Doubling down in 2022 was the theme of yesterday’s Heineken USA (HUSA) national sales meeting. HUSA’s leadership team, including CEO Maggie Timoney, stressed the message as their big ask of their wholesaler partners next year.
Timoney shared that the company has posted consistent share growth over eight months.
“Heineken is back. Dos Equis is growing. The line extensions are working,” Timoney said.
The meeting was void of new product introductions, which shouldn’t be a surprise. Timoney said HUSA won’t innovate just to do it. Innovation from the company will be aimed at bringing new consumers — both truly new and lapsed — back to the beer category.
Chief marketing officer Johnnie Cahill stressed the importance of bringing new consumers into the beer category and he believes the line extensions — whether that’s Dos Equis Lime & Salt, Heineken 0.0 or Tecate Alta — are doing just that.
“It’s not only new beverages,” he said. “It’s new people, new consumers coming into the category to enjoy products that make it easy to join the club of beer.”
1M Case Opportunity by Closing the Can-Bottle Gap
HUSA chief sales officer Jim Sloan said the “bounce” is back in the company’s step and it’s manifesting in the numbers. Nevertheless, he laid out the three major challenges facing the company:
- An unstable supply chain that requires backup manufacturers for cardboard and cans, as well as multiple trucking companies;
- The ability to scale line extensions — Dos Equis Lime & Salt, its variety pack and Ranch Water — and the need for its wholesaler partners to buy in similar to Heineken 0.0;
- The ability to close the gap between Heineken’s canned offerings with bottles.
Still, a million case opportunity exists alone by closing the distribution gap between 12 oz. cans of Heineken Original and bottles, Sloan said.
“It’s a big, big, big opportunity,” he said.
The opportunity for Heineken 0.0 is equally big, as the distribution for the brand is at 50-60% depending on the region.
“We need to close those gaps fast,” Sloan said, stressing the urgency as new competitors enter the market such as Anheuser-Busch’s non-alcoholic version of Stella Artois, Liberté.
Although HUSA;s meeting didn’t announce new-new products, a new packaging format is on the way: slim (sleek) cans of Heineken Original and non-alcoholic Heineken 0.0.
Heineken Slim Cans Hit in March; 0.0 Slim Cans in Q3
HUSA VP of marketing Borja Manso Salinas called 2022 “the year of the slim can.” Starting in March, Heineken Original will roll out in slim can 12-packs, after a successful test this year in Florida, followed by Heineken 0.0 in the third quarter. Heineken Light is already available in slim cans.
“We know that it works,” Cahill said. “It’s so premium. It’s a beautiful drinking experience.”
Asked about the launch timing for the company’s top offerings in slim cans, Timoney said getting Heineken Original into the format following the Florida test was much easier.
“We are in the queue to make sure we can get the slim cans in, and if we can go sooner, we’ll go sooner,” she said. “But we want to align and have slim cans everywhere across the Heineken franchise in 2022.”
More Innovation to Come
Cahill did offer the vaguest of teasers, noting the company is exploring ready-to-drink canned cocktails, coffee, wine and punch for 2022. But details were held close to the chest.
“We have more to come, more than what you just saw,” he said. “We are working in the areas of cocktails of adult beverages like teas and coffees, we’ve got an exciting proposition coming in wine with a real twist, and something truly exciting in the punch space that’s under development.”
Another priority for 2022: Expanding Tecate Alta outside its West Coast test markets. Alta is HUSA’s 4% ABV, low-calorie, low carb Michelob Ultra challenger.
Additionally, HUSA will continue to play in emerging categories through its collaboration with AriZona with SunRise Hard Seltzer and Dos Equis Ranch Water, as well as Canijilla hard seltzer or Comb & Hive honey spritzer.
Doubling Down on Heineken 0.0
HUSA’s marketing plan for 2022 builds upon the one laid out pre-pandemic in 2019. Manso Salinas reminded wholesalers of the plan’s three pillars: breakthrough communication with fewer but more powerful messaging; relevant category-building innovation such as Heineken 0.0; and focusing on the right product formats to premiumize the category.
“When we look at annualized growth for the Heineken franchise since the beginning of 2019 that trajectory … it’s accelerating,” he said, calling it “the best indication that we are on the right track.”
The success of Heineken 0.0 was among the standouts, with volume up +26% year-to-date per NielsenIQ, trial increasing +70% and a 32% repeat rate. The brand now accounts for 27% of non-alcoholic beer dollar sales.
“This growth is mostly based on rate of sale acceleration, distribution has been challenging,” he said. “But we are clear category leaders.”
The strategy ahead for Heineken 0.0 includes leaning into pop culture through memes, dating accounts, and popular TV shows such as Showtime’s Billions, Marvel’s Falcon and Winter Soldier and The Bachelor, in addition to promotions for Dry January, the” Summer of Cans,” a traditional holiday program and soccer partnerships with the Champions League, MLS and DraftKings.
“We have momentum, and we need to accelerate,” Manso Salinas said.
Growing the non-alc beer segment remains a priority, Manso Salinas said, pointing to 10% of the segment’s volume coming from people who were outside of the beer category and 40% coming from incremental consumers. As part of the push, the company will roll out a “Cheers with no alcohol” campaign that highlights “social occasions” as opposed to “abstinence.”
“This is about moderation,” Manso Salinas said. “It’s about some days you want to drink alcohol, some days you don’t, and even within the same day. That’s why our product innovation is basically doubling down on the 12 can pack.”
Dos Equis Bounces Back
2021 was “the year we turned Dos Equis around,” Ligia Patrocinio, Dos Equis senior director, said.
Patrocinio noted that the brand is gaining market share, recovering the volume lost during the pandemic and has regained its on-premise tap placements. She offered several highlights:
- the “Get a Dos” campaign was the brand’s best tested campaign;
- social engagement improved on each of the major platform (+70% Instagram, +100% Facebook and +22% Twitter);
- Lime & Salt is the No. 1 non-hard seltzer 6-pack innovation SKU in the U.S.;
- the brand boasts an 89% repeat rate.
Additional growth opportunities come with the launch of a Lime & Salt 12-pack, as well as 6-packs of Dos Equis Lime & Salt and Pineapple in the spring.
The Mandate is The Mandates
An unofficial theme of the meeting was fulfilling national account mandates. Sloan and other sales leaders, including Julie Carbon, HUSA VP for the central region, stressed the importance of not “leaving volume on the table with those voids.”
Sloan acknowledged that out of stocks have been an issue but noted that supply has improved of late. He and chief operations officer Laurens van de Rotte shared that the brewer’s Dutch portfolio was about 94% in stock while the Mexican portfolio was slightly better at 95%. They admitted that there are gaps to close, but they expect it to fall into alignment.
Fulfilling those mandates are the company’s “biggest priority,” Alex Boerger, HUSA’s off-premise national accounts manager, said.
“We’ve got 48,000 mandates right now, and look, if we can close half of those, it’s hundreds of thousands of cases,” he said.
Mike Miskiewicz, who leads HUSA’s on-premise national accounts, added closing national mandates is also a top priority in the on-trade.
“We have about 5,000 open gaps on our mandates that we’re looking to close and about 40% of that is actually Heineken 0.0,” he said. “So as we strive to close out mandates, we’re always looking for that 90% or higher execution, but Heineken 0.0 is a huge opportunity for us to close those out, and we’re working with our teams to continue to drive that.”
Opportunities in the off-premise include gaining displays for 12-pack cans of Heineken and Dos Equis, as about 70% of the company’s displays in chains are bottles, and gaining space for 24 oz. cans of Heineken, Dos Equis and the Lime & Salt and Ranch Water line extensions in C-stores.