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ATLANTA -- "Beer Matters."
That was Heineken USA's message to the 1,400-plus attendees at the company's National Distributors Conference, held here in late March.
After portfolio presentations and product tastings at the Marriott Marquis, guests traveled to the historic Fox Theatre for a multi-media spectacular that included live musical performances, videos and presentations by Heineken USA executives demonstrating how the company will become the upscale beer leader with its portfolio of brands.
"The beer industry is at a turning point. Wine and spirits are gaining share, and beer has stagnated. It is becoming less relevant to millennials, to women and to other key consumer segments," said Scott Blazek, senior vice president of sales. "Beer has to matter over wine and spirits. We have to return our product to center stage where it belongs. We have to make an emotional connection between our beer and the customer. With our portfolio, we have an unbelievable opportunity to lead in upscale. With our people, our values and the passion of the Heineken team, we are ready to write the next chapter of this great company."
How will Heineken USA make that chapter compelling to retailers and consumers? Becoming the "upscale leader in category management" through flawless execution of creative marketing, merchandising and advertising plans is the company's goal.
"The category is ripe for reinvention," said Lesya Lysyj, chief marketing officer. "Beer marketing has been the same for a long time, and we plan to break the mold."
While on-premise is critical to success -- 60 percent of millennials try on-premise first, so there's the need to win there to grow and profit, Blazek said -- retail is a crucial component of Heineken's brand-building strategy.
"We want to be the go-to supplier for retailers to help them grow the upscale beer segment," Blazek said. "Consumers are all about upscale, but they don't differentiate between imports and crafts, which reinforces the need for clarity."
The beer category is showing promise as retail is skewing upscale. For example, upscale beer accounts for almost 50 percent of category sales at supermarket chain Safeway and 40 percent at Jewel. Heineken brand sales are up 5.1 percent through March, according to Nielsen.
Recent improvements in retail performance show the immediate impact flawless execution can have, according to company executives. "We had a 10-point gap on display to conversion, and through focused and flawless execution, we closed the gap in three months with Corona vs. Heineken," Blazek reported. "Execution is our No. 1 priority."
If "beer matters" overall, space is what matters most in the world of retail.
"There are over 8,200 beer SKUs; the average store carries 246 SKUs, [and] convenience stores less than half of that," said Steve Ward, vice president, national accounts, who posed as Captain of the Starship Heineken USA to make his case to distributors. "Imports account for more than 25 percent of retail sales, but take up just 21 percent of shelf space, and we want to help the retailer navigate the space challenge and adjust to become more profitable."
The company will guide retailers with what it has dubbed "Heineken GPS" -- an approach that will help stores manage category objectives and growth profit solutions.
"We believe advocating one brand over another misses the point. Our first priority should be the customer, then the category, then the brand," said Ward, who stressed that Heineken has adopted "a retailer way of thinking.
According to Nick Lake, senior director of category management, Heineken USA has identified five strategic pillars to assist retailers in managing the category:
- Putting the retailer first. Heineken USA wants retailers to view them as a trusted business partner -- a resource that can provide a compelling blueprint for upscale segment development.
- Moving from a transactional to a consultative role. The company wants to provide retailers with the research and insights they need to profit within the upscale segment.
- Providing shopper insights. Heineken USA can help retailers by giving them path-to-purchase information and explaining how customers' behavior before, during and after shopping trips impact sales. This can help retailers understand trip strategies and, in the process, drive upscale growth.
- Flawless execution. Heineken USA has established clear expectations for itself and its partners, overhauled their planning process to deliver plans on a timely basis and is focused on flawless execution during time periods that will allow them to achieve 90-percent display conversion.
- Making a measurable dent. Heineken USA will help retailers achieve healthy growth and win in the upscale segment.
Ward emphasized that Heineken USA will provide thought leadership to retailers and help them address the big issues they are facing, such as how to grow imports as fast as craft beers, how to space crafts, how to attract more loyal beer shoppers and how to secure a bigger share of the key beer purchasing occasions. He noted that Heineken USA brands are participating in major beer programs this summer at retailers such as Kroger, Rite Aid, Safeway, Walmart, Supervalu and Walgreens.
"We have beers for all key demographics," Ward said. "Heineken USA converts tryers into buyers better than any other upscale brand. We have the brands and packs to drive significant profit and growth."