Dive Brief:
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As part of a 10-year investment to build Red Stripe’s position as a prominent global brand, Heineken has completed a $16 million investment in a state-of-the-art production line for the Jamaican beer’s export markets, according to a statement.
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The new equipment will allow Red Stripe to increase its export production to 26,000 cases per day, or 5 million cases annually. The beer maker also will be able to expand the brewery up to two times its current capacity. The plant also is powered by liquid natural gas, which will reduce the brewery’s fuel usage.
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“The long term investment in Red Stripe is monumental,” Charles Littlefield of Five Points Trading Co., the official U.S. importer of Heineken’s emerging global beer brands, said in a statement. “In addition to greater capacity, Red Stripe’s investment will significantly improve service to its export markets and delivers on the brand’s commitment to making a positive environmental impact.”
Dive Insight:
Heineken’s latest investment in Red Stripe will help the company accomplish several goals.
As a recap, the 2015 acquisition put the beer maker in a position to further capitalize on the rise of imported beer consumption as overall growth in the beverage category has stalled. In 2016, imported beer sales captured 6.8% of the market, according to the Brewers Association.
Red Stripe is one of several international brands under Heineken's portfolio, including Tiger, Birra Moretti, Affligem Belgian Blonde, Murphy’s Irish Stout, Prestige and Cerveja Sagres. Heineken's decision to return Red Stripe manufacturing to its home country will help the brand solidify its image as authentically Jamaican at a time when consumer research indicates an increasing demand among beer drinkers for regional beers.
Because the plant is powered by liquefied natural gas, the brewery will reduce its annual greenhouse gas emissions by 6,000 tons annually — a value-add for environmentally conscious consumers. Heineken also says increased demand will mean hundreds of new jobs for Jamaican farmers and a boost to the local economy.
"Developing a plan that benefits Jamaica, its people and the environment over the long term was integral to the strategic planning process,” Littlefield said.
In terms of building demand for Red Stripe, the company has high hopes for its investment.
“The changes at the brewery will have a significant impact in the U.S. market,” Andrew Anguin, senior marketing manager of Caribbean imports at Five Points Trading Co. "The new hi-tech production line in Jamaica guarantees we can consistently deliver the best quality, freshest Red Stripe beer on a timely basis in the packs our consumers demand. This is critical to the future success of Red Stripe here and on the global stage.”
Competitor Anheuser-Busch InBev's Mexican unit, Grupo Modelo, recently announced that it's adding an eighth brewery and bottling plant in Mexico. The plant is set to open in March 2019, and will allow the maker of Corona to produce about 320 million gallons of beer annually, or 9 million bottles daily.
It will be interesting to see how beer fans react to changes like these. Regional brews are certainly popular, but does the location where a beer is manufactured have that much of an impact on shopper choice in the alcohol aisle? Time will tell, but for now, it seems Heineken's move is a savvy one.