Heating Up The Cooler

Import beers are steadily climbing out of a slight slump as the economy continues to recover

As the economy was thrown a curveball back in 2008, many people began to re-evaluate their spending habits. This carried over through 2009, with some optimism showing itself at the cash register in 2010, and these changes hit just about every category retail channel, and import beers were no exception.

However, the fluctuation in the import beer segment may date back even further, specifically to economic instability in the 1990s. According to Steve Ward, vice president national accounts for Heineken USA, since the 1990s import brands have felt the effects of the economy more than domestics.

“Our customer research reveals that import brands tend to have a larger multicultural consumer base than domestic brands,” he explained. “Together, African American and Hispanic consumers make up 44 percent of import volume as opposed to 22 percent of domestic volume. Since the '90s, these groups have been strongly impacted by the economy, driving the sensitivity of the import market.”

But the market may be turning a corner. Ward said that while overall beer volume has been flat, there has been growth in the upscale category, which is composed mainly of imports and craft beers. Citing Nielsen research, he explained the overall category growth accelerated 1.4 percent in 2010 compared to 2009. This improvement was driven, in a large part, by imports which saw an eight-point increase in growth trends versus 2009, Ward added.

On the retail side, convenience store operators are also reporting improvements in import beer sales. According to Jenny Love Meyer, director of communications at Love's Travel Stops & Country Stores, for 2011 year-to-date, Stella Artois is up 29.6 percent and Beck's Beer is up 53.5 percent, both on a small base. Overall, import beer accounts for 3.8 percent of beer sales at the company's more than 140 travel stops and convenience stores, she said.

Love's has actually seen sales of its import brands grow year over year since 2008. As for the hot import sellers, Meyer explained that Stella Artois followed by Beck's Beer have seen the largest increases. “But Corona is the top in overall volume. Corona is over half of our import volume,” she said, adding that import sales are typically stronger in more concentrated urban areas and less so at locations in more rural states.

Certified Oil, with locations spread across Ohio, West Virginia and Kentucky, also noticed positive movement in the category. “Over the last 12 weeks we were up low single digits in units but up double digits in dollars,” said Wayne Wills, vice president of merchandising for Certified Oil, adding that the category is positive compared to lower sales in the past two years.

Overall, though, Certified Oil locations have never really expanded into many imports because the stores have small beer sets, Wills noted, explaining it also didnEt cut back as the economy appeared to take its toll on the segment. “Mainly we carry the larger brands that hold up over the years, like Corona, Heineken and Labatt's,” he said.

One key to upward movement in the category may be in-store promotions, with both supplier and retailer working hand in hand.

For example, this year Heineken introduced new aluminum cans featuring raised ink printing technology that casts a visual impression of condensation on the outside while making it more pleasing to grip. Research has shown that the new can package is perceived as unique, sophisticated, and has an overall positive effect on the quality and equity perception of the brand, said Ward.

“Along with the redesign of our cans, we also have replaced the 2x6 fridge pack with a new 3x4 suitcase. This will make our packages easier to stack and display at retail,” he explained. “Heineken will support the national launch of its new can package with advertising including print and 30-second digital executions, as well as merchandise and point-of-sale [POS] including can dispenser units, price cards, cooler decal and door handles, tuck cards and case stickers.”

In addition, Heineken believes it is important to promote directly from the cold box in a convenience store and that the company provides cooler specific POS such as wobblers to communicate the message.

Much of the support Love's Travel Stops & Country Stores gets from suppliers like Anheuser-Busch (whose products include Stella Artois and Beck's Beer) would have been customized to any beer brand, not just imports, and may include beer racks, neon signs and other signage like sign-making templates, according to Meyer.

As for looking into a crystal ball, Ward said Heineken USA sees 2011 trends continuing to improve like they did in the second half of 2010, driven by its lead brands like Heineken and Dos Equis. Ward also predicts the Millenniais will continue to be a driving force behind the trend as they embrace more multicultural diversity in the United States. “Our brands resonate with these targets and we have the initiatives in place, including highly relevant social media platforms, to benefit from this trend.”

Bottom Line

• 2011 year-to-date sales of Stella Artois is up 29.6 percent, on a small base, at Love's Travel Stops & Country Stores.
• Heineken USA saw its 16-ounce can growth more than double in 2010.
• Millennials' drive for multicultural diversity could push the import beer category even higher in 2011.