As COVID-19 intensified in 2020, Dos Equis watched as 40% of its U.S. business evaporated nearly overnight as bars, restaurants and other establishments closed their doors. But below the surface, the shock proved to be a much-needed jolt for the 125-year-old Mexican beer brand.
“For the brand, the pandemic was a wake-up call,” said Ligia Patrocinio, the head of Dos Equis at Heineken USA. “This brand has such huge potential. It doesn’t matter if it’s just beer. We can go way further.”
While Dos Equis was still generating hundreds of millions of dollars in sales annually through its beer, executives with parent Heineken observed the brand had grown tired and wasn’t doing enough to tap into its widespread market recognition. Sales were languishing, with the brand declining 5% in 2018 and 3% in 2019.
Dos Equis, they observed, needed to reconnect with consumers, innovate to generate excitement among drinkers who had forgotten about the brand and react with a great sense of speed and agility that had alluded it in the past.
They quickly went about refreshing the packaging to give it a more distinct identity among the scores of other offerings on the beer shelves. Dos Equis also replaced its marketing strategy — once synonymous with the “Most interesting man in the world” campaign — with “Get a Dos,” an effort to reflect the consumer’s unwillingness to settle and ongoing interest in spending time with their friends.
“We said, ‘Okay, guys, we need to really take this, give this another gear, speed things up, really go into customers, understand what are the new insights the pandemic is bringing and how Dos Equis meets consumer needs while also helping our business because, yes, we were heavily hit by the pandemic,’” Patrocinio said.
Dos Equis had a 4.2% market share of the imported beer market in 2011, according to the Beverage Marketing Corporation, before peaking three years later at 6.1%. Since then, its performance has been fairly middling, hovering at around 4.3%, as the brand failed to make inroads compared to Modelo and Corona, which were responsible for the lion’s share of growth in the Mexican beer segment.
More recently, performance has remained mixed, the Beverage Marketing Corporation noted. In 2021, the Dos Equis brand posted modest volume growth for the first time since 2016, driven by momentum from new product launches, data from the beverage analytics firm showed. Still, brand performance in 2022 has been reportedly negative so far, according to Beverage Marketing Corporation, particularly in the latter half of this year.
Pandemic spurs ‘speed of light’ launches beyond beer
The most ambitious change for Dos Equis was driving innovation and growing a beer-only brand outside of its comfort zone by tapping into other popular beverage trends. Heineken had been mulling the idea of extending the Dos Equis brand into other categories as early as 2019, but the idea hadn’t gained much traction until the pandemic.
The once slow rollout strategy was quickly replaced by an urgency to keep the brand relevant and reconnect with consumers amid changing market trends and upheaval caused by COVID-19. The brand portfolio doubled in size since 2021 with five product launches.
“We were not expecting to launch them all at the speed of light like we did,” Patrocinio said. “The pandemic really turned on the heat and put the pressure on. It really sparked something inside of us.”
With business at on-premise locations significantly curtailed during the pandemic, Heineken needed to find ways to offset the loss, and with more drinking taking place at home, that was a logical place to do it. In some cases, new product inspiration came from the same venues that were shuttered.
Dos Equis Lime & Salt was the first innovation to hit shelves in September 2020. The beverage took its inspiration from a drink popular in the Sun Belt, particularly Texas.
Consumers who buy Dos Equis are routinely asked by the bartender if they want it naked (just the beer) or dressed (with salt and lime). Many people took to social media to commiserate during the outbreak that the closure of their local drinking hole meant missing out on their favorite alcoholic product. Dos Equis grabbed the idea and put it in a can. It has since added a variety pack with flavors like pineapple, watermelon and cucumber.
“We said, ‘Okay, guys, we need to really take this, give this another gear, speed things up, really go into customers, understand what are the new insights the pandemic is bringing and how Dos Equis meets consumer needs while also helping our business because, yes, we were heavily hit by the pandemic.’”
Head of Dos Equis, Heineken USA
Ranch Water Hard Seltzer, which Dos Equis wasn’t even planning to launch in 2020, went from concept to shelf in six months, eventually debuting in May 2021. The beverage is the brand’s take on the popular seltzer market that Dos Equis was slow to enter. It also was inspired by Texas where a cocktail with the same name containing mineral water, tequila and lime juice is sold.
The final offering, Dos Equis Margarita, was first discussed in January of this year and launched just four months later. The ready-to-drink cocktail with lime and tequila made sense given both the brand and the hard liquor’s close association with Mexico. It marks the latest entry in the suddenly crowded RTD spirit category.
Despite evidence of mixed results recently, the rash of innovations showed early signs of paying off.
In 2021, Dos Equis sales surged 21% as the brand benefited from the rebound in on-premise consumption and continued strong performance of its core beer and line extensions. The new offerings appear to be a favorable tailwind for the core beer itself. Sales of the flagship beverage rose 16% last year, outperforming the 9.9% jump in the Mexican brew category during the same time. It’s also helped attract more younger, female and Latino consumers to the brand.
Even as Dos Equis expands the brand into other categories, beer, at least for now, is responsible for the majority of its revenue. Beer generates 85% of Dos Equis’ volume, with innovations collecting just 5%.
But it’s not hard to see why products geared toward younger drinkers are so important to the brand’s future. Dos Equis’ average beer consumer is between 35 and 45 years old, while for its recent offerings it’s between 21 and 34. Thanks to the new launches, Patrocinio said consumers who may have thought Dos Equis was only something their dad drank are now suddenly interested in the brand — and may be more willing to give the beer a try later on.
Roughly 20% of consumers who try one of the new Dos Equis innovations come back for a lager in their second purchase, she said.
“The entire brand is really rejuvenated because we’re giving them something new to talk about,” she said. “We are able to bring younger consumers to the franchise, increase brand penetration ... without alienating our older customers.”
Patrocinio said Dos Equis isn’t done growing the brand, noting confidently that “the bold moves will continue.” Bars and alcohol distributors are regularly asking what’s coming next, she said.
“Not every brand in the industry could do ... what Dos Equis is doing with its turnaround,” Patrocinio added. “I absolutely believe our strategy is paying off.”