Drinkers Drive Volume in Fast Growing Markets and Variety in US and Europe

Major brewers build local and global brands

Expansion in fast growing markets drove beer volume increases, but changing social and drinking trends slowed consumption in North America and Western Europe. As people, especially Millennials, socialized more in mixed groups of men and women, they drank less and instead focused on experiencing new tastes and flavors.

To reach new, young beer drinkers in developed markets, the four major global brewers – AB InBev, SABMiller, Heineken and Carlsberg – introduced their own versions of flavored and craft style beers. While the craft beer phenomenon is less pronounced in Europe than in the US, the growing desire for choice also is expressed in the resurgence of ale in the UK.

The major brewers build their global businesses by balancing the need for economies of scale with respect for local beer tastes and traditions. The BrandZ™ ranking of the Top 10 beer brands reflects this evolution. Four listed brands – Budweiser, Heineken, Guinness and Stella Artois – are global beers. The other brands are regional leaders, with four – Corona, Skol, Aguila and Brahma – from Latin America.

Normally, the major brewers produce their global brands close to the market to gain the greatest economies. But rising consumer concern with authenticity has produced exceptions. SABMiller brews Peroni, an Italian brand, in Italy. All the Heineken distributed in the US is brewed in Amsterdam. To compensate for the extra production costs, the brewers market these beers as premium brands.

These other trends continued to unfold:

  • Pairing with food
    Brewers promoted beer as an enjoyable – and affordable – complement to a good meal, a premium beer being less expensive than a modest wine.
  • Cider
    Like flavored beer, cider is seen as an entry option for people who find the taste of beer too bitter. Of the major brands, only Stella Artois offers cider, both apple and pear.
  • Craft Beer
    Although the trend is influential, craft beer represents less than 8 percent of total beer volume and around 14 percent of revenue in the US.

Building global and local brands

Industry expansion and consolidation continued, as AB InBev completed its acquisition of Mexico’s Grupo Modelo, adding Corona to its portfolio of over roughly 200 brands. Diageo, the UK-based spirits giant, relaunched its Guinness brand in Nigeria, which consumes more of the brand than Ireland.

Africa lacks beer industry infrastructure that can be easily acquired. But expecting strong growth in Africa, the major brewers have invested in distribution networks with the goal of convincing drinkers to trade up to higher quality beer.

In contrast, the existence of industry infrastructure facilitated expansion into Latin American, which now is split, along a rough “line of demarcation,” between AB InBev, which holds significant share in Brazil, for example, while SABMiller enjoys great success in Columbia. By acquiring strong local beers, the majors gained economies of scale and built diversified brand portfolios that they crowned with their global brands, positioned at a premium price.

Brazil is a prime example of this strategy. AB InBev acquired and invested in local brands, Brahma and Skol, and introduced its own global brand, Budweiser, to the market. AB InBev then reversed the process, picking one of the local leaders, Brahma, to build that brand outside of Brazil.

The world’s largest market

The majors also continued to compete for share in the fragmented Asian market.

China, the world’s largest beer market by consumption, is roughly twice the size of the US market. Lacking a beer drinking tradition, consumption per person is relatively low, which suggests that opportunity is high.

Although still a market of regional players, consolidation is happening in China. Snow, China’s largest brand, acquired Hong-Kong based Kingway Brewery at the end of 2013, for example. China Resources, a State Owned Enterprise (SOE), and SABMiller jointly own Snow.

Most of the regional beers are owned by one of the major global players. Harbin, which is strong in Northeastern China, is a subsidiary of AB InBev, which also markets other brands, including Budweiser, in China. Yanjing remains the only Chinese brand without a foreign partner and with intentions to remain independent.

Advertising, marketing and innovation

AB InBev’s Budweiser remained the King of Beer in title, and its brand value increased 25 percent, but Bud Light was the preferred beer in America, one of the only markets dominated by light beers, including the MillerCoors brand Miller Lite.

Marketing and innovation sometimes came down to the shape of the bottle. Heineken changed the shape of its familiar green bottle, adding a long neck to create a sleeker look and appeal to younger drinkers, the same group AB InBev intends to reach with the cobalt blue bottle of Bud Light Platinum.

Corona continued its “Find Your Beach” campaign, emphasizing individuality and featuring the Corona bottle topped with the ritual slice of lime. In an appeal to America’s Millennial and Latino drinkers, Corona offered a draft version of the beer, an early indication of how AB InBev intends to grow the brand.

Stella Artois reached Millennials by focusing on the glass, or chalice, rather than the bottle. The chalice and the pouring ritual dramatize the beer’s premium positioning. Stella created an app that enabled people to send friends a virtual chalice of Stella, redeemable for a real beer at selected locations.

And people who registered through Facebook for the Stella Artois holiday promotion had the option of receiving a surprise gift or passing the gift to a friend. Passing the gift earned a donation to a charity and, for those with the longest gift chains, entry into a sweepstakes to win a hand-blown crystal chalice. Stella Artois brand value improved 30 percent.

Russia’s Baltika, owned by Carlsberg, found a stealth way to air traditional commercials despite the national ban on beer TV advertising. A sponsor of the Sochi Olympics, the brand promoted its non-alcoholic Balitika 0 brand. By inference, the spots also reminded viewers about the rest of the beer’s range, which is also branded Balitika followed by a number that distinguishes each taste variation.

Action Points

Remain relevant.

Tap into the cultural context around consumers and tell engaging stories that connect consumers and their aspirations.

Celebrate the product.

A lot of beer communication is about the drinking experience rather than about the beer and its quality and taste. But today, consumers often are looking for a unique or distinctive taste.

Emphasize the local.

Beer is a global industry built on the legacies of local brewers. Those legacies are a source of strength, as they signify authenticity, quality and trustworthiness.

Beer Up 14%

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

BrandZ Top 100 2014

BrandZ Global 2014 Report Top 100 Report

Top 100 Chart

Top 100 Infographic

Methodology and valuation by Kantar Millward Brown

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