Alliances, not 'Imperialism,' will prevail - beer branding strategies

Over the next five years, the global beer business will separate into clear categories of winners, losers and non-combatants, with the U.S. one of the principal battlefields. On a global scale, two fundamentally different battle plans are being drawn.

The most popular approach is what I call "brand imperialism." Brand imperialists are interested in one thing: developing a global brand by expanding into as much geography as possible. They execute their vision by paying a "slotting fee" to local brewing partners, typically a 10-15% equity stake, to get access to local production and distribution. They focus ail their efforts on building their global brand.

In stark contrast, the second approach focuses on growth via a balanced portfolio of regional, national and international brands, and an overriding emphasis on building deeper business relationships. That's been the successful approach of Interbrew, the fourth-largest global brewer and an owner of Labatt USA. They make no attempt to force a brand into the marketplace or to impose a single global position behind an international brand, but instead start by focusing all their efforts on building their partner's local brands.

I believe the future belongs to these flexible brand builders who can work effectively with regional partners in any market to leverage the specific competencies each partner contributes. Labatt USA, a joint venture of Canada's Labatt Brewing and Mexico's Cerveceria Cuauhtemoc Moctezuma, is a full-scale model of this alliance-building strategy in action. We have carefully engineered a specialty-beer portfolio differentiated by country of origin, taste profile and brand imagery.

The huge U.S. market, diverse in its tastes and habits, is a perfect testbed for portfolio management strategies that can ultimately be applied around the world. Although U.S. margins are low by global standards, the market's immense scale can generate significant profits. As a result, success in the U.S. is mandatory for all brand owners with global aspirations. Certainly, our shareholders believe the U.S. is our top international priority, and it's easy to understand why: success here not only can provide the financial results to support investment elsewhere, but can also build credibility in new markets.

However, success in the U.S. can be elusive, as many global packaged goods companies know. Astute marketers know that brand "differentiation" and "relevance" are not just buzzwords, but important drivers for winning consumers' share of mind, in a segment offering fewer opportunities for superlative claims than other packaged goods segments.

"Tide detergent, which I worked on at Procter & Gamble, can demonstrate "cleaner, brighter" results, but beer "performance" depends on personal taste. A good product, well made, is a basic cost of entry into the beer market, and you can't tell a beer drinker that your beer is "bigger, better, bolder," because the consumer will respond, "Let me be the judge of that . . ."

Instead of performance claims, beer marketing depends on storytelling, on relating a brand to the life of the consumer in intelligent and emotional terms. Adept portfolio managers build brand equity by focusing where that consumer relationship is well established or can be enhanced. Our Canada-Mexico-U.S. alliances have created great successes using this approach for key brands such as Labatt Blue, Dos Equis, Tecate and Sol.

A portfolio manager's battle plan must also be grounded in an understanding of a brand's core equities, as we were reminded recently with Rolling Rock. When microbrews crowded our position, we strayed from the core equities that were the foundation of Rolling Rock's consumer appeal. Last year, we took a step back and found that Rolling Rock drinkers relate best to its tradition and mystique: the painted-label, green bottle, the horse symbol, the mysterious "33," the heritage of old Latrobe. After restaging Rolling Rock to reinforce these elements in a more relevant way with humorous new ads, stronger packaging and exclusive use of the painted longneck, we are seeing the brand rebuild momentum and reclaim its important role in our brand portfolio.

True, managing such delicate issues across a complex matrix of brands in many markets is more exacting than taking the blunter approach of brand imperialists. But it generates the kind of organic brand growth that can better be sustained over the long term.

COPYRIGHT 1998 BPI Communications, Inc.
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