As Bud slips, Heineken plots further shake-up of U.S. light beer
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May 23, 2023] By
Doyinsola Oladipo and Philip Blenkinsop
NEW YORK/BRUSSELS (Reuters) - As investors try to assess the fallout on
global brewing leader Anheuser-Busch InBev from a backlash against Bud
Light, rival Heineken is spending $100 million to promote a new light
beer to Americans.
The Dutch brewer sees Heineken Silver driving fresh momentum into its
U.S. business, where sales of standard Heineken have broadly stagnated
in the past decade. It aims to profit from major changes in the vast
U.S. market for light beer - which has reduced alcohol, calories and
carbohydrates - although it faces tight competition.
Even before the conservative backlash against Bud Light over a social
media promotion last month with transgender influencer Dylan Mulvaney,
sales volumes of established "light" brands have slid at a faster pace
than the U.S. beer sector as a whole over the past six years, according
to Euromonitor International, as first craft beers then hard seltzers
lured drinkers away.
Sales of light beers, which also include Molson Coors' Miller Lite and
Coors Light, still make up nearly half of the U.S. beer market, which
Euromonitor International says generated $118 billion in 2022.
Heineken Silver hit the U.S. market in late March. Heineken USA's Chief
Executive Maggie Timoney told Reuters in an interview that there is room
for Silver to grow among more expensive "premium" lagers, that comprise
only 25% of light beer sales against about half for all U.S. beer.
She said the brewer plans to win over Americans with more than two
million free samples this year, some during its partnership with the
U.S. Open tennis in late summer and as title sponsor of November's Las
Vegas Formula One Grand Prix.
Spiros Malandrakis, drinks analyst at Euromonitor, said he had been
enthusiastic about the brewer's earlier non-alcohol Heineken 0.0 beer
launch, but had reservations about Silver.
"This is a bit of a hazy proposition and it's fighting an uphill
battle," he said, adding younger Gen Z consumers seemed to be moving
away from beer to spirits and ready-to-drink mixes.
Timoney said the target audience would be younger, with more women and
perhaps not yet Heineken or even beer drinkers.
They might include Madeline Raineri, a 26-year-old social media marketer
from St. Louis, Missouri, who prefers craft beers. "I can count on one
hand the amount of times I've drank Heineken.... (but) if Heineken
offered a light beer that was good for sipping by the pool or on the
river, I would absolutely try it," she said.
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Bottles of Heineken Silver are seen on
display at a supermarket in Amsterdam, Netherlands, April 20, 2023.
REUTERS/Philip Blenkinsop
SILVER VS GOLD
Heineken is the world's second-largest brewer but in the United
States it is ranked No. 4.
AB InBev dominates the light beer segment and Bud Light is the clear
leader even after U.S. sales have fallen more than 20% since the
April 1 social media post. AB InBev, whose shares have fallen 10%
since then, says it is too early to assess the full impact of the
backlash.
And there is a newer star in premium light Michelob Ultra, whose
sales doubled between 2016 and 2021 according to Euromonitor. Last
year, it was the second highest selling U.S. beer.
It is the model Heineken wishes Silver to follow, rather than that
of Heineken Premium Light, which it introduced in 2006 but now sells
in low volumes in the United States as its retained bitterness has
not suited most American palates.
Heineken Silver was introduced in Vietnam in 2019 followed by other
Asian countries and across Europe last year. In Vietnam, one of
Heineken's biggest markets, Silver has overtaken sales of regular
Heineken as more consumers opt for its less bitter taste.
The U.S. version is less bitter still, but it does come at a cost,
with a 12-can pack selling online for $15.99 versus $10.49 for the
mainstream U.S. light lagers.
Lindsay Webb, a 29-year-old design researcher from Washington, D.C.
and a habitual Miller Lite drinker, said the price might prove a
prohibitive factor.
Silver will still have to fight Michelob Ultra, now boasting an
organic "Pure Gold" option, while Constellation Brands has just
launched its Modelo Oro ('oro' is Spanish for 'gold') across the
United States. All are similarly priced.
Trevor Stirling, beverage analyst at Bernstein Research, said
Heineken also had to battle a perception of being an old brand that
"your Dad or Granddad drank".
"This liquid could have more appeal to U.S. consumers, but it will
need a lot of work to get people to reconsider the Heineken brand,"
he said.
(Reporting by Philip Blenkinsop in Brussels, Doyinsola Oladipo and
Jessica DiNapoli in New York; writing by Philip Blenkinsop; editing
by Susan Fenton)
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