Beer battles enter ice age

Canada's two big breweries believe they have identified the current hot button in marketing their products to Canadian beer drinkers.It represents a significant shift away from the age-old custom of building consumer allegiance through heavy advertising-supported, image-intensive brands.The new wisdom suggests...

Canada’s two big breweries believe they have identified the current hot button in marketing their products to Canadian beer drinkers.

It represents a significant shift away from the age-old custom of building consumer allegiance through heavy advertising-supported, image-intensive brands.

The new wisdom suggests that image alone is not enough, and that beer drinkers need to be convinced that a new product is truly different before they are willing to try it.

This has translated into a new kind of competition between Labatt Breweries of Canada and Molson Breweries: a frenzied race to build categories, rather than simply brands, of beer.

In marketing terms, it means concentrating less on advertising and image and more on research and development and substance.

The two biggest success stories of the past few years – during a time of overall flat-to-declining beer sales – have been in new categories, so-called ‘dry’ beer and cold-filtered draft.

And in both instances, the undisputed leader is the brand that was first to market.

The dry category is led by Molson Special Dry, which got more than a month’s jump on Labatt. It has an estimated national market share of 4% to 5%.

And the cold-filtered draft segment continues to be led by Labatt Genuine Draft, also with a 4% to 5% share nationally.

Labatt also got its draft product to the marketplace more than a month ahead of Molson when it was launched last year, and has weathered an intensive attack from Molson, which responded with a draft under the well-known Miller brand name.

So it comes as no surprise that the recent Labatt-Molson confrontation over ‘ice-beer’ products has so far been fought on two tactical fronts: who would launch first; and who could convince consumers that its product is truly different.

Molson won the ‘first-out’ skirmish by a matter of days, announcing through a product-oriented commercial aired during the Sunday, March 21 Juno Awards coverage, that it was launching Molson Canadian Ice Draft, ‘the world’s first ice-filtered beer.’

On Thursday, Labatt stole the limelight.

The media were invited to a noon-hour press conference at one of downtown Toronto’s hot night clubs where Labatt President Hugo Powell, backed by a stage set that looked like a scene out of the Superman movie’s ice palace sequence, unveiled Labatt Ice Beer.

Powell said Labatt has invested more than $26 million in the technology required to brew the product, and that patents are pending on the process that, according to a Labatt press release, ‘creates a new world-wide beer category and opens the way for increased and long-term international partnerships and market development originating in Canada.’

Full-page ads

Labatt then responded to Molson’s claim to an ice-beer product with full-page print ads and two 30-second commercials that broke on the Academy Awards using actor Alexander Godunov as spokesman.

The campaign asserts: ‘If it’s not ice brewed, it’s not ice beer.’

Molson says it had all along planned to launch its ice product on the first day of spring and that it does not make marketing decisions based on its competitor’s agenda.

Molson Manager of Communications Freda Colbourne says ‘ice’ is a natural progression from the popular ‘cold-’filtered draft positioning, adding that Molson’s ice filtering has produced a product with a distinctly different taste.

Powell says Molson has developed a brand extension to the cold-filtered draft category and that Labatt Ice Beer is the only true claimant to new category status.

‘We have done something that is fundamentally different,’ he says.

Powell says Labatt’s ice beer was specifically formulated to address research findings that showed ‘the beer-drinking world wants a drinkable product that is also full in flavor.’

He says if Labatt Ice Beer can deliver on those expectations, it will eat into Molson’s Coors Light franchise, which is attracted to the beer’s easy-to-drink qualities, and Molson Special Dry, a brand that has a full-flavor image.

‘I believe that Molson Dry will pay a particular price because there is no substance to it,’ says Powell, adding:

‘Canadian beer drinkers are hungry for really new products, and they want to know about them.’

He says the copy-intensive print ads that explain the difference in the Labatt ice process are meant to satisfy consumers’ genuine interest in knowing the full story behind the product difference.

‘This way you build a relationship with the consumer,’ Powell says.

A recent Labatt-commissoned study showed that more than half of the critical 19 to 25-year-old youth segment feel the beer industry’s perception of youth as party-oriented and bathing suit-clad is out of touch with reality.

‘Old stuff’

‘They said, `Get out of here with that. It’s old stuff,’ Powell says.

The consensus among most industry observers is that both Labatt and Molson changed their plans at the last moment and that they hurried each other into the market.

‘It looks as though [Molson] knew that Labatt was coming out with a new [ice] product, and it appears that Molson was reacting to Labatt,’ says Michael Palmer, a consumer products analyst with Equity Research Associates, Toronto.

‘But it’s also clear that Molson rushed [Labatt,]‘ Palmer says.

One industry insider observes that if Molson and Labatt continue with aggressive ‘me-first’ one-upmanship, the beneficicaries, at least in the short term, may be the microbreweries.

‘If they get carried away by one-upmanship, all they’ll do is draw attention to the story that the mico-breweries have been selling all along – that people are looking for real alternatives to mainsteam products,’ the insider says.

In terms of getting the product to market, it appears as though this was a dead heat.

At press time, reports indicated that both Labatt and Molson would have their new products available in Ontario beer stores between April 1 and 5.

Ad agency for Labatt Ice Beer is Scali McCabe Sloves, Toronto. Agency for the Canadian brand family is MacLaren: Lintas, Toronto.