BEER: POSITIONING TAKES ON GREATER VALUE

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As americans kick off their loafers and make leisure time count for more, beer, wine and spirits marketers are crashing the party, increasing their ad budgets to an estimated $1.2 billion, a 9% increase over 1997, according to Competitive Media Reporting.

They also are testing new products and increasingly integrated marketing such as direct mail, event planning and PR -- all in search for a share of the $106 billion spent on beer, wine and spirits annually.

"Advertising is the linchpin," says Arthur Shapiro, group head of marketing and brand development for the Seagram Spirits & Wine group. "But you need to do more than just advertise. We're always integrating our advertising and merchandising. . .The message, the positioning -- it needs to be part of everything you do in communicating to the consumer."

These tactics increasingly have been employed over the past several years as marketers try to peddle new offerings.

No. 1 brewer Anheuser-Busch launched Tequiza, a beer with a hint of tequila, nationally in February and is testing Devon's Original Shandy, a mix of beer and lemonade. . Seagram, the country's No. 2 alcoholic beverage company, has introduced upmarket versions of its VO and Chivas Regal; as well as lime- and grapefruit-flavored gin; a white chocolate- and a cappuccino-flavored Godiva liqueur; and coconut, spiced and premium rums.

Not only do line extensions give a company more offerings to attract experimenting consumers, but they increase ever-important shelf presence -- necessary to attract impulse shoppers at liquor stores.

"Everyone in the industry is concerned about our location and prominence on the shelf, and a lot of money for positioning and merchandising [goes into that]," Mr. Shapiro says.

Some of the industry's best growth has come from the superpremium category -- be that imported beer, high-end vodka or superpremium tequila. The economy is largely responsible for that growth.

"[Fewer] people are unemployed. They're making more money, and they can spend it on alcoholic beverages," says Frank Walters, Impact's research director.

Consumers are turning to the so-called white spirits such as vodka and tequila over brown goods such as whisky.

Vodka continues to be the most popular distilled spirit -- selling 25% of the category. Growth continues with high-end imports that seem to hit the shelves monthly and sell well. Last year, that exclusive segment posted a 6% to 7% increase, according to Impact.

While not an immediate threat, tequila is gaining. The Mexican import is expected to see per-capita consumption grow from about 3.1 liters per person now to 3.2 liters by 2010, Impact predicts. That slight growth, however, pales when compared with ultra-premium tequilas. An estimated 21% growth is expected for high-end tequilas -- triple that of the tequila industry.

Beer sales finally are jumping out of stagnation, with expensive imports leading the way. This year marks a turnaround for the industry, with beer volume expected to grow about 2%, compared with just 1% for the past several years. The economic boom helps -- as the new twentysomethings look to imports and cocktails rather than $1 domestics.

Although per-capita consumption is expected to trail off over the next decade because of a decline in consumption of the brown spirits, spending could remain strong -- largely because of new young drinkers, Mr. Walters says.

"The baby boomlet -- the sons and daughters of baby boomers -- are hitting the market. About 3 million to 4 million young adults will be hitting the market each year," he says. "They're gravitating to tequila and cocktails and mixed

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