Brewers Trying To Adapt To Changing Market Tastes

Heineken Premium Light is all about the smooth. Print ads that broke last week to support the brand’s launch exhort consumers to “Meet someone smooth tonight,” inform them that “Someone smooth is waiting at the bar,” and ask, “Are you getting the smoothness you need?”

While brewers and distributors lament the decline in U.S. beer consumption over the past several years, two category segments are actually growing: light beer and imports. Hence, Heineken USA is putting $40 million in media spending behind Premium Light this year, sources said, or more than half of its $70 million U.S. spend. The beer will be available in bars and restaurants this month and in stores next month.

Client representative Dan Tearno said that while imported light beer accounts for only 2 percent of the U.S. market, “there’s a real opportunity for a beer that has a light-beer taste profile with some cachet.”

Consumption of mainstream domestic beer brands—such as Budweiser, Coors and Miller—has steadily declined in recent years, according to New York research consultancy Beverage Marketing Corp. Volume fell 4 percent in 1999, and then incrementally until 2004, when it dropped 5 percent. By contrast, volume of light domestic beer grew at an average rate of 4 percent from 1999 to 2004. Imports saw a 12 percent spike in 1999, and have averaged 2 percent growth over the past two years.

Gary Hemphill, Beverage Marketing managing director, said the reasons for this niche growth are two-fold: Light beers appeal more to the American palate and health consciousness, and imported beer falls into the “affordable luxury” category for the status-conscious. “People are trading up to products perceived to be of a higher quality,” he said.

The idea of “trading up” is at the core of Heineken Premium Light’s positioning, said Ewen Cameron, executive creative director of WPP’s Berlin Cameron United in New York, which handles the brand. The shop’s research showed that the young-adult target tends to “settle for light beer, but they’re not really excited about it,” Cameron said. The “smooth” concept appealed to their taste preference in beer and their wish to “trade up” in romantic relationships—the idea that “there’s something or someone better out there,” Cameron said. TV spots break next month.

Even Anheuser-Busch, which spends about $500 million annually in U.S. media on its brands, is recognizing the value of imports. It signed an agreement to distribute Dutch beer Grolsch in the U.S. in 2007, and last week moved up the date to April 1. The company said in a statement that the reason for the change was to give the Grolsch brand—which includes a light lager, premium lager, amber ale and blonde lager—”access to Anheuser-Busch’s marketing and sales expertise before the summer selling season.” A client rep declined further comment.

U.S. beer drinkers have also become more sophisticated thanks to an explosion in marketplace choice over the past three decades, according to research from Publicis in New York, which handles Heineken and Amstel Light in the U.S. A 50-year-old American beer drinker was limited mostly to mainstream domestic beers when he or she came of legal drinking age in the mid-1970s, said Publicis North America CEO Susan Gianinno. “Light beer was a new category back then,” she said. The proliferation a decade later of regional microbrews and domestic superpremiums like Samuel Adams and Anchor Steam exposed successive generations of beer consumers to a wider variety of beer.

As a result, “today’s twentysomethings expect light beer to taste good, and [they expect] to be able to choose from a wide selection,” Gianinno said, adding that this age group goes out more often to image-driven venues and tends to choose different beers according to the occasion.