Back to the basics for St. Pauli Girl.
Established selling and marketing strategies -- as well as a little bit of luck -- make for successful import, Associated Importers' president says. MBA: What were sales of St. Pauli Girl in 1988 and how does that compare to sales in 1987? BEGLEITER: First of all, actual sales figures are privileged information. Let me say, however, that sales for 1988 showed somewhat of a decline from the previous year. MBA: Was last year's decline of the size of the brand's decline in 1987? BEGLEITER: No, the decline slowed. Associated Importers got involved with St. Pauli Girl as of September 1, 1988. The influence of our planning is only now being felt. In 1988, we maintained the brand and spent most of our time working on our plans for 1989. MBA: What are the particular reasons for the brand's decline in recent years? BEGLEITER: Primarily, the previous owners in the United States, the McKesson Corp., had decided some years ago to get out of beverage alcohol marketing and it was quite well known that their interest was in simply maintaining the brand. Maintaining the brand was really not to do anything that positive. So, a great deal of money that should have been spent in promotions, advertising and programming just wasn't spent. Today, there is a great deal of competition out there. To simply let something go by itself, unfortunately doesn't work. MBA: To what consumers is St. Pauli Girl marketed? Is it marketed toward the traditional imported beer drinkers? BEGLEITER: The classic target audience for an imported beer is the legal drinking age to maybe 26 or so, quite young, because imported beers are consumed a great deal on premise. In this case, the audience is male, educated, with disposable income and single. And because he is single he is out with friends, often in on-premise locations.
Our target audience is a little broader and its more `psychographical' than demographical. The person we're marketing to has a little more of a sense of himself. He's a little older or a little more assured. Consequently -- and he may be in that grouping of legal drinking age to 26 -- he's the type who is so much of an individual he doesn't respond to peer pressure, but rather makes his own mind up. He also has a sense of humor. There are quite alot of people like that, according to our strategy people at The Bloom Agency. MBA: There is a new advertising campaign, which includes broadcast ads. What other attempts is Associated taking to reverse the brand's sales trend? BEGLEITER: We're doing alot of fundamental, marketing-type work, including selling programs. An important feature of what we do is to create exciting, interesting programs that our distributors take to the trade. These programs fall within the image of the brand, essentially St. Pauli Girl programs that couldn't be done by anyone else. We had one major program that ran April-May which selected the new St. Pauli Girl and coincided with the brand's current campaign, based on `meeting the right girl'. The July-August program is an opening line contest, which also falls into the brand's marketing image. Then, in the fall, we have the poster program. These are very unique and definitive programs for the brand. They come from within the brand. MBA: While it's still early in the year, imports from Germany are off 16 percent through February. Is this due to any particular reason? BEGLEITER: None that I can see. That's surprising as Becks' numbers are up and ours are starting to show up. MBA: How do you think the German category will fare in 1989? BEGLEITER: I think it's going to be outstandingly good. I think the traditional European beers are going to perform very well for alot of reasons. One is that during the last two years that they were under stress, they managed to maintain their distribution. I think it opened up some of the marketers' realization that they must spend to defend their position. They did it, in a sense, last year, out of their fundamental gross margin. They hadn't taken any price increases so it was a defensive move that started to work. I believe that the indications are that these steps created improved sales for Heineken and Beck's last year--all at the expense of Corona, of course.
I think Corona, by the way, is actually in better shape that people might give it credit for. It really shook up the category. MBA: What about the overall imported beer category in 1989? Will imports fare any better than last year? BEGLEITER: I think it's going to show a slight increase. I don't think it will reach the average seven-to-nine-percent increase that it has enjoyed but it will be over last year's final figure. I'm calling for an increase of about four percent. MBA: Will that growth trend continue going into the 1990s? BEGLEITER: Absolutely. I see imported beers as a consistent area of growth in the beer category, one of the few. The idea of imports is one that the American consumer really appreciates. We have a greater acceptance of imports in the U.S. than any other place in the world. I don't see any reasons for that not to continue. MBA: Beer imports from certain countries have gone in and out of vogue. Most recently, Mexican beers were the craze but now have slowed. Why has this trend been prominent with beer imports? BEGLEITER: I actually believe it is the popular-selling brands that drive the sub-category countries. This has also been a function of the overall growth of the imported beer category, a relatively-new category. With imports, there is a great deal of peer pressure so you'll find consumers who jump onto a particular brand when it becomes hot. This drives the sub-category of the country.
We have a fundamental group of brands, maybe 20, in the import category that represent the bulk of the business. When a newcomer gets into that grouping, that doesn't mean that any of the top brands will be thrown out of the category; it just simply means that it will take part of the share. The top 20 brands seem to manage to stay in that position all of the time.
If you look at each individual brand, you'll see that they have their own history. Heineken, which has been here a long time, has made its mark by virtue of its distribution and its claim to being number-one, as well as maintenance of the business for many years. Beck's is in a similar situation--a slow, steady growth and runs on its reputation of being a great German beer. Beyond that, in the Canadian category, Molson has been around a long time. And Moosehead came along and it did have a personality. And Corona has personality. I don't think people said, `I'm drinking this new brand from Mexico.' Rather, they said, `I'm drinking Corona.' I think the same thing happened with St. Pauli Girl. Its growth came as a result of an image projection, the brand became very real to the consumer. It was also backed up by the substantial fact that it is a German beer, which gave it credibility.
So, each brand, rather than a country, really contributes to the growth of the category. But in terms of brands driving a country, I see brands which come from England, which really have not shown great growth in the past, now starting to grow. Traditional ales and lagers are beginning to take off. Consequently, the United Kingdom sub-category is posting increases. MBA: Associated Importers markets brands from the United Kingdom. Which ones are they? BEGLEITER: Double Diamond, John Bull, and a small brand from an Allied Dutch brewery, Three Horses. John Bull is a lager; Double Diamond is an Original Burton ale--it is brewed in Burton-on-Trent, a location where beer has been produced since 1002. It is the oldest documented brewing site in the world. MBA: When were these brands introduced? BEGLEITER: John Bull was introduced last year. We are on a market-by-market introductory basis. Double Diamond had been in the country previously; we are marketing it on a much broader basis nationally. MBA: What effect has the growth of U.S. microbreweries and specialty beer products had on beer imports? Do they compete for the same consumers? BEGLEITER: I think so. We should welcome them, anything that broadens the category and interest in beers that have more character will help the development of imports. Brands from microbreweries or small regional breweries will help. MBA: As a veteran of the alcohol beverage industry, do you think imports require a marketing and selling approach different from domestic beers? BEGLEITER: Yes. MBA: What is that difference? BEGLEITER: We are marketing to a more defined, narrower group and so we have to be much more targeted. Domestic beers are so much broader in their scope that by the very nature of their acceptance, they have to be represented in so many areas of communications. Today, to be a successful domestic, as proven by Anheuser-Busch and Miller, you have to have tremendous communication on a national base. Imports are not under such rigorous demand for communication, we can be much more targeted. We have to be because we are simply just not that big. So, our budgets being smaller, we communicate much more directly.
We also differ in who we appeal to. There's a very narrow level of communication, for example, with women. Women don't drink imported beer on an index level as they drink domestic beer. MBA: As an importer, do you think beer wholesalers do an adequate job of merchandising and selling imports? In what areas can they improve? BEGLEITER: I think they're capable of doing a better job for imports. I think they're pragmatic businessmen and they have to cover alot of bases. They certainly are not going to merchandise an import at a higher level than their main domestic beer. There are many distributors, however, who are now import specialists. These people certainly respond, if given proper programming, to imports and do a good job. There is alot of selling that has to be done by an importer if he's in a major domestic distributor's house. MBA: Do you see a problem with the price discounting of imports. Do these efforts `cheapen' the image of imports in the consumer's mind? BEGLEITER: Yes, I see that as a problem and there are some markets where that will never go away. But there are many markets where it is slowly going away, now. I don't, however, think that these practices cheapen the image of imports because consumers judge on a local basis. If they see all the imports running at a certain level and all the domestics running at a certain level, and they're proportionate, they're still going to see imports at a higher end. But there are some places where heavy discounting is not going to go away. Once the price of imports is lowered to the super-premium level, it does become a problem. MBA: Do you see further growth in the imported light beer category. BEGLEITER: Absolutely. MBA: Will Associated Importers enter that area? BEGLEITER: We certainly are looking at it. I think if the opportunities continue to be made available to us, we will examine them each individually. MBA: What do you make of dry beers? How large will that category in the U.S. get? BEGLEITER: In the face of Anheuser-Busch's decision to market Bud Dry, one would say that they've done their homework. However, I can't believe that the Michelob Dry introduction has been evaluated long enough to make a really good judgement. It may very well happen, simply because of the weight of the effort being put behind dry now. There seems to be an acceptance on the part of the consumer. My instincts tell me that dry beers will be around for a while. But whether it will be a success of the nature of light. I'd say the jury's still out. MBA: Associated Importers is a subsidiary of Hiram Walker-Allied Vintners, which is in turn a subsidiary of Allied Lyons PLC. The parent company is a firm very much involved in beverage diversification and international marketing. Will Allied Lyons get further involved in diversification, particularly in the U.S.? BEGLEITER: That would be hard for me to say. I can only speak in terms of what you said and confirm the fact that Allied Lyons is a company that is fundamentally interested in the beverage alcohol category and in strengthening their brand positions internationally, as well as in the United States. My company is, in a sense, a further indication of Allied Lyons' commitment in that we are the only beer importers of the fold. We are also equipped to consider marketing beverages that are either non-alcohol or low-alcohol, which is a further indication of Allied's interest in expanding its business into many facets of the drinks industry. MBA: How far will this global consolidation and worldwide marketing go among beverage producers? BEGLEITER: Well, I don't think you'll ever see just one producer. But I do think that because of the nature of marketing in today's environment, where so much money is needed to maintain brands, there is a definite pull toward a smaller group of major marketers. I think it's going to continue for a while so there will be fewer and fewer players, so to speak, fewer and fewer independents. MBA: Warning labels on malt beverages take effect in November. Will that have any impact on beer sales? BEGLEITER: I think they will continue to severely restrict the consumption of beverage alcohol to a great extent. The warning labels are part of a general trend. MBA: Other steps that may be taken include a federal excise tax increase and advertising ban. What impact will those restrictions have on the sale of malt beverages? BEGLEITER: I think all of those things--if they were to occur, and certainly the excise tax possibility is close to being a reality while the limitation on advertising is close to remote -- along with attitudes within the country today, will restrict the consumption of beverage alcohol in the future. This means that as a marketer we have to be a little smarter and have alot more commitment and money to market successfully in today's climate.
Brands will still be the predominant factor in terms of success or failure, and we see that today. We've even seen it at the retail level. Retailers are becoming much more merchandising-minded. The ones that are smart enough to appeal to the public in a certain manner that the consumer will respond to, have been successful. And yet, you see many, many package stores going out of business. The same thing is going to be true of the industry as marketers. You can't have a production source and just simply say, `I'm in business.' Now, you have to have alot of planning procedures, smart people, and a dedication and an idea that you know where you want to go.
We're going to have fewer players in a somewhat smaller industry, but those players will be playing with bigger chips. It's a matter of readjustment. Let's say there is a complete ad ban, similar to what exists in many European countries. Other promotional activities then come to bear. If a marketer simply says, `Oh, well, I don't have use of media anymore, so I'll promote by pricing,' he isn't going to be around for very long. You've got to find alternate means to create those images that people respond to. MBA: Do you have any additional comments? BEGLEITER: I'd like to expound a little more on the question of competition as that's an area I deal with every day. Every marketer believes that he has a better idea on how to do it. Some operate similarly, some operate in a totally unique manner. It is important today for a company to have a very specific methodology. It can't really be done by a seat-of-the-pants basis, anymore. The dollars aren't as available. It becomes a day-to-day agonizing decision on how you make your judgements, how you make your moves. That's so fundamental, so basic. And then there's an element of pure happenstance that comes into this as well. One can't bank on it but must be aware of it. To a great extent, that defines competition today.
There are hundreds of importers today. Who are these importers? They're entrepreneurs who figure they can move a few containers of beer and that will be that. They're on one side, hoping to get lucky. On the other side are the 15-20 serious importers who have a commitment to the category and have the resources to work within it. By resources I mean money and people. For these people, in addition to hard work and resources, a little bit of luck must come into it. MBA: Have you seen the importing beer business become more professional over the last few years? BEGLEITER: Unquestionably. It is the distributor to a great extent who has done away with the unprofessional importers. When imported beers were starting to come in, distributors said, `I better not get left out.' So, they were absorbing brands, and before long, some had 30 imported beers with 20 just sitting there. So, first he gets rid of them and becomes a much harder sell. Beer wholesalers want to talk to legitimate business people and they want to be sure that the marketer is dedicated and has the resources.
The distributor is a businessman who must prioritize. He knows he must have a selection of brands, including the right imports and a number of possible-growth brands. So the distributor has become the determining factor. When you're marketing a brand and pouring millions of dollars into it over the years, you want to be with the right distributor and you want to be sure that distributor has the time for your brand.
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|Title Annotation:||beer marketing|
|Publication:||Modern Brewery Age|
|Date:||Jul 10, 1989|
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