Heineken Turns Corner, Vows to Accelerate

PHOENIX -- A stage full of dancers move and sing to rhythmic, DJ-synthesized club music, as flashing green and white strobe lights spotlight live bongo drums and an engaged audience. Some people toe-tap in their seats, while others meet and greet on front-row couches — most are smiling.

This lively party vibe was “Club Accelerate,” Heineken USA’s distributor conference turned nightclub, at 8 a.m. one day last month at the Phoenix Convention Center. The cause for celebration was loud and clear: the company is taking its banner 2012 year and running with it this year and beyond (2014 will mark its 150th anniversary).

“2012 made it exciting for all of us. Heineken Lager was back in the black for the first time in five years — not just in a couple of states, but in 32 states — and the goal in 2013 is all 50 states,” Scott Blazek, senior vice president of sales for Heineken USA, said as he addressed the crowd of 1,500. "We’re working harder than ever. Our plan is to take advantage of the momentum we have and accelerate our performance.”

Blazek kicked off the conference by highlighting notable brands in Heineken USA's arsenal:

• Dos Equis Lager is one of the fastest-growing brands, with 26 percent sales growth.
   
• Tecate Light continues to take off, posting double-digit increases in the last three months of 2012.
   
• Strongbow, the company’s newly acquired cider brand, is part of an exploding category and the company is poised to drive the brand’s activations throughout 2013.

Distributors in the audience got the chance to back up the company’s positive news by sharing their own achievements. A distributor in Maryland reported his company grew its Dos Equis business by more than 30 percent last year. A distributor in Georgia highlighted that his company was up 35,000 cases last year in overall Heineken USA brands. Finally, a distributor in California revealed its Heineken USA portfolio was 500,000-plus cases strong last year, with Tecate sales being especially powerful.

THE TIPPING POINT

Heineken USA’s year of good fortune in 2012 was in line with the beer category in general, according to the company’s President and CEO Dolf van den Brink, who told the crowd that in 2012 the beer market grew “for the first time in a long time, and it was a broad-based recovery with almost all segments [showing growth], but especially imports by more than 3 percent.”

Rather than viewing this as just a blip, van den Brink sees this as the dawn of a new age for beer overall. “I believe we’re at a tipping point,” he said. “There’s an incredible dynamic now in beer. There are new players, new segments, new subsegments, new brands and many new SKUs.”

With this new dynamic, though, comes new challenges, particularly sameness in the mainstream segment, SKU proliferation in the craft segment, and diminished execution support in the imports segment.

Sameness in the mainstream segment is exemplified by the fact that four brands control more than 80 percent of the beer business, whereas in the hard liquor segment, nearly 60 brands make up 80 percent, van den Brink outlined. “Mainstream product sameness is just the beginning. The similarities also extend to advertising and marketing, which runs the risk of turning beer into commodity products,” he cautioned.

He believes that if the shared vision is to grow the total beer category, then it is critical to add variety and choice in the mainstream segment. Regarding SKU proliferation, van den Brink pointed out that “almost 60 percent of items now in the beer aisle were not there five years ago.” He stressed the category needs “smarter innovation and variety, not duplication.”

While these are the industry’s collective challenges, they are also Heineken USA’s hurdles. The company intends to align its business to address the same three challenges, van den Brink said.

WHERE HAS BEER LOYALTY GONE?

The beer category used to be a loyalty category, but it is moving to a “repertoire” category, Lesya Lysyj, chief marketing officer for Heineken USA, told attendees at the distributor conference. She noted that craft beer drinkers were recently tracked to drink, on average, 46 brands a year.

“What this means is that all brands need to adapt,” she said. “As a relatively small player, we need to break the mold in the world of sameness. We need to engage in a much deeper way than anyone else.”

Lysyj also lauded 2012 as a pivotal point for Heineken USA. “Every brand moved in a positive direction. We know we still have work to do, but we have turned a corner,” she added. “Building an emotional tie with our consumers is what we do well — through advertising, events, and social and engagement programs. In the refrigerator of life, we’re going to stand out, and collectively, we’re going to win.”

In line with that, company executives shared various brand highlights planned for 2013:

Heineken "Star Bottle” — The brand debuted its new premium Star Bottle packaging for Heineken and Heineken Light for the first time in the United States. The brewer’s first packaging change in nearly 20 years is designed to be a more modern take on the iconic green bottle and intended to reinforce the brand’s upscale status and make it a more relevant choice.

Available in 12- and 22-ounce sizes, the Star Bottle features strong shoulders; a taller, slimmer neck; curved embossment inspired by the iconic racetrack label; and a thumb groove that improves the bottle grip and encourages drinkers to hold the bottle at a lower point, keeping the beer colder.

The Star Bottle will be supported by a fully integrated, 360-degree marketing and sales plan, as well as a “Star App” that encourages consumers to scan the bottle and be entered into a national promotion to receive Star Bottle giveaways.

Dos Equis — In 2012, Dos Equis experienced a 24.8 percent sales lift in cases during the Cinco de Mayo season. This year, the brand is celebrating Cinco de Mayo with a five-week program that takes the celebration to a new level by providing retailers and consumers with reasons to celebrate not just on the company’s kickoff of “Dos de Mayo,” but during the weeks leading up to it.

Newcastle — For the first time in four years, the Newcastle brand is growing again. Thanks to limited editions in 2012, the brand closed the year with a sales volume increase of 6 percent. This year, the company intends to almost triple its limited-edition volume with Newcastle Bombshell and Newcastle Werewolf, to name just two, and believes there are still more opportunities. It will support the brand with more sampling and social media activity this year than ever before.

Strongbow — The hard cider category is a new frontier for Heineken USA and it plans to make Strongbow the badge cider brand in the country — an upscale, aspirational brand that appeals to young urban professionals, half of them women. Lysyj pointed out that even though the entire cider category is only the size of the Amstel Light brand, it holds good promise, especially with Millennials in years to come. By the end of 2013, the goal is to regain the brand's No. 3 position and educate consumers that the best way to enjoy Strongbow is over ice.

Amstel Light — Burgers will go hand in hand with Amstel Light this year as the brand claims its place as the “Official Beer of the Burger.” Consumers can look forward to burger-themed events and more executions during National Burger Month in May.