LOVE THAT HEINIE

The First Successful Upscale Light Beer

By Jeff Ostrowski

Palm Beach Post Staff Writer

Monday, March 05, 2007

Two years ago, Bob Posten discovered something beer marketers had overlooked: Affluent young professionals wanted an upscale light beer and would pay a premium for it, so long as the brew projected a debonair image and didn’t taste as watery as the top sellers.

Until then, the marketing world had relied on the stereotype of light beer drinkers as frat boys and Al Bundy types who slouch on the couch with hand firmly planted in waistband.

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The low-calorie beer market long has been dominated by Bud Light, Miller Lite and Coors Light, brands whose advertising and pricing appeal squarely to the middle market.

But aside from the success of Corona and Corona Light, attempts to sell light lager to upscale customers and to add a little international flavor fell flatter than day-old beer. Brands such as Beck’s Light and Amstel Light never quite took off.

Posten, co-chairman of Landis Strategy & Innovation, a consulting firm in Palm Beach Gardens, helped launch Heineken Premium Light, the surprise hit that has shaken up what was a moribund market for imported light beers.

Heineken hired Landis to help define and position its new light beer. From late 2004 through early 2006, Posten and a group of his employees hosted dozens of focus groups throughout the country and traveled to Heineken NV’s headquarters in Amsterdam.

The conclusion reached by Landis and Heineken? Sure, the frat boys and Al Bundy-types like light beer. But educated thirtysomethings do too, if it comes in the right package.

“The misconception is that there’s only one light beer customer,” Posten said last month from his office near PGA Boulevard.

Heineken launched its Heineken Premium Light brand in the United States last March, and it has sold well in an otherwise-stagnant beer market.

Heineken said last month that its 2006 profit soared 59 percent to $1.6 billion, thanks in large part to the success of Heineken Premium Light. Perhaps more telling, Anheuser-Busch has blamed the Dutch import for cutting into its light-beer sales.

“This is the first daring line extension we ever made for Heineken,” Chief Executive Jean-François van Boxmeer said. “Definitely Heineken Light reignited our growth in the USA.”

Heineken expects to sell 1 million barrels of Premium Light in 2007. That’s a drop in the keg compared to the 40 million barrels Anheuser-Busch’s Bud Light sells every year, but the sales volumes have been enough for Heineken to recapture the glory days it enjoyed in the 1980s.

Landis doesn’t get a bonus for helping to set the stage for Heineken Premium Light’s success, Posten said. But it does get the satisfaction of finding a gap in the beer market and filling it.

“We created a new segment of light beer,” Posten said. “It’s called luxury light beer, and that didn’t exist before.”

Heineken Premium Light comes in bottles only — cans, at least in terms of market positioning, are for the cheap swill that’s dismissed by snobs as “lawn mower beer.”

And the price is steep. Publix sells a six-pack of Heineken Premium Light for $8.19, compared to $5.63 for Bud Light bottles, $5.39 for Miller Lite and Coors Light and $3.59 for Natural Light.

As Landis launched into its consumer research, Heineken’s brewmeisters came up with a dozen possible recipes for Premium Light. Landis presented the concoctions to focus groups and helped hone in on exactly what consumers wanted, and Heineken tweaked its recipe to match their advice.

In the end, Heineken said, it created a drink that’s distinct from its fuller-bodied regular product and lighter than Amstel Light, another Heineken brand.

Now that Heineken has hit a home run with its light beer, observers are calling the brew a natural move for Heineken, the No. 2 import in the U.S. after Corona. Harry Schumacher, editor and publisher of Beer Business Daily in San Antonio, says Heineken Premium Light was a “no-brainer.”

“A lot of people like Heineken, and they also want to watch their calories,” Schumacher said.

Posten bristles at the suggestion that launching a new product in a saturated beer market is easy.

“When it does look easy, it means we did a good job,” Posten said.

He notes that Heineken pointedly never mentions calorie counts or carbohydrate totals in its TV ads. Instead, a sleek green bottle sweats while the Pussycat Dolls’ hit Don’t Cha blares. Another spot features Beautiful by Snoop Dogg and Pharrell Williams.

Schumacher calls the ads — created by an ad agency, not Landis — “pitch-perfect,” especially in contrast to the sophomoric spots used by Budweiser and Bud Light.

“You juxtapose a commercial that’s kind of sexy with a Budweiser ad that shows a farting horse and you can see where your upscale customer wants to be,” Schumacher said.

As for the calorie count, Posten said, “Nice to know, but that’s not why people are buying it.”

Posten likes to say that features don’t sell products. That’s why Heineken Premium Light focuses on creating an image of luxury and cachet while ignoring the nutritional details.

For beer enthusiasts like Dan Oliver, a board member of the Palm Beach Draughtsmen Home-brewing club and beer columnist for the Palm Beach Post, the focus groups are about sales.

“I’m not a big fan of marketing and research,” Oliver said. “I don’t think it’s led to better beer.”

But in the high-stakes world of mass beer sales, insights like Landis’ can mean the difference between a hit and a flop. Heineken brand director Andy Glaser said Landis’ research helped find a niche in the growing light-beer market.

“What Bob and his team helped us to do was to understand the subsectors that were emerging,” Glaser said.

Posten freely admits that drinkers buy beer based as much on emotion as on the quality of the liquid in the bottle.

That’s why Landis’ research delved into the deep-seated motivations of beer drinkers. Posten said Heineken Premium Light drinkers are persuaded by price, packaging and advertising, even if that influence is subtle.

If they’re drinking at home, Heineken Premium Light consumers are rewarding themselves with a little bit of opulence, Posten said. If they’re drinking in a bar, they’re using the bottle as a signal that’s every bit as important as their clothes or hairstyle.

“It’s an expression,” Posten said. “It’s an accessory that’s helping a person define to someone else who they really are.”