In recent years, as the brewer watched sales of its namesake beer begin to slide (volume sales in c-stores were flat during the first half of this year), the company committed more dollars and attention to its other Mexican imports: Tecate and Tecate Light.
The brews have embraced boxing and soccer sponsorships, two sports with strong Hispanic followings. Cans, including single-serve, 24-ounce cans, also became part of the portfolio. During the first half of this year, Tecate Light sales have grown an amazing 54% in convenience stores, while Tecate volume has dropped off 6.2%.
“Since 2012, Mexican import [beer] is the only segment in the category that has shown consistent double-digit growth year over year” in all channels of retail, says Andrew Katz, vice president of marketing for Dos Equis. This year, Dos Equis added a college football sponsorship that should further increase its demographic reach.
These brands carry an “imported cachet and intriguing marketing campaigns,” says Crecca of Technomic.
And the beer companies know it. MillerCoors CEO Gavin Hattersley acknowledged the hole in his company’s portfolio during an industry event this past spring: “We don’t have [a Mexican import]. That’s a reality, and we have to deal with it. … We’re going to play with the brands that we have.”
Demo Dive
Demographic preferences are also driving growth in the import subcategory. “Hispanic consumers favor Mexican imports and are an important demographic for the beer industry,” Crecca says. “Younger consumers engage with imports, too, and Mexican brews are highly appealing to them.”
Nearly 60% of Hispanic consumers in Technomic’s 2015 BeerTAB Report said they drank beer on their most recent occasion of alcohol consumption. And of those, 46% said they drank an imported beer, the highest percentage of the ethnic groups surveyed.
So what advice would Fox of CM Profit Group offer to any convenience-store retailer not readily in the import-beer game?
“Oh, that’s a mistake,” he says. “Sure, you need to know your customer demographics, and you can’t ignore the premium-beer category because it’s such a large part of the business. But if you don’t have a facing or two of the best-selling imports—whether it’s 12-packs or singles, or whatever works best in your store—you’re probably missing a pretty major opportunity.”
One at a Time
The beer companies’ focus on single-serve packaging is paying off—not just for imported beers, but also in all subcategories, according to retailers.
“We are dominating as an industry the singles category,” says Dana Sump, senior category manager for Casey’s General Stores, Ankeny, Iowa. “It’s a great way to sample new craft items to customers who aren’t willing to drop money for an entire package with the chance of not liking it.”
Lundy Edwards, general manager of retailer Forward Enterprises in Standish, Mich., says he gives a minimum of two cooler doors (approximately 40% of the beer space) to single beers. “Single beer sales are even more important in the beer category,” he says. “Today, single beers represent almost 60% of the SKUs sold in our beer category.”
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