Strategic priority two
Developing strong, relevant brand portfolios in the local market
As the global beer market overview explains, most of our markets exhibit at least three major trends. One is premiumisation as consumers move up the scale from economy to mainstream and mainstream to premium beers in search of brands that offer prestige and differentiation. Another is fragmentation. Contrary to expectations a few years ago, consumers at the top end are varying their choices and becoming more interested in speciality brands, craft beers, foreign imports and other sub-divisions of the premium segment. And a third trend is the growing importance of female consumers.
Our central strategy is to identify the trends and dynamics in each market, then to create the right mix of brands to capture the opportunities in each location. We’re helped in this respect by having a huge and varied global portfolio of brands on which any of our businesses can draw – not to mention our ability to innovate as consumers demand new tastes, new presentations and new drinking experiences. The key is to deploy our brands so that each adds value through its own distinct positioning.
Managing full portfolios of brands in this way is more complicated than the single-brand approach. A premium beer with an unusual heritage will need different marketing to a mainstream brand – something more akin to viral marketing that gives consumers a sense of having discovered it for themselves. Brands targeted at the clubbing generation, of legal age drinkers, might be best communicated through new media such as the internet, as we’re doing with Miller Genuine Draft in Russia. Among the skills we need, we’re learning the best ways to communicate with multiple target audiences.
Around the group, businesses such as Miller in the USA and Kompania Piwowarska in Poland have continued to evolve their portfolios to match the opportunities in their respective markets. Panama and Botswana are two examples of businesses that have renovated mainstream brands successfully. The case of Miller Chill shows how an innovative premium product can fill useful gaps in more than one market – its success in the USA followed by an equally successful launch in Australia. In Poland and Russia, the strategy of marketing the Redd’s brand to women is generating good results. Other successes are detailed in this section.
Reshaping the portfolio in the USA
The main strength of the Miller portfolio in recent years has been the low-calorie flagship brand, Miller Lite. Its weakness has been its heavy exposure to two declining sectors, full-calorie and economy beers, and its under-representation in the premium segment where most of the growth is happening. In late 2006, Miller developed a strategy to rebalance the portfolio and position the company for long-term growth.
The first part of the strategy was to renovate Miller Lite with new packaging and advertising. Sales have responded with a 1.1% rise during the year.
The second part was to capitalise on current trends in the premium sector with brands drawn from a variety of sources. Peroni, for example, is now the seventh-fastest growing European import into the USA. The Leinenkugel’s brand, still brewed in the Wisconsin woods by the fifth generation of Leinenkugels, exploits the trend towards craft beers. The newly created Miller Chill trades on the growth in light beers and the fashion for all things Latin.
The third aspect of the strategy seeks to slow the decline of the full-calorie Miller Genuine Draft and the economy brands, Miller High Life and Milwaukee’s Best, recognising both their heritage value and their contribution to cash flow. Miller High Life has now returned to growth on the strength of its successful ‘Take Back the High Life’ campaign.
Today’s portfolio makes a much better fit with consumers’ demands and the strategy has played a large part in Miller’s resurgence.
A full portfolio in Botswana
St Louis is Botswana’s only local beer brand, with a market share of around 50%. By 2006, however, it had become jaded and its sales were declining. The decision was made to renovate the brand and review the portfolio as a whole.
In a country proud of its status as one of Africa’s success stories, the first step was to create new packaging and associations to link St Louis with the taste and style of today’s Botswana. In a break with local tradition, the revitalised brand was introduced in new returnable bottles instead of cans. As well as being more affordable, glass bottles are better environmentally.
The 2007 relaunch quickly reversed the decline of the previous few years. With St Louis successfully addressing the mainstream market, the business has filled out the portfolio top and bottom by adding Peroni Nastro Azzurro at the premium end and introducing Barons from Mozambique in the economy segment. The sorghum beer, Chibuku, retains its 97% share of the traditional beer market.
Panama: a historic brand relaunched
SABMiller’s move into South America in 2005 was followed by a systematic analysis of the marketplace and a strategy aimed at raising the perception of the beer category. One result in 2007 was the renovation of Panama’s oldest brand, Balboa, which dates back to 1910.
Under the theme of getting more flavour and passion out of life, the relaunched product is directed at premium drinkers in their mid-20s. The 330ml bottle and modern, stylish label support the theme with an image of the swashbuckling Spanish explorer, Vasco Núñez de Balboa. The launch took the form of a beach party with live bands and the distinctive red sofas used in the advertising to symbolise ‘the tribe’ enjoying life together.
Buoyed by the relaunch, Balboa’s sales rose 65% in the year to March 2008. The brand-building continues and includes further special events to consolidate Balboa’s strong connection with its consumers.
Peroni: winning in the UK market
Miller Brands (UK) was established in 2005 to handle SABMiller’s international premium brands (Peroni Nastro Azzurro, Miller Genuine Draft and Pilsner Urquell) in the mature UK market. Its formation came as many of the UK’s existing premium brands were declining and consumers were turning to more distinctive beers. With competitors reducing their prices to maintain market share, Miller Brands chose to occupy the top end of the market and maintain its premium price positions.
In the case of Peroni Nastro Azzurro, Miller Brands’ strategy has been to work closely with key UK retailers, developing exciting and innovative marketing and distributing only to outlets that attract the discerning target consumer.
In a premium lager market that declined by 5%, Peroni Nastro Azzurro has both expanded its sales volumes, growing 39%, and maintained its premium price. Miller Brands’ portfolio has now been enhanced with the addition of Tyskie and Lech, respectively the number one and two Polish beer brands in the UK.