Sounding Off: E. Tomiya – Millward Brown “Why global beer brands will never beat the local favourites”

Eduardo TomiyaEduardo Tomiya is Managing Director of Millward Brown Optimor company BrandAnalytics

Rising employment levels and purchasing power have led to an increase in beer consumption across the region. Beer is a part of life.

And the size of the market is huge,which makes it very attractive to overseas brands – but none of them can successfully compete.

beer.coronaHeineken for example, the UK’s leading cider and beer business, tried to get a foothold in Brazil but has not managed to take any of the local brands’ huge market share.

The reason for this dominance is the ability of Latin American brands to build a unique brand proposition, and deliver powerful, specific and relevant attributes.

This has given the entire category a resilience that protected its performance against the factors that have recently impacted economies in the region, including inflation and the fall in commodity prices.

Peter Gerdes - CC
Peter Gerdes – CC

Beer brands excel at solid positioning and great marketing communications. AB-InBev, which owns four top beer brands – Brahma, Antarctica, Bohemia and Skol – does this best, and holds 70% of the total market as a result. Yes, it has the advantage of a distribution network that enables it to reach into every corner of the region, but it’s AB-InBev’s brand strategy that gives it the edge.

The company positions each brand in a very distinct way. Skol’s marketing emphasises enjoyment of life and appeals to young people – commercials such as Skol profissa and Casa de praia reflect this, with a positive, energetic and ‘party’ spirit. The traditional ‘round and square’ joke it uses across its communications, meanwhile, has significant local relevance in Brazil.

Brahma is well-known for its innovative and witty advertising that relies heavily on sex appeal. Its commercials – including Lata torceda and Brahma carnaval – link the brand very closely with soccer and carnival. Bohemia is more niche, with messages focused on its handcrafted, artisanal, traditional attributes. Antarctica is highly associated with Rio de Janeiro and the ‘Cariocas’ born there, and its logo featuring two penguins is extremely famous.

According to BrandZ research each of these brands captures its associations really well, giving them a huge competitive advantage.

Latin American beer brands are also good at tailoring their proposition to local preferences – producing light, low-alcohol beers that are suited to frequent drinking in hot weather.

Local Preferences

The outcome of this successful marketing is unshakeable consumer loyalty. The beer brands in the BrandZ Top 50 Most Valuable Latin American Brands ranking received the highest scores of any category for brand contribution, which is based on consumer perception and measures the impact of brand alone on future earnings. This indicates that close bonds have been forged between the brands and their customers.

The huge market share local brands have developed through their focus on brand-building also has its own rewards: the level of brand recognition they achieve, and the reach their large distribution networks give them, will be almost impossible for any foreign brand to match.

Beer brands with ambitions to grow their strength and value have two choices: they can become a global brand, or they can focus entirely on their local market. Both strategies work – the market share held by brands that have ‘gone global’ is equal to that of those that have remained local.

Each Latin American beer brand enjoys a huge leadership position in its home market.

Corona is popular across the world, but 50% of its sales come from Mexico. It has used this strength at home to help it succeed overseas, leveraging the ‘Mexican brand’ attribute and the associations behind it – such as holidays and relaxation.

Alternatively, brands can extract value from being local, deciding not to export and developing a focused brand strategy that connects with consumers in the country. This is what SAB Miller did when it bought two Colombian brands, Àguila and Poker – potentialising them locally by linking them strongly with soccer. Its marketing for Àguila ties the brand very powerfully to local tradition: the 100 años de alegría commercial, for example, connects with the country’s heritage in a very emotional way.

When we carry out taste tests in Latin America, people usually can’t recognise different beers from their flavour alone. It’s the brand that’s important, and which influences their choices – so a clear brand strategy, solid position and relevance is vital, along with a focused strategy for growth.