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ASIAN BEER: Beware the snakes and tigers

21 August 2008 By db staff writer

“standfirst”>The UK beer market may be flat, but imported lager, especially from Asia, is surging ahead. Ben Grant reports on the rise and rise of Tiger, Cobra, Chang and co

For those who believe that variety is the spice of life, a look at the lager category can be a rather depressing experience. The consolidation of ownership has been as dramatic as in almost any industry, while the unstoppable rise of a handful of mega-brands has left the beer brigade scratching their beards in a combination of horror and despair. The imported beer sector stands out as a ray of sunshine in an otherwise rather inclement category, and while lagers that hail from Latin America and Eastern Europe have been established in the repertoire of many British drinkers for some time, the region that is really picking up at the moment appears to be Asia.

Of course, a number of Asian lagers have been present – and popular – in the UK for a considerable time. Singha, for example, is preparing to celebrate its 30th anniversary, while Tiger, Kirin and Asahi have all been around for years. However, the current dynamism that defines the sector is twofold. Firstly, the established brands are increasingly looking beyond their traditional heartland and tapping into new sales channels, ergo Cobra’s big-budget drive into the pub sector and Tiger rolling out draught lager for the first time last month. And secondly, new brands are being brought to the UK by brand owners who have recognised our thirst for the exotic. Chang’s official launch (with coordinated nationwide distribution) last year and Halewood’s major push behind leading Chinese lager Tsingtao stand out as two of the most striking examples. So what are the dynamics driving the growth of the category? And for the multinationals (and others) who are signing up brands with a view to tapping into this burgeoning segment, what are the golden rules?

It’s a mystery
When considering what Asia – as a continent – means to the average British consumer, the one word that emerges continually is “mystique”. “It’s an incredible continent and really intrigues British consumers,” says Cobra marketing manager Zoe Smith. In our global village the nations of the world are growing to be more and more similar to one another. Of course we perceive mainland Europe and the Americas as different from the UK, but we view these cultures with increasing levels of familiarity. The links between the UK and Asia are stronger than ever before, but we still regard the continent as distinctly and unmistakably different and exotic. It’s a factor that the beer brands have clearly recognised when it comes to presenting their wares to UK drinkers – Tiger beer is typical of the category in the way it has “pushed the Far Eastern allure” in order to appeal to consumers for many years.

But what makes the region’s beers even hotter property in the current climate is the fact that – while the gulf between Asia and the UK remains as wide as ever – there has undoubtedly been a shift in terms of the way we perceive the region. Asahi UK brand manager Akira Saito points out that we still have the same perception of the mysteriousness and exoticism when we think about the continent, “now [British] people are associating Asia with premium, which they never used to do”. He points toward a growing interest in Asian culture, arguing that Asia is more “fashionable and cool” than it has ever been. Roger Barrey, director of beer international at Chang-distributor International Beverages Group, says: “The world is now moving east rather than west.”

The wine industry has long recognised the powerful role of tourism in driving a category forward, and this certainly appears to ring true for Asian lager. “Tourism is definitely an important part of the success,” says Greaves, “there’s nothing better than reliving that great holiday moment; it’s fantastic news for the brand.” Accessible long-haul travel has made Asia a reachable target for ever-increasing numbers of adventurous UK holidaymakers – and buying into the beer brand that you sipped while watching the sun go down on an exotic faraway beach is a pretty powerful way of reconnecting with great memories. Underscoring the power of the linkage between tourism and beer exports, Tirrell explains that Singha has long worked in close cahoots with the Tourism Authority of Thailand. “The brand is a perfect ambassador for the country, the two go very closely hand in hand.” It’s also worth pointing out that while the region’s appeal has expanded well beyond the backpacker community, an attractively high percentage of tourists are in the under-30 age bracket, the golden demographic for lager brands.

Serving the ethnic community
Tourism and the desire to try exotic new things are certainly important factors in widening the appeal of Asian brands to new consumers, but most brand owners report that, before considering these drinkers, the first priority is to serve the brand’s own national community. The ethnic community has a strong emotional tie to the brand that is likely to ensure that they will remain incredibly loyal. Anheuser Busch launched Harbin in the UK in 2006, and brand manager James Whiteley explains that the initial push was firmly focused on the Chinese community. “The brand has great roots, so it would make no sense to ignore this… In the first and second generations (after arriving in the UK) they are looking for familiar products, if they are second generation or beyond they want to link back to their heritage,” and brands from home provide an ideal way to do this.

The British Thai community, meanwhile, looks set to be heavily courted by beers from back home. We’ve always enjoyed a very strong relationship with the Thai community in the UK,” says Singha’s Tyrrell, “we take part in a lot of cultural events.” This strategy has clearly been picked up on the radar by the team behind Chang, which originates from the same country. “We’re taking a slow, measured strategy, so the first priority is the Thai market … our competitor has obviously been here a lot longer, but we want to become the number one beer for the Thai market.” Nigel Tarn, senior brand manager beers for Tsingtao distributor Halewoods, confirms that this is the most logical first step. The brand was launched at the beginning of this year, and he reports that the number one priority is “to consolidate the brand within its ethnic market”.

Beer with food
As brands seek to reach a wider consumer demographic, the most obvious touch point is via restaurants. The Chinese and Indian restaurants have been stalwarts of the British high street for a generation (and are far more prevalent than eateries specialising in British cuisine). More recently, south-east Asian establishments have enjoyed a surge in popularity: Vietnamese restaurants are cropping up regularly, while there are now more than 1,500 Thai restaurants nationwide, up from just four when Singha arrived in 1978. According to Tyrrell, the brand still sells more than 80% of its inventory alongside food, while Tarn reports that an extensive promotional campaign linking up with restaurants – Legacy of Taste – is pivotal to the £500,00 initial push behind Tsingtao.

Restaurants provide a great forum for seeding exotic beers, but the brand owners tend to be wary of becoming too reliant upon the sector. Association with “food [from the same country] is really important,” says Greaves, “but it’s not the be all and end all and you can get stuck in this sector if you’re not careful.” Whether or not the move is coming as a response to Chang’s arrival is unclear, but Singha is clearly working towards reducing its dependency upon the Thai restaurants. “This is our core market, our foundation, so we obviously won’t step away from it, but it’s important to look elsewhere too,” says Tyrrell. Whiteley agrees, stating, “food is an ideal springboard, but long-term the brand must not pigeon-hole itself.” The most obvious area to expand into is restaurants of different Asian cuisines. Tyrrell confirms that this is part of the strategy for Singha, as does Cobra’s Smith, who points out, “the recipe is brewed to complement spicy foods, it doesn’t have to be Indian”.

ON THE BALL: CHANG AND EVERTON

The nuances of globalisation have resulted in a number of peculiarities as culture and consumables find favour with audiences around the world. But few organisations have been blessed by more fortuitous circumstances than Chang Beer enjoyed as it rolled out in the UK last April. A small percentage of British consumers were already acquainted with the brand following visits to Thailand. However, for a brand that was, up until that point, only distributed very sporadically in the UK, brand recognition was staggeringly high. The reason? Chang’s high profile sponsorship of Everton Football Club.

Shirt sponsorship of a Premier League club represents a major investment (though both brands and clubs are notoriously cagey about disclosing transparent figures), yet the Chang logo had featured on Everton shirts since the 2004-05 season when very few British consumers had access to the lager.

The objective of the sponsorship, of course, was to reach the vast numbers of consumers in Asia who are diehard fans of the English Premiership, especially in Thailand where millions of supporters verge on the fanatical. Thailand has some of the harshest restrictions of any country when it comes to advertising and promoting alcohol, with brand owners severely restricted in terms of where and how they can communicate with consumers. Featuring on the shirts of a foreign football team that is based more than 8,000 miles away is thus one of the most effective ways for a Thai beer to reach Thai consumers.

Roger Barrey, director of beer for UK distributor International Beverages Group, can scarcely contain his glee when explaining that “the Everton deal has absolutely nothing to do with the UK consumers”. It has, he says, “been a big boost for the brand worldwide, increasing awareness as the Premier League becomes ever more popular”. With Everton qualifying for next year’s UEFA, Cup this sky-high profile looks set to rocket even higher. Barrey suggests that the deal “has not been a huge benefit” in terms of building brand image among UK consumers, however, it seems certain that most distributors would be simply delighted to enjoy such a prolific marketing placement during the delicate early years of roll out – particularly if it doesn’t come out of their marketing budget.

Taking the brands into a broader range of restaurants is clearly one way to grow the segment, but the latest moves suggest that Asian beer brands are increasingly looking beyond the restaurants and want to make an impact in the wider on-trade. All of the brand owners go to great lengths to point out that they are not “stepping away” from the restaurants and that this will remain the major driver of the business, but there is a movement toward exploiting other channels as well.

The potential of the bar scene has been made abundantly clear to Tsingtao. Tarn reports that the brand has been selling well in a number of high-end bars that were buying stock from the wholesaler (because Halewoods had not begun to address this distribution channel), indicating that there is clearly a demand coming from the premium on-trade, with
outlets attempting to distinguish themselves with brands that aren’t widely visible. Tyrrell confirms that Singha “is looking at the bar and club side of things, we’re working on a new strategy tied to that sector”. Tiger, meanwhile, has just begun selling draught beer for the first time in 35 test outlets, with a view to a wider roll out this year if the reception is good. “We’re just testing the logistical capabilities,” says Greaves, “but the research suggests it will be popular.” He points out that the inspiration for the move was the fact that so many outlets have been demanding it – always an encouraging sign.

But the Asian brand that looks set to make the biggest impact on the wet-led on-trade in the next year must surely be Cobra. Smith explains that the company is in the middle of “a major push” at the moment to roll the brand out in pubs, and the accompanying advertising campaign has been phenomenally prolific for a brand of its scale. The company has set

aside a war chest of £8.4 million to tell consumers that it is no longer confined to the Indian restaurant scene, and Smith states “we’re looking for 20,000 new on-trade accounts by 2010”.

Bring on the brands
So the sector is clearly in rude health at the moment, but all the indications point to an even brighter future. Greaves sums up the mood when he predicts that “we’ll see growth in terms of the number of products available rather than a few players growing massive volume”. While Saito states, “I think we’ll certainly see new brands arriving,” before confirming, “there’s certainly a few on their way over from Shanghai.” And does the prospect of further competition strike fear in the heart of fledgling Chinese brand Tsingtao? On the contrary, as Tarn explains, “The more brands there are the better; it’ll mean more awareness, more investment and a more defined category.”

THE REAL DEAL?

As the world becomes ever smaller, consumers are exposed to goods from more and more locations, and the soaring popularity of these imports suggests that the experience of enjoying a product from the other side of the world taps into a desire that goes beyond simple taste. Imported beers are a case in point: according to Nielsen figures, while the overall beer business in the UK is pretty much flat the packaged premium imported category is up 14% year on year.

“We live in an age where the world has shrunk,” says Harbin brand manager James Whitely. This has meant that we have access to beers from a far greater variety of locations, and this has undoubtedly moulded the way that many consumers behave. The growing variety of beers on offer has been seized upon by consumers who are keen to use brands as tools of outward expression, and this has had a dramatic impact on their thirst for knowledge. “The imported beer segment will increase more and more,” says Singha marketing director Donna Tirrell, “as it is appealing to consumers who are looking for brands to differentiate themselves; they allow people to show their knowledge.” Equally important, says Steven Greaves, marketing manager at Tiger, is the perceived experience of drinking a beer from a faraway land. “People are far more interested in experience than they were a decade ago,” he says, and in order to qualify as a genuinely enriching experience, “authenticity is important”.

So does this infer that consumers will only be satisfied by genuine imports, or are they equally drawn to beers that were conceived in Asia, but which are brewed rather closer to home?

“The fact that our beer is always brewed in Thailand is really important to our consumers,” says Tirrell, “they’re well travelled and ask a lot of questions because they want to know about provenance. People want the real deal.” Barrey – whose brand, Chang, is also produced entirely in Thailand – agrees, though rather less emphatically. “People are definitely more interested, enough to find out about the origin of the beer. The more discerning the consumer becomes, the more difficult it is for brands that are brewed under licence in the UK.”

However, as Greaves points out, there is still plenty of opportunity for such brands. “It definitely helps to have genuine provenance,” he explains, but failing that “genuine heritage is the next best thing. Such a viewpoint is certainly shared by Cobra – and the rampant growth of the Indian-styled (but Bedford-brewed) lager is a case in point. Marketing manager Zoe Smith explains that consumers are well aware that the brand is not produced in India, however they are still keen to buy into the brand because of its Indian heritage and its authentic Indian recipe. “In consumers’ mind they definitely see Cobra as part of the world beer category. World beers don’t have to be genuine imports, it’s more important that they have strong heritage and the quality is good.”

Akira Saito, brand manger from Kent-brewed Asahi, backs up Smiths’ argument. Place of origin “is not the top priority for consumers, the power of the brand is much more important. As long as locally produced beer follows a traditional recipe consumers are still interested.” He acknowledges that a sizeable minority of consumers have an intractably negative attitude towards locally brewed foreign brands, as they don’t see them as genuine. However, he also points out that the rigours of intercontinental transportation raise questions of quality control over some genuine imports.