Sustained success in the beverage and brewing business depends on anticipating the tastes and trends of ever-changing demographics. Yesterday's drink rage can become today's fizzle without notice.
This market reality affects both small and big players in this sector. One big player that is a text-book example on how to adapt to an evolving marketplace is Heineken N.V. (OTCQX: HEINY).
Alternative Market to Counter Craft Beers
Only five months after the CEO of Heineken NV admitted the company couldn’t compete with craft beers in the United States, the company's stock started trading on the OTCQX market on Jan. 27, 2014.
On Feb 3, HEINY's share price closed at $30.49, down 69 cents from its close of $29.80 the previous day. It traded 44,626 shares near its three-month average volume of 46,497. The stock so far has been well received because Heineken is astute enough to recognize where it couldn't compete and turn its focus like a laser beam on where it could.
During a conference call to analysts in 2013, Heineken CEO Jean-François Van Boxmeer stated that the Netherlands-based company's flagship brand could not directly compete with a craft beer sector that has monopolized U.S. beer growth over the past decade, according to Beverage Daily.com.
Van Boxmeer went on to say that instead of trying to compete head-to-head with the phenomenon of craft beers in the United States, the company would instead grow its market share with its Strongbow cider brand. Heineken's Strongbow Gold is an alcoholic apple cider that was launched in Italy in 2011 and has enjoyed some success
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Duplicate Its Mexican-Beer Strategy
In a question-and-answer session with analysts, Van Boxmeer explained how the brewer would grow its cider sales in the United States by using the same marketing strategy it used to grow the sale of its Mexican beers to double digit rates in the U.S. over the last eight years. That strategy consists of targeting only the "upper side" of the market because Heineken doesn’t have the scale to compete in the mainstream, he added.
Cider Sales Booming
Focusing on growing hard-cider sales in the United States appears to be a forward-thinking strategy.
Sales of the top-10 cider brands in the United States grew by 62.6% to 9.58 million, 2.25-gallon case depletions in 2012, according to Impact Databank. The fact is that most major brands enjoyed double-digit increases. Strongbow sales saw a 9.1% increase to 867,000 cases in 2012.
Making a strong footprint in the burgeoning U.S. cider market is not a sudden move by Heineken. The brewer has been carefully plotting its strategy since 2008 when it acquired Scottish & Newcastle, giving Heineken ownership of Strongbow, which has already captured 24% of the global share of cider sales.
Hard-Cider Competition Brewing
However, Heineken is not the only brewer planning to exploit the growing U.S. cider market, Anheuser Busch Inbev SA (NYSE: BUD) also has also been taking steps to ensure its footprint. According to a memo published by Just-Drinks, Anheuser Busch is planning to launch a hard cider, called Johnny Appleseed on or about Apr. 7, 2014. The product will target 21-to 27-year-olds. In addition, MillerCoors has confirmed it will roll out a hard cider product in the United States this year, according to Just-Drinks. They, too, want to adapt to the cultural curve.
Staying Ahead of Cultural Curve
Lessons on adapting to the marketplace are also found in small beverage companies that know how to stay ahead of the cultural curve.
One such company is Drinks Americas (OTC: DKAM)
DKAM's stock volume soared to 11,299,396 shares on Feb 3, significantly higher than its three-month daily average volume of 7,154,463 shares.
This sustained volume uptick comes on the heels of a spate of positive announcements made by Los Angeles-based premium alcoholic-beverage broker in the last several days.
Day-of-Dead Beer Takes Off
Drinks America on Feb 3 announced that its Mexican Day-of the-Dead craft beer line exceeded its expectations at NYC's Dos Caminos Mexican Restaurant after selling 30 cases in just one week.
On Jan. 30, the company announced that it has signed with Southern Wine and Spirits of South Carolina for the distribution its premium Mexican craft beer brands throughout the state.
According to Drinks Americas, Southern Wine and Spirits of South Carolina is one of the state's largest distribution companies for wine, spirits and beer with over 2,700 throughout the state. They are a division of Southern Wine and Spirits of America, Inc. which is a nationally recognized wine and spirits distributor in the United States. Founded in 1968, Southern Wine and Spirits of America, Inc. operates in 35 markets employing nearly 14,500 team members.
Just two days before, on Jan. 28, the company announced that its premium Day-of-the-Dead Craft Beer was being carried in all nine of Arizona's Whole Foods Markets.
Branding In Tune with Cultural Curve
Drinks Americas is gaining traction with a wide customer base because it's introducing a variety of exotic new brands of its Mexican craft beer, including "Death Rides a Pale Horse Blonde Ale” and “Day-of-the-Dead Mexican Craft Beer."
Such unique products are in tune with many of today’s movie and TV themes that are growing in popularity among younger beer drinkers, who are big fans of such apocalyptic shows as the "Living Dead" and "Revolution." Since the gothic-sounding beers' roll out in Florida, the brand is being sold in more than 700 outlets, including Cost Plus, Fresh Markets, Disney, World of Beer, 7-11's, Mexican restaurants and other independents.
Drinks America also markets such popular niche-targeted brands as Willie Nelson's Old Whiskey River Bourbon, Olifant Vodka. It also receives a royalty for Kid Rock's American Badass Beer and Damiana Mexican.
On Feb 3, shares of DKAM closed at 2 cents, unchanged from the previous day’s close.
Find out what could be the best investor's move when it comes to DKAM by getting the complete report here, or by cutting and pasting the following link in your Web browser:
Liquid Relaxation Drinks
Another small player that is quickly adapting to changing demographic tastes is Bebida Beverage Co. (OTCPINK: BBDA).
The Mooresville, N.C.-based company is having some success in marketing what it characterizes as a "liquid relaxation drinks," which is the opposite of energy drinks, which it also sells.
On Feb. 3, BBDA's share volume soared, with 227,793,830 shares changing hands, nearly eight times its three-month average of 29,515,219.
The volume was triggered in part by the Bebida's Jan. 28 announcement that it had entered into an exclusive distribution agreement with Double CC Distributors LLC. Through the partnership, Double CC Distributors LLC will handle 16 counties in the panhandle of Florida, offering both local and national retailers the company's signature product, KOMA Unwind relaxation drink.
But the soaring stock volume could continue to be sustained by Bebida’s penchant for being ahead of the cultural curve with its beverage offerings.
On Feb. 3, 2014, shares of BBDA closed at 0.0218 cents, up 0.0023 cents from 0.0195, the previous day's close.
Find out what could be the best investor's move when it comes to BBDA by getting the complete report here, or by cutting and pasting the following link in your Web browser:
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