With cider sales swiftly gaining traction over the past few years and all signs pointing to impressive growth momentum, the time seems ripe for Heineken USA to put a big push behind its Strongbow cider brand here in the U.S. market.
Last month, Heineken debuted Strongbow Gold Apple Hard Cider with a glossy new packaging design and a revamped liquid inside the bottle. The move comes after Heineken acquired the import rights for Strongbow in January 2013 and took over distribution and marketing for the brand. Prior to that, Heineken partnered with the Vermont Hard Cider Co. to distribute the brand, which has been in the U.S. market under Heineken since 2008.
The brand relaunch seems somewhat ironic given that Strongbow is the biggest global cider brand in the world—thanks to Heineken N.V.’s distributing and marketing muscle—and considering that cider as an alcoholic beverage has a heritage here in the U.S. dating back to the 1800s.
As with many trends, what’s old is new again. Just as American consumers had to be familiarized with cider again, the release of Strongbow Gold Apple Hard Cider, along with the first flavor extension, Strongbow Honey & Apple Hard Cider, is both a new product launch and a reintroduction, in a way, of the Strongbow brand to American consumers.
And now Heineken, a company that has groomed beer brands like Heineken, Amstel Light, Newcastle and Dos Equis to become top-selling, upscale, premium import brands, plans to use that same strategy with Strongbow and is taking aim at the top spot within the cider market.
“I want to be the No. 1 [cider],” says Charles Van Es, senior brand director for Strongbow within Heineken USA. “Honestly, we’re the biggest cider in the world. We’re not there in the US. But with our expertise, our heritage and our knowledge of making high-quality products and with the fact that we know how to do this kind of marketing, I honestly think we have a good shot of being the leader in the cider market over time. We’re not going to be there tomorrow. On the shorter term, we’re the No. 3 brand right now and I could see U.S. becoming No. 2 relatively soon.”
So it seems Angry Orchard and Woodchuck should watch their backs.
But Strongbow does have its work cut out for it. Boston Beer Company’s Angry Orchard brand, which launched in 2011 and went national in 2012, is on fire. Woodchuck, owned by the Vermont Hard Cider Co., had been the long-standing top-seller, but Angry Orchard’s sales surpassed it last year as the brand has a phenomenal growth rate.
However, Strongbow already seems to have a good trajectory before its new marketing push has even begun. According to Nielsen data, Strongbow is now the No. 3 brand and is outpacing the category with 96 percent growth.
Van Es credits the growth acceleration in 2013 to Heineken USA taking over the brand from the Vermont Hard Cider Co.
“Vermont Hard Cider was doing a good job with the brand. But we had an opportunity to add the value of what we’re good at as a company, which is building big, well-known, upscale brands and Vermont Hard Cider was not able to bring that kind of depth,” he says. “”So, with our expertise in marketing, our distribution network, our connection to big national accounts and our deep-rooted connection with a lot of on-premise accounts—independents as well as chains—the global company Heineken decided that strategically the right thing to do was to bring it into Heineken USA.”
The entire hard cider category, Nielsen figures show, continues to grow at an impressive pace with 102 percent volume growth in 2013 and 90 percent growth year-to-date. Market analyst firm IBISWorld also reports that sales of cider in the U.S. hit $600 million in 2012.
While cider makes up a very small part of the alcohol beverage market—still less than 1 percent of total U.S. beer volume—it’s ripe for the picking as a small, yet fast-growing category. And it comes at a time when domestic sub-premium beer sales are down and have been trending down for several years.
The cider renaissance here in the U.S. began building back in 2007 but really took off after 2011. According to the Beer Institute, cider suppliers produced 226,725 barrels in 2005 and that number rose to 1.2 million barrels by 2013, or about a five-fold increase. The cider market grew 69 percent alone between 2011 and 2012, cites the Beer Institute. Many analysts predict that at its current growth rate, cider could expand to become 2 to 3 percent of the beer market in five years.
As one of the hottest categories right now, cider is attracting artisanal cider makers, craft brewers and the mega brewers as well. In just 2012, there was a flurry of M&A activity and product launches as big and small brewers try to get their slice of the apple.
Two years ago, MillerCoors acquired Crispin Cider and Ireland’s C&C Group, maker of Magners cider, bought Vermont Hard Cider and its Woodchuck brand. Anheuser-Busch InBev launched Michelob Ultra Light Cider and in 2013 the brewer released Stella Artois Cidre, a Belgian cider, in the US. And this spring, new offerings on the shelf will include MillerCoors’ Smith & Forge, a new cider marketed heavily to men, as well as ABI’s new Johnny Appleseed cider.
Van Es acknowledges that it makes for a crowded playing field at a time when retailers and bar and restaurant owners are seeing new innovation and new products at a dizzying rate.
“There is a lot of competition with retailers just to get on the shelf,” he says.
The Strongbow team at Heineken USA plans to take advantage of the momentum behind the cider resurgence as well as the strengths of the Strongbow brand to hit their target.
Having a Golden Moment
Looking at the cider market in the US, Van Es believes there are a number of elements at play helping to fuel the cider boom in general and the growth of Strongbow specifically. Natural ingredients are hot right now and as an apple-based beverage, consumers often see cider as a healthier alternative.
“With our Strongbow Honey and Apple Hard Cider product extension, we are playing on that consumer need for naturalness,” Van Es says. And, Strongbow, like most ciders, is naturally gluten-free, which hits on another growing consumer trend. Strongbow also has a long cider-making heritage (see sidebar) that comes across in the brand iconography—namely, the archer and bow on the label—yet the Strongbow team will be putting a more contemporary spin on the brand story.
Many established cider brands have found success by playing up their special ingredients, their homespun origins and flavor variety, much like the craft beer segment. “Angry Orchard and some other brands have done a fantastic job of playing on that crafty side. But we think there’s an enormous opportunity in the cider market to play on the other side—the badge, lifestyle side. And, honestly, there really isn’t a brand that is going there right now,” he says.
“We want to build an upscale, badge brand; that is what Heineken USA is good at,” he continues. “We’ve done it fantastically with Heineken and Dos Equis. We have the credentials and we as a company are very good at lifestyle brands that stand for something, that have a point of view and that people want to be seen drinking.”
To build Strongbow as a “badge” brand, Van Es and his team went back to the drawing board and upgraded the packaging, the marketing campaign and even the liquid inside the bottle.
Strongbow Gold Apple Hard Cider is the flagship product and the new recipe has a flavor profile described as balanced, refreshing and smooth with the sweet and tart notes of Golden Delicious apples, along with Honeycrisp apple and pear notes. Strongbow Honey & Apple Hard Cider is a blend of fresh apple flavor and honey. Van Es credits cider master brewer Jean Pierre Stassen and his team for crafting a cider with a balanced taste profile, neither too tart nor too sweet.
“There’s true craftsmanship that went into making this cider, so you get the refreshment, you get the crispness and you get the smoothness,” Van Es says.
He also points out that during consumer taste tests, consumers rated Strongbow Gold Apple Hard Cider as the most refreshing cider compared to other ciders, and consumers strongly preferred the new Strongbow flavor profile to the old recipe.
With a focus on a premium image and “higher energy,” aspirational occasions, Heineken also revamped the packaging to feature an embossed bottle with a more feminine shape and sophisticated, glossy labels. The six-pack packaging features bold colors like black and gold and also plays up the “refreshing” positioning with crisp, eye-popping imagery of an arrow slicing through a juicy apple while featuring the tagline “Cut through refreshing taste.”
While chatting about the Strongbow brand in a conference room at the Heineken USA Manhattan office, Van Es pours the hard cider into a proprietary Strongbow tumbler glass. He notes that the ideal way to consume the cider is in a Strongbow glass, over ice, as “that’s where the crisp refreshment comes through.”
He points out the thoughtful design behind creating a tumbler glass for the cider brand as opposed to a typical beer pint glass.
“What we know about Strongbow is that 80 percent of our volume is sourced outside of beer, so we’re talking about wine and cocktails. And I think that speaks to the product being smooth, drinkable and refreshing. Some of the other cider brands are much closer to beer, not only with their positioning but also with their use,” he says.
And, strategically, since Heineken sells quite a lot of beer, it makes sense that the company would want to source Strongbow’s volume from wine and distilled spirits as opposed to consumers moving over from beer.
It works out well that cider is now a trendy ingredient in cocktails, as well, and the Strongbow team is happy to see a lot of interest from mixologists to use the cider in inventive cocktail recipes. For instance, a Thanksgiving-themed cocktail called the Strongbow Spice calls for Strongbow cider, cinnamon whiskey, pomegranate juice and pomegranate seeds.
“That’s an organic part of the in-bar experience and that’s happening without U.S. pushing too much,” Van Es notes.
And getting back to the tumbler glass, Van Es feels that it makes drinking Strongbow an elevated experience for consumers. “It just looks a lot cooler and more sophisticated and more unisex to drink out of this glass in a nice, cool bar than compared to a pint glass.”
As part of the Strongbow relaunch, the brand is designed to be accessible to both men and women and Van Es emphasizes that Strongbow will actively market to women, which is something that the beer market has shied away from. As part of its integrated marketing campaign starting this month, Strongbow plans to do female-targeted print campaigns and will partner with businesses like Speed Rack, an all-female speed bartending competition, he says.
The cider market does attract more women than beer, and Van Es estimates the market is about 50/50 compared to beer’s 70/30 male to female ratio.
“The interesting thing about cider is that if you have a group of 10 people, five men and five women, hanging out in a bar, someone can order a round of cider and everybody will like it. It has enough bite for the men and it’s smooth and sophisticated for women, so that’s the sweet spot,” Van Es says.
According to the Strongbow team, the brand’s upscale image and refreshing taste make it a perfect first drink of the evening — or a time of day called the “golden hour.”
“When we think about the perfect moment to drink Strongbow, we think about that end of the day, beginning of the evening moment, when the sun goes down and the light changes and you’re done with the rush of the day and you are transitioning to something new. And the sugar in the product also gives you a little extra energy and a little pick-me-up,” Van Es says.
The brand team plans to introduce consumers to the brand through experiential sampling events at rooftop bars and patio decks, outdoor accounts and brunch hotspots, according to Yonathan Bendesky, Strongbow brand manager, Heineken USA. And the Strongbow team sees tremendous opportunities for the brand in markets like Florida, New York City, California, the Pacific Northwest and Austin, Texas where upscale “badge” occasions, like music festivals, happen more frequently.
“The key to attracting and converting new consumers to the new Strongbow brand is to get them to try the liquid for themselves,” says Alejandra de Obeso, Strongbow brand director. “We are leading with an extensive sampling program across the country as well as a strong mix of social and digital support, traditional and paid national media, PR and experiential marketing to drive brand awareness.”
And, according to Van Es, the brand’s emphasis on authenticity resonates well with the 21-29 year old millennial consumer, which is a key market for Strongbow.
“We definitely see the biggest proportion of our growth from that consumer segment. We know millennials are gravitating toward cider and we see from brand data that we have among the youngest consumers in the cider category,” he says.
It’s all these upsides of cider—it attracts the large millennial market, it appeals to women, it draws drinkers away from wine and liquor instead of beer and it commands a higher profit margin—that is attracting so many players into the category. At the same time, beer distributors are looking for opportunities to gain share back from wine and spirits.
“I think there’s enormous potential for the cider market here in the U.S.,” Van Es says. “There are two key dynamics. Consumers are looking for variety and natural, so you have the consumer pull. The distributor network is very interested and is rallying behind this, so you have the distributor push. And then, on top of that, the big brewers are in now and they’re pushing as well.”
More broadly, Heineken N.V. sees the global potential for its premium cider brand and is investing massively in Strongbow.
“It’s a big innovation for U.S. globally, and we are the spearhead of that right now here in the U.S.,” Van Es says. “The whole thing about cider is that, if you do it well, cider can reach consumers that beer just can’t reach.”
With all the upsides of the cider market, many analysts see the category following the same path as craft beer. Most of the major cider brands are experiencing double digit, if not triple digit, growth and new varieties are being added to appeal to younger, adventurous consumers who want to explore new flavors.
The Strongbow team says the brand will offer new flavor innovations in the future, but will stay very close to its apple base.
“Our goal is to keep surprising and delighting consumers and we want consumers to say ‘This is my brand, this is my cider and I identify with it on an emotional level and not just a product level.’ If we do those things combined with the sales and business acumen of this company, I think we’re going to be the No. 1 cider brand,” Van Es says.