It used to be that a young Canadian male was as fiercely loyal to his beer as his favourite hockey team. And those brands were always as homegrown as hockey itself, bearing labels like Ex and Blue. That’s no longer the case: these days your average red-blooded Canuck is as likely to reach for a Beck’s, Guinness or Heineken.

In recent years, heavyweight domestic players Molson, Labatt and, in some instances, even smaller breweries like Sleeman, have found themselves under attack from a burgeoning number of imports. Despite some attempts to turn the tide by introducing new humorous ad campaigns and focusing more on product quality, observers suggest the brewers must revamp everything – from packaging to advertising to pricing strategies – to truly save their brands.

Imports have accounted for close to 10% of Canadian beer volume this year, marking a fourfold increase in the past decade, according to Bob Scott, president of Toronto-based Ascot Marketing, which tracks the industry and publishes The Toronto Beer Buying Monitor. There’s another significant change as well; 10 years ago, half of those imports were cut-price American beers, while now premium-priced international brands make up three quarters of the segment.

The brewers are feeling the impact on their bottom lines: In the last quarter, Molson saw its profit drop 46% for the three months ended June 30 compared to the same period in 2002, while the Labatt Blue brand is also in decline as a result of ‘the shift [away] from mainstream,’ according to Brussels-based parent company Interbrew’s annual report. Even Guelph, Ont.-based Sleeman has felt the sting of competitors, reporting a 56% plunge in profits during the second quarter of this year.

There have been personnel changes in the senior ranks of these companies as well, with Labatt announcing a new president in Stewart Gilliland, who previously acted as CEO for Interbrew UK and Ireland, and Molson gutting and rebuilding its marketing department, most recently with the hire of P&G executive Les Hine, who will fill the role of president, marketing and sales for the brewer’s Ontario/West division. Paul Brennan, formerly director of marketing at Sleeman, also joined Molson as its VP marketing of super premium.

According to The Monitor, trademark brands now account for only 60% of total beer sales in Canada’s largest city, versus 80% a decade ago, and what’s even more disturbing is the fact that discount brands make up a higher percentage of the top three Canadian breweries than ever before, says Scott. ‘Once proud innovative Canadian brands such as Molson Dry and Labatt Ice have been reduced to discount beers, while Old Milwaukee now represents a significant percentage of Sleeman’s volume.’

Basically, it all boils down to the fact that beer lovers are looking for distinct tastes and want to be seen clutching a premium brand, especially in urban centres.

Sleeman, not long ago a brand of choice, plans to reassert itself as ‘Canada’s Premium Beer’ with the 25-to-34 crowd. A new radio campaign from its AOR, Toronto-based shop doug, will hit the airwaves this month and will bring back chairman and CEO John Sleeman, who propelled the brand to greatness as a spokesperson a few years ago. Sleeman will use this advertising to introduce its new Clear label, which contains only 2.5 grams of carbohydrates per bottle.

Why bring John Sleeman back? ‘The guy has loads of credibility,’ says marketing director Greg Newbrough, who adds that the CEO may also speak on behalf of the main brand again. Sleeman has ‘rallied around the new tagline ‘Canada’s Premium Beer,” says Newbrough, and the brand’s recent outdoor campaign ‘tried to associate the beer with a premium stage of life.’

He calls the new effort an ‘evolution’ of the brand and says it emerged out of customer research. ‘They basically told us that we’re no longer a small brewer, that we should step up and be more assertive.’

Interestingly, as Sleeman tries to throw its weight around a bit more, Labatt is looking to glean marketing insight from some of its smaller import brands, which it can then apply to the likes of Blue. Among its foreign holdings are Beck’s, Boddingtons, and the wildly successful Stella Artois, which grew 85% in sales last year. ‘I think we get great ideas on how to treat and improve the quality perception of our own Labatt beers,’ says Andrew Howard, senior director of marketing for premium brands at the Toronto-based brewer. ‘That’s our greatest advantage over our competition, which largely doesn’t own its import brands.’

Even internally, when it comes to its so-called ‘mainstream’ brands ,the company has decided to rethink how it refers to those labels. Instead of lumping them into the ‘mainstream’ group, those brands will now be referred to as ‘premium’ product.

‘As Canadians we’ve lost some of our pride in our beers and not for any good reason, because we’ve actually gotten better at our ability to create great beer,’ says Howard, pointing to the fact that Blue just nabbed a gold medal at an international competition called the Monde Selection Awards – a fact the company will likely communicate to consumers.

But Labatt is also ‘investing a lot of money in quality’ right now, he says, adding that the best example is the new Blue draught tower, a brushed stainless steel, ‘elegant’ beer tap placed in 500 bars in Ontario. There is also a difference in how the beer is being served in those locations; glasses will be rinsed with cold water to keep the liquid chilled and Blue will be poured into a proper pilsner glass. The idea is to show that the product is treated with respect and to create ‘a premium-looking experience.’

Howard says this new focus is also evident in packaging, which was revamped two years ago to include ‘quality cues’ like crisper blues and historical references, like Labatt’s birth date (1847), and a nod to its founder John Labatt.

Furthermore, the latest advertising for Labatt, served up by Toronto shop Grip, incorporates a ‘beautiful pour shot’ at the end of each spot, and the ‘Cheers to Friends’ platform is one that could ‘house a [stronger] quality message for sure.’

Adds Howard: ‘We focused a lot as an industry on image, which I think is important. But I also think consumers buy subconsciously on image, and consciously on rational benefits – and quality is a great one for beer.’

Similarly, Molson decided to unveil a quality message for its Canadian brand earlier this summer, for the first time in many years. The spot from its Toronto-based AOR Bensimon*Byrne starred the golden liquid itself, and listed several international awards Canadian has captured.

At the time, David Jones, director of PR for the Montreal-based brewer claimed it wasn’t ‘a direct response to [the growth of] premiums’ but rather was introduced to remind people that ‘the number-one-[selling] brand also happens to be an excellent, award-winning beer. People sometimes equate selling a lot with [being] not so great.’

However, Jones suggested the ad was a one-off and certainly, the brewer seems to have returned to its image-based approach with its current spots, depicting characters named for different days of the week and carrying the super ‘Seize the day.’

The problem is that the Molson Canadian campaign, although funny, could belong to any brand; in fact, it could have worked just as well for Labatt Blue, maybe even better, points out Chris Staples, CD and partner at Vancouver ad shop Rethink. And this points to a larger problem – ironically, in a category that spends over $70 million on advertising annually, much of it looks the same.

‘The best beer advertising is the kind that you cannot slap any other logo on,’ says Staples. ‘An example of that is Bud Light, which has been consistent in its idea to stand up for Canadian men [with The Bud Light Institute]. It’s puzzling why Molson Canadian would stray from ‘I am Canadian’ because there are always fresh ways to communicate that.’

A former beer executive, with years of experience in the industry, who wishes to remain anonymous, suggests the breweries could have been better prepared for the onslaught of imports and craft products in the first place, since those brands were slow to debut in Canada.

Now that it’s too late for any proactive measures, he believes the big guys need to ‘put their size aside and talk to the 19-to-24 crowd in a language that resonates with them.’ The trick, he adds, is to get the consumer to not only love the advertising, but also love the brand. ‘Here’s the magic: a clear role of the brand in the advertising. Just making a great ad and having it sponsored by a beer brand isn’t going to work.’

But it’s not just the advertising that looks identical – it’s everything else too. According to Ascot’s Bob Scott, the difficulty is that the mainstream brands are ‘essentially interchangeable,’ leaving advertising to be the ‘primary discriminator.’ He explains: ‘The liquids all look and taste the same, regular shelf prices are the same, the scuffed bottle is the same, and if one brand is offering a free T-shirt, or a feature price, hey, that’s often enough to switch.’

In part, Molson and Labatt have only themselves to blame, as they signed a standard bottle agreement in 1992 which means they are now stuck with the same boring look. ‘So while Molson Dry can no longer have its unique painted bottle (and the premium price that went with it), all of the imports plus Moosehead, Sleeman, Creemore, Steam Whistle, Brick, et al. continue to rely on unique bottles to help differentiate their products and add brand value,’ says Scott, who points to the American brand Miller Genuine Draft as an illuminating example of what can be achieved with a different approach. Since MGD was repositioned as a premium price import in a clear bottle two years ago, its share in the Toronto market has tripled.

He adds: ‘And with the tremendous product and packaging innovation we’ve seen in the wine and spirit markets in recent years, the Canadian beer industry now looks very old and tired.’

Moosehead’s no-discount policy pays off

You aren’t likely to find Moosehead on sale anytime soon. ‘We try not to get involved in discounting,’ says Steve Poirier, VP of sales and marketing at the Saint John, N.B.-based brewer. ‘As soon as you do that, it says there isn’t anything about the beer that is different. People get used to paying a low price for it, and then they won’t pay full price when it’s not on deal.’

Instead, Moosehead’s objective is to communicate a higher quality product, geared at consumers who are looking for more – both in taste and image. So far this strategy seems to be working. While overall beer growth in Ontario has remained flat, the East Coast brewery’s volume is up a significant 10% in the province. ‘As long as we stay true to our image and marketing plans, we seem to be avoiding that plight,’ says Poirier. ‘It’s a matter of doing what’s right for your brand in the long term, and not just on a quarterly basis.’

Most of Moosehead’s advertising is out-of-home, as it’s a relatively small player. But it sets itself apart is by targeting the 25- to 35-year-old, as opposed to the typical 19-to-24 male beer demo. ‘They are starting to reach a point in their lives where they can make their own decisions and they don’t just follow the crowd. The advertising is all about outdoors and nature, which people, especially in large cities, aspire to.’

Taste is integral, but it isn’t a factor in the advertising because Poirier says it’s difficult to describe. Instead, the brand relies on its retail and on-premise sampling initiatives to encourage trial and hopefully get consumers hooked.