Hopping from Beer to Beer

Growing up, thirsty Millennials could walk into a grocery store and grab anything from a classic cola to a grape or candy-flavored beverage. Now, drinking age Millennials expect the beer section to offer that same variety of options they are used to seeing from other beverage categories.  

Ray Faust, chief sales officer at White Plains, N.Y.-based Heineken USA, calls modern consumers’ thirst for options “flavor promiscuity,” and says the trait is on the rise. 

“Today’s consumers are eager to experiment with new flavors and styles and are willing to pay more for something unique,” Faust says. “Our Strongbow Hard Ciders and our Beers of Mexico Variety Pack are poised to capitalize on this growing demand for variety.”

Mary Jo Hardy, head of consumer insight, category management and innovation teams at Rochester, N.Y.-based North American Breweries, agrees. She says North American Breweries now calls its consumers “flavor seekers.” 

“It’s not just more flavor necessarily. It is a variety of flavors, and there are those who are looking for very intense flavor experiences as well as lighter experiences,” Hardy says.  

A recent Anheuser-Busch Alcohol Shopper Poll found Millennials are satisfied with their recent beer purchases for three reasons: a large selection of beer brands from all segments, a variety of pack sizes and a unique beer selection. Millennials are quick to get excited about new flavors that they have not tried, and this demand for variety is important for retailers to keep in mind, industry observers say. 

“Millennials grew up in a world where they have access to more choices across the food and beverage industry than any other generation,” says Chris Williams, vice president of sales for St. Louis-based Anheuser-Busch. “Because they have always had the luxury of choice, they continue to look for it in all categories. For example, Millennials were the first generation to have a large variety of soda types and flavors available to them on a daily basis.”

Retailers can take advantage of Millennials’ demand for new and exciting flavors, as well as their love of variety, by stocking beers that cater to different taste preferences and occasions. “I don’t think Millennials are so loyal to a particular brand necessarily, but they’re loyal to new flavors, and I think that’s something that we in particular are excellent at doing,” says Nathan Arnone, brand manager at Lakewood, N.Y.-based Southern Tier Brewing Co.

An updated beer stock is a great way to drive sales, and the best way to do that is by keeping current with seasonal trends. For example, making sure pumpkin beer is in stock during the autumn months, observers say. 

Retailers also need to think about how much space they want to devote to craft beer and other beer categories, such as premium beers and imports. Observers say retailers should make these decisions by taking into account their category goals and looking at what types of drinkers their customer base is. 

“We think the best course of action for retailers is to offer both well-established beers and new brands in a thoughtful way based on where they see craft beer sales trending,” says George Ward, director of off-premise national accounts at Boston-based Boston Beer Co. “Established brands deliver comfort to many existing and new craft drinkers because they are familiar with the quality and flavor of beers like Samuel Adams Boston Lager or our seasonal OctoberFest.” 

Faust suggests stocking a mix of high-reach scale brands such as Heineken, strong growth brands like Dos Equis and some of the fastest moving national and local craft brands. He says dedicating a fair share of space to imports can also boost sales as the segment has been growing.

“In the U.S., imports are driving overall beer category growth while the domestic beer segment continues to decline and craft segment growth has decelerated,” he says. “We expect import share to continue to improve as more Millennial consumers reach legal drinking age. These consumers are more likely to equate cost with quality and shop the upscale import segment where quality, variety and image play a key role.”

Williams says each beer segment plays a specific role and targets a certain type of consumer. Premium beers have the highest customer reach, drive the most traffic and are responsible for 46 percent of retail dollar sales, he says. He adds that the “value shopper” shows the most brand loyalty and contributes 59 percent of dollars in the beer category, but is often overlooked. He also says the craft and import segments are both growing, and these segments pull at the heartstrings of Millennials. 

Within the craft segment, there are sub-segments that draw more interest than others. “Drinkers continue to seek out IPAs as they are the largest segment in craft beer,” says Ward. “We’ve seen the growth in our family of Rebel IPAs including our Rebel IPA and Rebel Grapefruit IPA. Seasonal beers continue to remain some of the top-selling styles, as well—beers like our OctoberFest and Summer Ale.”

Specialty beers have also been gaining traction among Millennials. 

“We’re seeing a lot more experimental beers being produced on a larger scale like sour beers in particular,” says Arnone. “It is also something that we’ve been working with, and we’ve been working to produce our beers on a larger scale.” 

Intense flavors, like the bitterness of an IPA or a fruit-forward high ABV beer, are catching consumers’ attention. Lighter, session beers and better-for-you brews have also been gaining popularity. 

“We’re starting to see more wellness cues come through in the industry, and wellness can take on a lot of different dimensions,” says Hardy. “It could be gluten-free for those people who need to or want to stick to that type of diet. It could be about less calories, fewer carbs or even just a feeling of wellness like ‘I feel less bloated when I drink certain products.’” 

MillerCoors just expanded its gluten-free portfolio with its naturally gluten-free Coors Peak Golden Lager. The new product joins MillerCoors’ Copper Lager and is brewed with 100 percent all-natural, gluten-free ingredients including California brown rice and Pacific Northwest hops. Officials for the Chicago-based company describe the Golden Lager as “bright and balanced, with a toasted malt backbone and hints of citrusy hops.”

Product placement is almost as important as variety, and retailers that master the art of organizing their beer sections in a way that gets premium products off the shelves could see a rise in profits, observers say. 

Ward, however, does not recommend putting lower priced brands directly next to expensive brands. “Price flow the set so there are no major price jumps, and always encourage shoppers to look at the higher quality, more profitable offerings by making them visible and putting them in the best display location,” he says. 

Another way to add visibility to higher-priced premium products is to display out-of-aisle, where legal. For example, placing craft beer near cheese and educating consumers about which beers pair best with which type cheese. The same can be done in the meat section. Educating consumers about the beer they are browsing can also really help drive beer sales, observers say. 

“Helping shoppers understand what they’re buying is a really big opportunity for retailers, just by providing information and education,” Hardy says. “Signage like, ‘this beer looks dark but it doesn’t taste heavy,’ those types of educational messages would really help shoppers know how to navigate. With some assortments so vast it has got to be overwhelming for shoppers who aren’t as savvy as maybe your most hard-core craft beer drinker.”

Making the shopping experience easier for the consumer by putting lead brands together, and placing all of the SKUs of a particular brand  next to each other, can help keep shoppers from getting overwhelmed in the beer section, say observers. Many brands also offer special displays that can help catch consumers’ eyes and push products off the shelves. 

“We have great display pieces in store that really capture the essence of the season and identify our beers on the floor, such as our OctoberFest pole topper and case easel,” says Ward. “We really focus on sampling drinkers on our beers so they can really experience for themselves.”    

Heineken's Global Initiative

Effective Jan. 1, 2017, Heineken USA is launching Five Points Trading Co., a new venture aimed at incubating a range of popular global beers in the U.S. Five Points Trading Co. will assume U.S. importer responsibility for Red Stripe (Jamaica), Tiger (Singapore), Birra Moretti (Italy), Affligem (Belgium), Murphy’s Stout (Ireland), Prestige (Haiti), Sagres (Portugal) and Mort Subite (Belgium) brands.

According to officials of White Plains, N.Y.-based Heineken USA, with the development of Five Points Trading Co., Heineken USA is now able to bring these emerging premium brands back in-house, while taking them to new heights by utilizing the resources and expertise of the company’s established distribution network.

Named in reference to the five points of Heineken’s iconic red star logo and America’s first melting pot neighborhood in lower Manhattan, Five Points Trading Co. will embody the same energy, cultural diversity and entrepreneurial spirit of the historic neighborhood, say company officials. The brands, which will be represented by Five Points, are established in the U.S. market and currently imported and sold by other importing companies whose contracts are set to expire at the end of 2016.

The new division will be led by general manager, Charles (Chas) Littlefield, who, along with his team, will manage the new brands separately from Heineken USA’s current portfolio.

“Like its neighborhood namesake, Five Points Trading Co. will provide a nexus for new thoughts, perspectives and cultural exploration, while tapping into the legacy and import expertise of Heineken USA,” Littlefield says. “This portfolio of exceptional beers provides new opportunities to connect with Millennial beer drinkers as they become more global and more adventurous with their taste. We are excited for the transition and are already hard at work developing our 2017 go-to-market strategy.

“Keeping the Five Points and Heineken USA portfolios separate will allow our current marketing and sales organization to maintain focus on our four core brands—Heineken, Dos Equis, Tecate and Strongbow—while enabling Five Points to direct its energy and resources to developing the potential of these new to the company acquisitions. We are grateful to our current wholesale partners, whose enthusiasm and dedication to cultivating these brands, to date, has been integral to their success,” Littlefield says. —Richard Turcsik