Local is always lekker when it comes to beer
“Levitt’s law” — an often-quoted 1980s thesis by Harvard Business Review editor Ted Levitt — argues international brands will always trump locals. But not apparently with beer. A great article from Financial Mail on SABMiller’s approach to beer branding and marketing.
WHEN SABMILLER BOUGHT into the Peru market a few years ago, it inherited a local beer produced only in Arequipa, a small city high in the country’s mountains, bounded by three volcanoes.
The brewer decided to phase out production of the beer, called Arequipeña, and replace it with Cristal, a national brand . As CEO Graham Mackay recently told the UK Marketing Society: “We were offended by the inefficiencies of producing a small quantity of beer for such a remote community.”
But the people of Arequipa disagreed. When SABMiller used the annual fiesta to launch Cristal, citizens smashed open crates and kegs and poured the contents down drains. Arequipeña was part of their tradition, their culture. They would drink nothing else.
And they don’t. Arequipeña “thrives to this day”, says Mackay ruefully.
It was a harsh lesson but one that reinforced SABMiller’s brand strategy of catering individually to markets. Where some brewers rely on their flagship brand — such as Heineken, Stella Artois or Guinness — in most of the markets where they operate , SABMiller believes that when it comes to beer, most consumers prefer local brands.
This runs counter to “Levitt’s law” — an often-quoted 1980s thesis by Harvard Business Review editor Ted Levitt — that argues international brands will always trump locals. As Mackay puts it: “This asserts that consumers will naturally aspire to, and drift over time towards, international brands simply because they are international. They are self-evidently better because people all over the world have sought them out.”
But not, apparently, beer. Despite their obvious advantages of scale and production efficiency, Mackay says, brands drunk outside their country of origin account for little more than 5% of world consumption. That’s 5% of an awful lot of beer — by one estimate, the world’s drinkers down about 140bnl annually — but it leaves an overwhelming slice to national beers. In its single biggest market, the US, Heineken has a market share of less than 3%. “You need to combine more than 60 of the top beer brands to amass half of total world volumes,” says Mackay.
SABMiller has a number of international brands — such as Peroni, Pilsner Urquell, Grolsch and Miller Genuine Draft — but they are in the minority. In most of the five continents and more than 30 countries in which it operates, the brewer caters mainly to local preferences.
That doesn’t necessarily mean taste, though group marketing director Nick Fell says: “The industry likes to say there is a perfect taste that pleases most of the people most of the time.” Instead, tradition, history and culture play an important part in beer drinkers’ choices. Selection is often “instinctive and emotional”, says Mackay. Local pride also comes into it.
Fell says that, as a rule, the only markets where international beers come close to domination are those where the population has a poor opinion of local beers. He cites Greece and Vietnam as examples. “However, in most cases where people have a strong sense of identity of their local beer, 98% say their own country produces the best beer.”
At SA Breweries in Johannesburg, marketing director Ian Penhale says the aim is to “tap into segments of the national psyche”. Though there are common elements in beer culture around the world — most relating to various definitions of masculinity — SAB marketing has specific characteristics.
The marketing and brand message behind Castle Lager, which last week concluded a new sponsorship deal with SA Rugby, is one of “bringing people together”, says Penhale. “It’s about tapping into male sociability as it applies to SA. It’s about how South Africans see themselves. Castle plays on its South African- ness more than our other brands.”
Carling Black Label, which has made huge strides in market share in recent years, is “a more serious proposition”. It was once billed as a black, working-class beer, but Penhale says the marketing of the beer has “moved away from the worker hero to espousing the values of 21st century man”. Though the target market is not deliberately black, he says : “The profile of our country is essentially black and our advertising tends to portray the make-up of our country.”
Carling is also popular among students, though this no doubt has something to do with the beer’s higher alcohol content.
Castle Lite is positioned as a premium beer for a younger, up-and-coming audience. “The message is more individualistic.”
Fell says decision making on regional brands and messaging is devolved to local market level, “subject to oversight”. Penhale says even global brands need local treatment. “It’s important to articulate the global brand proposition in a way that is relevant to local consumers. For example, Miller Draft is all about cosmopolitan, metropolitan life, but what that means to a young guy in Johannesburg is very different to what it means in Singapore. So the message has to be handled differently. A single brand message can’t resonate with all consumers.”
Least of all with women. The male camaraderie that defines the brand image of so many beers could, in theory, alienate women drinkers. But the image is so successful that Penhale admits marketers are loath to tamper with it.
“Mixed drinking is more common than in the past. Women are an important part of our audience but targeting them directly is difficult. We’ve never done so, though they appear in some of our ads. There was a time when no women appeared in beer advertising because men found it offensive.”
Internationally, beer brand positioning is complicated because in many major markets, marketing and advertising may no longer show people enjoying the product. Like tobacco before it, alcohol is becoming increasingly subject to advertising restrictions. Because of its growing reputation as a drug of potential addiction, there can be no suggestion that it makes you witty, strong or irresistible. That leaves only camaraderie and sociability.
Neither can there be swigging of the product. Ross Chowles, executive creative director at advertising agency Jupiter Drawing Room Cape Town, whose clients include Brandhouse — its products are Windhoek and Guinness beers, among others — says: “Advertisers like to use words like ‘sip’ and ‘savour’, never ‘swig’ . It’s all very genteel.”
SAB has the choice of international advertising campaigns and brand messages . Decision making may be a collaborative effort with executives at group head office in London, but Penhale says: “There is no foisting of unsuitable material or ideas. We are unlikely to simply take something off the generic shelf.”
Among the countries where SABMiller operates are Angola, Ghana, Uganda, Australia, China, India, Vietnam, Hungary, Italy, Russia, the UK, Ukraine, Colombia, Ecuador, Honduras, Panama and the US.
Each market has its own characteristics, and therefore its own reasons why people drink what they do, says Fell. In the US, for example, regular beers, light beers, imports and, more recently, regional speciality and craft beers — made by small, independent breweries — have all enjoyed waves of popularity. The trick, he says, is to find a match between the intrinsic attributes of each brand and “the emotional benefit we want it to satisfy”.
Though SABMiller believes its brand and marketing approach is the correct one, Mackay admits each major brewer has its own view on the way to develop brands and profits.
Following an era of takeovers and mergers, the big four groups — Anheuser-Busch Inbev, Heineken, Carlsberg and SABMiller — have grown to the point where they account for almost half of global beer sales volumes, and about 75% of profits.
“This period of intense consolidation has driven the adoption of global best practice in many areas, from brewing production to packaging and distribution. But when it comes to brand marketing, each of the brewers has a different take on where they stand in the global-versus-local debate,” says Mackay.
Source: Financial Mail
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