Beer

Brewers innovate to satisfy changing tastes in mature markets

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.

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.

Top 10 Chart

More fragmentation

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 BrandZ™ beer category, while Coors Light entered the BrandZ™ Beer Top 10.

Marketing concerns

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 BrandZ™ 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.

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 efficiencies and boost profitability with brands that cater to growing 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.

10-Year Trends & Analysis

Globalization dilutes brand character

The BrandZ™ 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 BrandZ™ 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 BrandZ™ 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 BrandZ™ 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

Insights

Brewers balance local relevance, global economies

Most lagers struggled for a meaning, trying to balance local relevance and against the need for global economies. For example, when most of a brand's advertising is created in the US, it may not resonate elsewhere. Brands invested to build Salience by being present and visible around the World Cup, but being Meaningful and Different drive Brand Power. When brands focused mostly on the World Cup their equity actually declined, because they shared the space with so many competitors.

Eleonora Caliò
Client Manager
Millward Brown
Eleonora.Calio@millwardbrown.com

Consolidation softens competitive bite among brands

Because of the amount of consolidation that's taken place, many brands that were previously competing are now in the same portfolio, at a global and/or local level. In the past, there might have been an aggressive strategy to better the competition. Budweiser and Beck's was a classic example in the UK. Now they're in the same stable. When a key competitor comes into the same stable, it's a transition in terms of culture, mindset and strategic approach. You're now looking after a brand you need to nurture and be fond of, rather than one that you're aiming to knock out.

Dominic Warne
Director
Millward Brown Vermeer
Dominic.Warne@mbvermeer.com

Future View

  • Given the size of the millennial market, that generation's desire for higher alcohol experiences will continue to impact the beer category.
  • As with most categories, the opportunity to sell product online is enormous. But beer isn't just any product. Because it's alcoholic, the potential liability risks are also enormous. The brewer that figures out how to sell alcohol online while minimizing risk wins the game.
  • Craft continues to grow in popularity. But there will be a craft shakeout when drinkers start to ask, "Why are there 2,884 different brands, and why are they so expensive?"

Up 9%


Beer - Top 10 Total Brand Value
$78.6 BILLION


Category Definition
The beer category includes global and regional brands, which in an increasingly consolidated industry, are mostly owned by four major brewers.


BrandZ Top 100 2015

BrandZ Global 2014 Report Top 100 Report

Top 100 Chart

Top 100 Infographic


Methodology and valuation by Millward Brown

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