- U.S. convenience stores will soon see 24-ounce, single-serve cans of Tecate Titanium 7.5% ABV on shelves in February, according to Foodbev Media.
- Heineken says that the brand is aiming to capitalize on the continually growing popularity of Mexican imports in the U.S., as well as the growth of high-strength beers in convenience stores.
- "Our core target, Hispanic c-store shoppers, are currently underserved by existing high-ABV options as they are 13% less likely to have purchased than the average shopper and have spent 30% less on the segment. We are offering a superior liquid at a competitive price point, in a segment our shopper target is familiar with," Belen Pamukoff, Tecate brand director, said.
For years, major beer producers have seen slumping sales as Americans move away from domestic lagers in favor of Mexican imports, craft beers and spirits. But recently, even craft beer — which used to be the golden child of the beer industry — seems to have reached a saturation point with consumers foregoing brand loyalty in favor of trying the new products that are finding their way into store coolers.
But there are some exceptions. Consumers have been flocking to Mexican beer, which has continued to see strong sales. And high-alcohol content beer is also becoming popular. With the release of its new high-ABV Tecate, Heineken is hoping to tap into these two popular segments simultaneously in specific stores. According to Nielsen data cited by Heineken, 6.5%+ ABV products are growing 10.1% and singles cans are growing 11.6% in the the c-store channel.
At the same time, brewers who produce Mexican beer have been doing well. Constellation’s portfolio of Mexican beers continues to grow margins and market share. Its Modelo and Corona brand families have helped boost its earnings when other brands in its portfolio have struggled. But total American beer shipments in the U.S. declined 1.3% in 2017, led by sharp drops among flagship products including Budweiser (-6.8%), Coors Light (-4.1%), Miller Lite (-2.8%) and the most popular U.S. brand, Bud Light (-5.7%).
With American beer struggling, it seems that a Mexican beer was a good investment for Heineken. South-of-the-border flavors are finding a permanent place in the American palate. According to Constellation Brands, approximately 36 million Hispanics of legal drinking age lived in the U.S. in 2016. That number is expected to grow to 46 million by 2025.
This is good news for the beer industry because Mexican consumers generally prefer beer over other alcoholic beverages, according to a report from The Brewers Association. Plus, since Mexican consumers are more traditional in their preferences, there is a good chance that more traditional brands will be able to gain back some of their market share by catering to this emerging demographic.
Even among non-Hispanic Americans, Mexican beer is taking off. But Constellation Brands still controls 90% of the premium beer. Other manufacturers like AB InBev are also doubling down on their investments in Mexican beer with Anheuser-Busch InBev's Mexican unit, Grupo Modelo, building a $755 million brewery and bottling plant about 55 miles northeast of Mexico City that is set to open in March.
With all these other brands looking to sell Mexican beer, it’s no surprise that Heineken is hoping to take part in this growing market. But it is interesting that it is partnering its ramp up efforts with single-serve cans. AB InBev has also chosen to jump into the single-serve market by adding 7-ounce bottles to their Michelob Ultra brand, the fastest-growing beer in the country during the last few years. Depending on where the price point of Tecate Titanium falls, these single-serve portions of high alcohol beer could be viewed by customers as an attractive way to get the best bang for a buck. Especially now that convenience stores are edging into supermarket territory, it could be wise for Heineken to launch its newest beer through this platform.