NEW BEERSIES
Faced with a radical decline in New Zealand beer consumption in the last quarter century, DB Breweries had to innovate.
WHAT DO YOU do when faced with a market where annual per capita consumption has halved since the mid-1980s?
Kiwis used to drink 120 litres of beer a year each. Now they drink to 60, says DB Breweries CEO Andy Routley. Which is a pretty big problem if you are a brewer.
The answer: to find beverages “that bring new occasions back to the category”.
Routley says any great innovation starts with market insights on what consumers want or need. What DB identified was a growing trend towards health and well-being. The company’s Dutch-based parent, Heineken, also wants to help foster a moderate drinking culture in New Zealand, he says.
Enter Export Citrus, a lemon-flavoured lowalcohol beer made up of 40% beer and 60% juice. It has 2% alcohol by volume, compared with 5% for standard beers, and was launched in November 2013.
Routley says Citrus took just six months to bring to market, the quickest in DB’s product innovation history.
Export Citrus has already become the leader in the low alcohol beer space, accounting for 73% market share in grocery, Routley says. Customers bought five million bottles in the first year – 178% more than DB’s original forecast.
Routley, in his understated English way, is “quite pleased” with that.
He’s picking low alcohol beers, which currently make up just 2% of the local beer market by volume, will rise quickly, especially after drink driving alcohol limits were tightened late last year.
Some of the problems encountered in innovating the product included having to give retailers “motivation”, essentially discounts in order to get Export Citrus on shop and pub shelves in the busy pre-Christmas period. DB rightly predicted it would be a seasonal brew, with two-thirds of the annual volume sold during summer.
Another issue was making enough product, which Routley admits was a “high class problem to have”.
The natural juices which go into Export Citrus come from Heineken in Europe and DB had to rush orders and work extra shifts to keep up with the demand.
The challenge now is how to unite the runaway success back into the DB family of Export Gold, Dry, and 33. There are economies of scale in advertising the entire brand, rather than just one family member, Routley says.
And DB now needs to find new ways to grow the low-alcohol category. Routley won’t disclose what innovation is underway but says a sweet spot could be the 2.5%-3.5% alcohol by volume space.
“And who’s to say you can’t go below 2%?”
FIVE THINGS DB LEARNED:
Understand what consumers want and need. Once it had identified a consumer trend towards health and well-being, DB looked at what its parent, Heineken, already had in that space. Having a beverage it could tweak for local consumption shaved three to six months off the product innovation process.
Test it on consumers in the target group. DB reckoned Export Citrus would appeal to people 21 years and over predisposed to try new things, so tested it on that group.
Have a back-up plan in case the first one flops. DB consumer tested several different recipes because, by definition, innovation is new and you never quite know how it will go.
Aim for first-to-market advantage. Rival liquor retailer Independent Liquor snuck in three weeks ahead of the Export Citrus launch with its own low alcohol beer – which “irritated” Routley somewhat. Still, DB held the course because it had had such strong consumer response when testing its product and gained retail support.
Spend your marketing dollar where it has most purchasing impact. DB splurged on in-store and in-bar sampling, giving away half a million bottles to Kiwi consumers in the last quarter of 2013 and first half of 2014. Its research said once consumers sampled it in the right conditions, including the stock being at hand, they were 33% more likely to buy. Routley says, “you’re better getting the product into people’s mouths. That’s the success factor for a product that is tangibly different to anything else out there.”
Have a back-up plan in case the first one flops. DB consumer tested several different recipes because, by definition, innovation is new and you never quite know how
go.” it will