Global 2015: CATEGORIES | BEER
CATEGORY DEFINITION: The beer category includes global and regional brands, which in an increasingly consolidated industry, are mostly owned by four major brewers.
China and Latin America drive volume growth
The beer category increased nine percent in brand value on the strength of consumption in China and Latin America, despite slowing consumption and changing tastes in some mature markets.
Advertising and social media reinforced the salience of major brands with campaigns built around events like the FIFA World Cup. The sheer proliferation of World Cup-related marketing however, meant little meaningful differentiation among brands.
The local brewing, consolidated global operations and centralized marketing communications that helped global category leaders achieve economies of scale and enhance profitability also contributed to flattened brand distinctiveness, (Please see the 10-Year Trends story.)
In addition, major brewers faced several challenges in mature markets, including: the demanding tastes of millennial drinkers; a shift from on-trade to off- trade consumption; and the imposition of government restrictions on marketing.
In response to the millennial pursuit of new taste experiences and product authenticity, brewers either added line extensions to their major brands, or purchased or developed alternative brands, sometimes to compete with craft beers.
A phenomenon in North America and the UK, craft beer is related to a larger global shift toward premiumization. It also reflects an attempt to make beer relevant for more occasions.
Diversity and niches
Latino influence was reflected in the success of two brands with origins in Mexico - Modelo and Corona. Modelo, acquired by AB InBev through its acquisition of Grupo Modelo, entered the BrandZ Beer Top 10 for the first time, while Corona, an earlier AB InBev acquisition, led the import sector in the US, ahead of Heineken, the number one import in other markets.
AB InBev, also the maker of Budweiser, the most valuable brand in the BrandZTM beer category, released a hybrid beer called Oculto, a tequila-flavored beer aimed at
the younger drinker attracted to Mexican brews and amused by the skull on the label. Reminiscent of the Day of the Dead, the eyes glow when the beer is chilled. This entry followed AB InBev’s rum-flavored variant called Cubanisto.
Brewers in many country markets created mixtures of beer and alcohol to meet millennial preferences, which include a sweet palate, an interest in cocktails and the desire to feel the effects of alcohol quickly. Brewers also sought to build incremental growth by converting more women drinkers from spirits to beer.
The brand repertoire of many beer drinkers included both a mainstream brand and a craft brand that connected with their sense of personal identity. Sometimes the newer and smaller craft beers did a better job telling their brand heritage stories than did the major brands, which are, on average 99 years old.
While millennials showed little interest in their fathers’ beer brands, they found authenticity in the brands their grandfathers consumed. In the US this drove interest
in brands such as Pabst Blue Ribbon and Coors Banquet. Coors advertising stressed the provenance of Coors Banquet (being brewed in the Rocky Mountains), and in some of its variations emphasized heritage with the line, “Someone named Coors tastes this beer everyday.”
North America continued to experience the 'wineification' of beer, meaning that a category driven by a few volume leaders is fragmenting into smaller brands, the craft beers, none of which individually controls significant share.
Fragmentation further complicated brand portfolio management. This task is already difficult in the US, because, while in other countries brewers control their distribution, beer brands in the US funnel through independent distributors who may handle hundreds of competing brands.
Light beer retained its popularity in North America, despite fragmentation, because of local taste preferences and because lightness confers permission to indulge. Bud Light and Coors Light led consumption. Bud Light remained the number two most valuable brand in the BrandZTM beer category, while Coors Light entered the BrandZTM Beer Top 10.
The vast majority of beer in the US was sold off-trade, while in the UK, traditionally an on-trade market, consumption continued to shift to home and away from pubs
and restaurants. Having the majority of beer volume sold in supermarkets, often at a discount, intensified the marketing challenge for brewers.
Fulfillment trends in the UK and continental Europe compounded the problem. With the popularity of click and collect, purchasing online and picking up at a drive-thru, the consumer less often experienced point-of- sale brand marketing.
Despite uneven economic growth across Latin America, beer consumption remained strong. Brazil’s Brahma beer, owned by AB InBev, was a World Cup sponsor. The BrandZTM ranking of the Top 10 beer brands includes two Brazilian entries, Brahma and Skol, along with Mexico’s Corona and Modelo.
The major brewers continued to aggressively market their Chinese brands, in some instances with World Cup sponsorships. Two issues impacted beer consumption in Russia: the economic slowdown and the imposition of regulations restricting beer advertising on TV. Regulations prohibiting liquor advertising also moderated beer sales in India.
Meanwhile, SAB Miller continued to expand its brands throughout Africa from its base in South Africa. Driven by growing affluence in some parts of Africa, the global brewers invested in local brands and moved toward premiumization.
Globalization dilutes brand character
The BrandZTM Beer Top 10 grew by 183 percent in Brand Value during the past 10 years, exceeding the growth rate of the Top 100 overall, which grew 126 percent. However, the Beer Top 10 tracked lower than the Top 100 in Brand Power, the BrandZTM measurement of brand equity.
Last year major beer brands invested heavily in media around the FIFA World Cup. Because consumers now see beer brands as less distinctive in character, it appears that the investments maintained awareness without creating points of meaningful difference. The scores for viewing beer brands as sexy declined while the scores for viewing them as straightforward increased.
The global production and communication practices of the major brewers, which yield economies of scale, contributed to the softening of differentiation. Advertising restrictions against associating drinking and sexiness probably influenced this development as well.
Difference is key in driving profitability and growth. The brands that have remained in the BrandZTM Beer Top 10 over the 10-year period have a high Difference score of 106. An average brand scores 100. Brands that dropped from the Top 10 scored only 84 in Difference.
The brands comprising the BrandZTM Beer Top 10 ranking changed only slightly over the last decade. Four of the Top 10 beer brands – Skol, Corona, Brahma and Modelo –have Latin American heritage. Budweiser and Bud Light continued to lead the ranking, on the strength of their global distribution and high ad spending, but they switched order, with Bud Light moving to first place followed by Budweiser. Heineken retained its lock on third place.
Brands exhibit less distinctive character
Consumers now see beer brands as less distinctive in character. The scores for viewing beer brands as sexy declined while the scores for viewing them as straightforward increased.
BRAND BUILDING ACTION POINTS
1 Introduce new products to match trends and reach new drinkers, but don’t tinker with the soul of the main brand.
2 Establish a fast-to-market protocol where multiple new ideas are tested in differing geographies, allowing for a continuous pipeline of options.
3 Refine the portfolio to create trends and reach new drinkers, but efficiencies and boost profitability don’t tinker with the soul of the main with brands that cater to growing brand. market segments.
4 Make beer relevant on more occasions. Growth will come from people choosing to have a beer with a meal rather than wine or spirits. You don’t win and lose drinkers. You win and lose occasions.