AB InBev: Flavored beer can grab share from other beverage categories

Rum-flavored beer Cubanisto, for example, has been competing against spirits in nightlife; Leffe is being positioned as a beer to be paired with food; and non-alcoholic beers such as Brahma 0.0% and Budweiser Prohibition can appeal to alcohol-free occasions.

Even core lager brands can benefit from careful positioning around the right occasions, says the world’s number one brewer.    

When and where do you drink beer?​

In developed markets, the beer category faces the challenge of stagnating volumes and declining per capita alcohol consumption.

“We understand why the category faces challenges, as traditional beer occasions become less prevalent when markets mature, and consumers have an increasingly wide variety of beverage choices for different occasions,” ​observed Carlos Brito, CEO, AB InBev, in the company’s FY2017​​ earnings call.

“As markets evolve, we see beer occasions evolve too: moving from primarily male-dominated socializing in the on-premise, to more in-home, mixed gender occasions and consumption with meals.”​

Flavored beers offer an opportunity to appeal to new consumers and to take on other alcoholic beverage categories.

“Flavored beer provides an option for mixed gender occasions as well as entering new occasions that have historically been owned by other alcohol beverage categories,” ​said Brito.

“We have seen success with many of our brands in this segment in both emerging and developed markets. In South Africa, Flying Fish grew volumes by more than 60% by recruiting females and younger LDA [legal drinking age] consumers into the beer category and taking share from cider. ​

“In Western Europe Cubanisto, a rum-flavored premium beer, grew top line by more than 40% this year by successfully competing against spirits in the nightlife occasion.”​

Other opportunities for beer include food pairings, craft and premiumization, continued Brito.

“One of the biggest opportunities is in the meal occasion, where our craft portfolio as well as our international brands enable us to engage consumers through beers and food pairings. ​

“We're leveraging this in many of our mature markets, such as in France with Leffe, which has become the No. 1 beer brand by penetration in that country. ​

“We continue to invest in the global craft and high-end space to offer more choice of beer styles across our footprint.”​

Premium brands are performing well, and Brito sees an opportunity in both emerging and developed markets as consumer trade up to high-end beers. As well as a portfolio of global brands, AB InBev has its High End unit that focuses on global specialty and craft brands.

Meanwhile, no and low alcohol beers open up new occasions for beer, with AB InBev pledging that such varieties will make up 20% of global beer volumes by 2025. It says this responds to consumers’ desire for more balanced lifestyles by increasing its selection of no and low alcohol beer products (NABLAB) and near beer options that suit a variety of experiences and occasions.

But don’t abandon core lager…​

While new innovations will help its beer portfolio evolve, AB InBev acknowledges that core lager remains the ‘heart of the business’.

However, it also sees the opportunity to position core lager brands carefully: appealing to different occasions and consumer needs rather than cannibalizing each other.

In order to do this, it has started segmenting its core lagers into easy drinking lagers and classic lagers. Easy drinking lagers are considered lighter beverages for informal, mixed gender occasions. Classic lagers are more full-bodied and positioned for more traditional beer occasions, such as sporting events.

“By differentiating between these two types of Core Lagers, we're able to reduce cannibalization and strengthen the positioning of our brands,” ​said Brito.

He uses the example of Quilmes and Brahma in Argentina, which were previously ‘right on top of each other and consumers didn’t know exactly why I should pick one or the other’ – and where communication packaging and touch points have now been separated to distinguish each brand.

It is a similar case for Budweiser and Bud Light in the US; and for Skol and Brahma in Brazil.

AB InBev’s aim to is accentuate the character of each brand so that they appeal to different occasions, different consumer needs and are therefore more complementary than cannibalistic.