young things Charles Wells sales and marketing director Nigel McNally looksat the importance of the emerging beer brands sector If you consider which brands have dominated the UK beer market since time immemorial, Guinness is probably the only true example. Even Stella Artois was a new kid on the block 15 years ago and, along with brands such as Kronenbourg and Grolsch, started to overtake established brands. Together they created a new segment, the emerging brands sector, but in turn they became mainstream and ubiquitous. The market lifecycle continues to see product growth, followed by alevelling-off process with previous emerging brands suddenly becoming the hunted, not the hunter. The licensed trade faces a challenge to stimulate energy and new strands into the beer sector, trying, where possible, to extend the lifecycle growth period. That energy can only come from mainstream brands or the emerging products. Figures show that it is most likely to flow from the emerging brands, where there is an undercurrent of rapid growth. Corona Extra, the number one premium bottled Mexican lager, for example, is maintaining a volume growth of more than 100% and Red Stripe is gathering momentum at 25%. At Charles Wells, we have looked at brands from the Northern and Southern Hemispheres to consider whether such growth can, and will, be sustainable. The Northern Hemisphere offers us European/Continental or Americana-style beers. The Continental versions are bitter tasting and currently growing at 4% from a large base (volume 2.3 million barrels). The American beer style is blander and rising at 2% from a smaller base. Brands from these categories tend to be supported by considerable advertising budgets, with the returns generally proving to be relatively disappointing. The southern hemisphere, meanwhile, is seen to offer fantastic growth through Central and Southern American and Asian beers. Their growth appears inconsistent with advertising spend, yet suggests that the consumer is looking for brands that offer a point of difference from the mainstream. And it suggests that they are meeting genuine consumer needs and should not be ignored. Their key characteristics are: l Taste Central and South American beers are generally more refreshing and offer subtle taste varieties. They are less bitter than their Continental counterparts and the same is true of Asian brands such as Kirin, Cobra and Tiger beers. Consumers are searching for a refreshing taste experience from different parts of the world and are more adventurous than ever in what they try. l Heritage Consumers are increasingly well travelled and may have experienced exotic beers in their natural environment. They are looking to recreate this acquaintance when they return home. l Positioning and propositions Consumers identify a beer to match the occasion and the proposition becomes a key driver to purchase. Propositions offered by beers from emerging brands tend to be more interesting and stimulating than mainstream brands. Corona Extra, for example, is positioned as the ultimate party beer. It is now outperforming Budweiser in key managed outlets such as Urbium, SFI and the Living Room and also in four-pack bottles in the off-trade. It spends little on advertising yet is achieving a 100% growth rate on a base of more than 2 million cases a year. And this rate of sale shows no sign of slowing. The marketing approaches of Corona Extra and Budweiser are diametrically opposed. Instead of extensive advertising, Corona communicates its proposition at the bar where, if customers enjoy a positive experience, the "ultimate party beer" message is reinforced and becomes self-perpetuating. The clear, distinctive bottle and unmistakable Mexican imagery simply serve to strengthen its partying credentials. Similarly, the Red Stripe heritage emphasises all the positive elements of Jamaican and Caribbean culture that is represented through its chilled, "irie" proposition. Its taste profile is refreshing and not bitter and the use of Yakhima hops makes the distinctive taste very moreish. Rather than investing heavily in advertising, Red Stripe is deliberately marketed at grass roots level. In this way, the brand is associated with events relevant to its target market, including surfing, music, carnival and cricket. Such marketing plans look to continue the brand growth from its current base of 2 million-plus cases and current growth rate of 25% year on year. A couple of emerging brands have taken a further step, giving additional consumer benefit through their choice of ingredients. Cobra, for example, provides a less gassy beer. Another Asian product, Asahi, markets itself as offering a dry-tasting beer-drinking experience whilst Kirin, also from Japan, will be relaunched later this year, capitalising on its unique brewing process proposition. With regard to draught premium lager, customer insight shows that trade can realistically justify two premium lager fonts on the bar, given the size and performance of the sector. At Charles Wells, it's our view that one of those should be a mainstream premium lager, such as Kronenbourg or Stella, with the other being drawn from the emerging brands sector. These offer at least one point of difference and, as the perception is of a more premium product than the mainstream, a premium price can be charged. We've monitored draught Red Stripe on the same bar as Stella Artois and seen it command a 30p-per-pint price premium to Stella and still achieve a comparable rate of sale. Our test experience shows that Red Stripe can, therefore, offer a higher cash margin delivery per customer than Stella and work successfully in tandem with a more mainstream brand. To put two Continental-style products on the bar does not give the consumer wide enough choice, nor does it maximise the use of limited bar space. Greater consideration needs to be given to satisfying the broader consumer taste profiles. Likewise, licensees need to recognise the benefits of allocating greater space to the emerging packaged beer brands, given their exceptional rates of growth. These new premium-packaged lagers shouldn't be hidden away on the bottom shelf of the fridge where consumers might not even notice them. When new products from the emerging premium lager sector are introduced, a concerted point-of-purchase strategy should be implemented allowing consumers to develop brand recognition and the opportunity of experimentation with a new taste, heritage or proposition. So where do the emerging beer brands go from here? A number of emerging brands have been successful through trial in restaurants. This is true for Corona Extra in Mexican restaurants, Cobra and Kingfisher in Indian restaurants and Asahi and Kirin in Japanese restaurants. The challenge has always been to widen appeal of the emerging brands and take them out to a wider arena, and it remains so today. Some have fared better than others, with Corona, Red Stripe, Cobra, Kirin and Tiger leading the way. But will these emerging brands of today become the mainstream brands of tomorrow or will they continue to hold their mysterious allure and their key selling points? It's my belief that certain brands within the sector will become significant in their own right over time. Whether they become mainstream is open to question. Providing the brand owner can be sensitive in the marketing of its products, there's no reason why the exclusive nature of these products can't be retained whilst enjoying considerable volumes. What is absolutely clear is that the emerging beer brands are an important constituent of the trade offering and should be cherished, nurtured and enjoyed while recognising the benefits of their premium credentials.