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- BEVERAGE R&D
Following steady performance in 2012, beer sales are proving to be a bright spot in the consumer packaged goods (CPG) market. “The market for beer in the U.S. is strong,” says Chris Williams, vice president of national retail sales for Anheuser-Busch (A-B). “It’s one of the fastest-growing retail segments.” In 2013, beer was responsible for 4 percent of the multi-outlet sales tracked by Chicago-based Information Resources Inc. (IRI) and 7 percent of the revenue growth, he notes.
With the beer market making strides, A-B is putting a focus on enhancing the beer purchasing experience for both the consumer and retailer. At A-B’s St. Louis headquarters, the brewer designed a retail lab to allow its customers to gain a deeper understanding of how to manage and merchandise the beer category within their respective channels.
“[The] retail lab is split into four channels: grocery, convenience, package liquor/military and on-premise,” says Greg McLeod, vice president of trade marketing for grocery at A-B. “It provides retailers an opportunity to view existing and future trade solutions, plus it allows us to get quality feedback from retailers on new ideas.”
For the grocery segment, A-B’s retail lab features product displays that complement specific brands and varietals outside of the traditional beer aisle. Some examples include merchandising brands at deli stations or in the produce section.
“We’ve made major improvements to our point-of-connection materials so they connect better with the shopper mission trips,” McLeod says. “Retailers have more confidence than ever to merchandise Anheuser-Busch brands in locations outside of the beer aisle because our sales teams provide grocery-department-relevant programs with merchandising support where legal.”
Chris Schafer, vice president of trade marketing for convenience at A-B, adds that the company seeks to offer channel-specific trade solutions that are tested and proven based on shopper insights, shopper missions, and channel-focused drivers to their retail partners.
“For convenience, our solutions are based on four key strategies: attract and convert shoppers; core shopper retention; win immediate occasions; and drive total store performance."
“For convenience, our solutions are based on four key strategies: attract and convert shoppers; core shopper retention; win immediate occasions; and drive total store performance,” he says. “The retail lab is set up to resemble an actual convenience store with coolers, a walk-in beer cooler, gondola, etc., to not only showcase our trade solutions [that are] available, but also test prototypes and ideas prior to implementing [them] at retail.”
For example, the company will test space creators for convenience stores in the retail lab, Schafer says. These include ideas such as under-shelf rollers and suction cups as well as cold solutions like ice bins and chill chambers.
Consumers in the package liquor/military channel, however, approach beer shopping a bit differently. “We see multiple types of shoppers on browsing missions that are increasingly seeking variety,” says Josh Halpern, vice president of national retail sales for on-premise and military at A-B. “Some shoppers are delighted by the concept of browsing the store to find their hidden jewel, while others potentially can be overwhelmed by that amount of variety.”
In addition to bringing packaged beverages home, shoppers are becoming more interested in the at-home draft experience, Halpern notes. To address this growing trend, A-B created Draftmark, a tap system that conveniently fits into consumers’ refrigerator shelves.
“With Draftmark, there are absolutely no hassles when it comes to pouring fresh draft beer at home,” Halpern says. “It fits easily in your fridge, and each Draftmark refill comes with its own spout, so there is no line-cleaning required.”
Launched in St. Louis in 2012, Draftmark is available for a select number of A-B brews, including Budweiser, Shock Top Belgian White, Bass Pale Ale, Michelob Amberbock, Goose Island Honker’s Ale and Goose Island India Pale Ale. A-B has since expanded the cities where the at-home tap system is available. Location information is available at draftmark.com.
Draftmark uses 1-gallon refills that are driven by bottle-in-bottle technology, which ensures that the beer and air do not come in contact until the beer is poured into a glass in order to keep the beer fresh for 30 days, the company says.
A-B’s package liquor/military lab also features sets of multiple brands creating a “beertopia” display as well as displays featuring the parent company’s import brands for Beers of the World designs.
“We continually research and develop solutions tied to shopper occasions and missions that bring our portfolio together in a uniform approach,” Halpern says.
But as A-B has worked to enhance merchandising for its off-premise retail partners, the company also continues to find ways to replicate that strategy on-premise by pulling influence from other retail channels.
“The key to bringing off-premise methodology into the on-premise is the notion that analytics and insights are equally as important to the on-premise as [they are] to the off-premise,” Halpern says. “Research companies have taught us a lot about accounts’ guests, their pain points, their motivations, and how they spend their money in the account. That research, together with our own insights and analysis, has shaped our on-premise programs.”
Another tool A-B is enlisting for its on-premise partners is Brew Appétit, a website set to launch in early 2014 that will serve as a menu driver featuring food and beer pairings as well as recipe suggestions.
“Brew Appétit is designed to bring our beers closest to the foods our restaurants serve,” Halpern says. “It’s an educational training [tool] for an account’s sales force — its bartenders and wait staff. We want to educate those individuals — and ultimately customers — on the ritual of beer.”
Although A-B has put a great deal of effort into its retail lab, it realizes that not all customers can make the trip to St. Louis to get the full effect. In order to make sure all of its customers benefit from the company’s research, A-B instituted the Balanced Portfolio Approach (BPA).
“Balanced Portfolio Approach or BPA is about growing the entire beer category in a healthy and sustainable way,” says C.J. Watson, vice president of category leadership for A-B. “Starting the year with a balanced strategy has shown to lead to retail success over 90 percent of the time. It is by far the most successful retail strategy we have studied.”
But A-B took that strategy a step further with Your BPA, which is a more customized approach based on a number of factors including regions and demographics.
“The Your BPA platform is the evolution of the Balanced Portfolio Approach,” Watson explains. “We segmented and quartiled retailers to better understand successful retailer tactics. This evolution is customizable, meaning that we look at only retail segments that match the targeted retail partner, and we have trained all of our category managers on how to evaluate their accounts.”
One of the ways A-B assists accounts is through its SAVE segmentation, which identifies different types of grocers and consumers.
“SAVE stands for Savvy markets, or retailers that focus on couponing and loyalty rewards to drive traffic; Associate markets, or retailers that have a lot of associates in their stores to improve service and differentiate themselves; Value markets, or retailers that focus on low prices or lowest prices in the market; and Experience markets, or retailers who differentiate themselves from other grocers with unique assortments,” Watson says. “In our Your BPA analysis, we segment retailers leveraging this segmentation to ensure we are evaluating like-for-like retail partners.”
To help appeal to the different consumer tastes that make up a balanced portfolio for these different retailers, A-B offers a diverse collection of brands. The company has leading brands across most beer segments, with Bud Light and Budweiser accounting for the largest brand family in the category, Williams says.
“Premium-plus and high-end are critical for improving retailer margins and trading customers up, so winning there contributes to a healthy category,” he adds. “Value is a big play to keep the category accessible, and Latinos over-index in beer consumption and are a fast-growing segment of customers.”
Among the ways A-B is contributing to a healthy beer category is through its product innovations. As a follow up to its successful Bud Light Lime Lime-A-Rita, the company launched Bud Light Lime Straw-Ber-Rita in 2013. Straw-Ber-Rita is an 8 percent alcohol by volume flavored malt beverage (FMB) that blends Bud Light Lime with the taste of a strawberry margarita, the company says. A 6 percent alcohol by volume version of the Straw-Ber-Rita is available in Maine, New Hampshire and Tennessee.
“The response to Lime-A-Rita, especially among non-beer drinkers, was tremendous, and we knew we’d tapped into a winning insight we could build on,” said Rob McCarthy, vice president of Bud Light, in a statement. “Strawberries and margaritas have long gone hand-in-hand. Straw-Ber-Rita is a unique twist on a familiar flavor that only Bud Light Lime can deliver.”
At the company’s trade media day in November, representatives said that the Straw-Ber-Rita actually has outsold the Lime-A-Rita, which is rare for a line extension.
However, the company didn’t stop there. Designed as a limited-edition winter seasonal, A-B released Cran-Brrr-Rita, which combines a cranberry margarita with a splash of Bud Light Lime.
“Bud Light Lime Lime-A-Rita and Straw-Ber-Rita have been immensely popular among adult consumers, and we see a huge opportunity to experiment with the ‘Ritas,’” said Pat McGauley, vice president of innovation for A-B, in a statement. “Our … winter offering, Bud Light Lime Cran-Brrr-Rita, highlights the ‘Ritas’ ability to innovate year-round by combining a staple flavor of the holiday season, cranberry, with Bud Light Lime to create a refreshing, flavorful cocktail alternative.”
After launching Cran-Brrr-Rita in November, A-B announced in late December that demand for the FMB was so popular that it decided to extend availability through January. And A-B isn’t stopping there. Set for a spring release, the company announced at its trade media day that it will add Raz-Ber-Rita and Mang-O-Rita to the popular Bud Light Lime Ritas lineup.
But FMBs are not the only sub-segment of the beer category in which A-B is making a splash through its innovations. To complement the burgeoning U.S. hard cider market, the company introduced Stella Artois Cidre, which is a crisp, European-style cider made with hand-picked apples. It’s drier than sweeter U.S. ciders and serves as a refreshing alternative to white wine, McGauley explains.
Launched initially in mid-2013 in 26 states, the brand recently expanded distribution nationwide.
“Stella Artois Cidre has performed very well, and we’re putting even more muscle behind it in 2014,” McGauley adds.
A-B also continues to expand its successful Shock Top family, with on-trend offerings such as Lemon Shandy, Honeycrisp Apple Wheat and Shock Top Choc’ Top — a mixer pack with the flagship Belgian White and a new Chocolate Wheat.
“Shock Top Chocolate Wheat is perfect for the winter season. The Shock Top brewmasters got it right for sure … and will continue to introduce unique, new flavors,” McGauley says.
A-B also took steps in 2012 to play a larger role in the super-premium beer segment with its Bud Light Platinum release. The product has been so successful that the company expanded the packaging offerings for the brand with an 11.5-ounce reclosable aluminum bottle.
“We hand-picked Bud Light Platinum to launch our company’s first reclosable aluminum bottle because of our confidence in the beer,” McCarthy said in a statement. “Platinum has been able to elevate the premium light beer category with its blend of image and flavor, and we believe it will do the same for the perception of aluminum bottles.”
Another super-premium success story from A-B came from its Project 12 experiment, which asked 12 brewmasters to develop their own versions of the company’s flagship beer. The winning recipe was released in January 2013 as Budweiser Black Crown, which features more body, color and hops character than Budweiser and has a slightly higher alcohol content, the company says.
Although A-B has found ways to address the numerous legal-age consumer segments, it seems like innovation will continue to be a focus to assist its balanced portfolio strategy.