Apr 11, 2009

Imported Beer Going Flat?

Sales of mature imported premium beers Corona Extra and Heineken’s have fallen far faster than lower-priced domestic brews, according to the Wall Street Journal. Could uninspired and commoditized marketing and value-added downstream in the retail system play a part? It seems so easy these days to simply blame global consumers’ “new frugality” as largely responsible.

In any event, the premium brands are reported to be raising ad budgets and lowering case prices to hang on to business. Sounds like an expensive rear-guard defense. Why don’t the imports go on the attack instead, by doing more with their retailers.

For instance, inventory is a big issue for off-shore brands. How can they reduce retailers’ inventory-carrying costs? Given the length of import pipelines, there have to be postponement strategies these brands haven’t fully exploited yet, like tightening data exchange so that cases show up at the back door just in time. Done right, postponement helps both the upstream and the downstream partner.

Or helping the retailers provide chilled product to consumers as Diageo is doing (see my earlier post). While these distribution-intensive types of growth investments are sizable, so are old-school, me-too ad budgets. Whatever they do, it should be something of real value to the beverage server or store. But Heiniken knows all this, as public comments they have made make clear.
‘‘Now more than ever, you need to give consumers a reason why you’re worth paying more for,’’ said Christian McMahan, chief marketing officer at Heineken USA (Jan 2, 2009)
With smart help and new experiences from the brewer, retailers might just push these brands harder. And focusing downstream, especially on the consumer, might just earn both brewer and retailer the right to maintain prices in hard times as well as good.

But beware old school generals and their management advisors, who are always fighting the last war. They will make the case for comoditized actions like discounting, promotion pricing, and private label products. Yawn! RIP!

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