Comment - "Speers" and the Near-Beer Revolution
The label that started it all
At the launch of an extension to Heineken's hugely successful Desperados brand two weeks ago, the brewer's UK management issued a brash come-on to rivals looking to challenge them in the so-called “spirit-beer” category. “You'd better be good,” they said.
As Heineken suggests, the new contender will have its work cut out, because the Dutch brewer's faith in Desperados is hardly misplaced. The Tequila-flavoured beverage in the UK holds two-thirds share of a spirit-beer category estimated by IRI to be worth GBP30m (US$50.2m). According to Heineken's own numbers, the Desperados brand has seen value sales increase by 70% in the past year, with the overall spirit beer category growing volume sales by 71% in the on-trade. The brewer said that, by 2016, the category is predicted to be worth GBP400m (US$6.7m).
Another advantage that Desperados holds over Cubanisto, as well as brands such as Cuvana and Dead Crow from SHS Drinks and Carlsberg's Skøll Tuborg, is an established name across Europe, earned since it was first rolled out in France more than a decade ago.
In fact, Desperados' standing has meant it has set the ground rules of the spirit-beer category. The products are geared towards younger consumers and what the industry terms “high-energy occasions”. They also typically have a higher-end abv (Desperados is 5.9% abv), a fact that reflects the French market it was incubated in, where high abv beers are more common compared to the rest of Europe.
“That's one of the factors that consumers see as setting the spirit-beer category apart from other flavoured beers,” said Mark Hopper, head of innovation & brand development at SHS Drinks, and who has branded the category "speers". “Consumers are expecting it (the abv) to be higher.”
Another factor that links spirit-beer is, confusingly, that there are no spirits in it. Desperados is a malt beverage with Tequila flavourings, while Cubanisto is “rum-flavoured”. The question is, therefore, is this a category at all, or simply part of flavoured beer?
Hopper believes the consumer knows the difference.
“The spirit element is what motivates the consumers to go for the spirit beer,” he told just-drinks today. "When you talk to the consumer, they don't see these products as flavoured beer, they describe them as spirit beer because it is the spirit part that motivates them to buy. They see the value in that.”
According to Bernstein analyst Trevor Stirling, the motivation for producers is even clearer.
“There are much higher unit revenues on these products,” he told just-drinks. “Desperados is priced around 25% premium to Heineken, I believe, so it is a very profitable high-margin business.”
But, if Heineken feels secure in maintaining Desperados' market share in the face of the likes of Cubanisto, then it might be wise to look to the US, where A-B InBev is finding success with cocktail beer range Lime-a-Rita.
Similar to the spirit-beers of Europe, Lime-a-Rita and its flavour extensions have been propping up declines in parent brand Bud Light since it was launched two years ago. The extension is also bringing new drinkers into the beer category from spirits with its high 8% abv. According to A-B InBev, 50% of the incremental volumes coming in to the beer category are down to the Rita range.
Stirling believes these US-based brands, which also include Redd's Brewing Co's range of flavoured ales, are all playing in the “near-beer” zone.
“Redd's products are malt based but are clearly trying to play into the spirits territory,” he says. “You've got spirit-flavoured beers, which are still primarily beers, and then further on you have the Rita's, which are between the two.”
What links all of these products on both sides of the Atlantic is the younger demographic that drinks them. One question, then - and one which was asked at Heineken's Desperados launch two weeks ago - where do these consumers go when they become older? Do they remain loyal to these labels or move onto 'traditional' premium lagers such as brand Heineken or Stella Artois?
The short answer from Heineken's UK management is that it is still too early to tell. However, it is interesting to note that the Desperados extension that was being unveiled, Desperados Verde, was described as sweeter than the original. It also has a lower abv of just 4.7%.
It seems that, just as the spirit-beer category is getting more crowded, Desperados has changed the rules of its own game.
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