Kronenbourg's recent appointment of Bartle Bogle Hegarty to its UK ad account is a clear signal that it is looking to arrest a slump in its overall sales.
In the 12 months to October 2009 the Heineken UK-owned lager brand posted an 8.8% decline in its off-trade sales, to £103m. It has responded with plans to launch a campaign in October comprising TV and national press ads to drive sales in both the on- and off-trade sectors.
This activity follows the launch of a fresh offand on-trade pack design, featuring a predominantly silver background, and the introduction of the 'Dynamo Systeme', an in-can widget that Kronenbourg claims can recreate the taste of draught lager.
While these initiatives have yet to make their mark on sales, the brand's latest marketing plans raise a question about whether it is, in fact, possible to promote premium at-home drinking, given that price is so tightly controlled by the supermarkets and retailers.
Lucas Bergmans, Kronenbourg's senior brand manager, says that the biggest challenge the brand faces in this regard is the relative lack of consumer loyalty in the sector and the extent to which choice is driven by price. He claims, however, that the lager has a strong group of faithful customers who value Kronenbourg's quality and flavour.
'We want to expand this base of loyal users by targeting a specific group of 35-year-old-plus men in a way that is relevant and motivating to them,' he says. 'There is a real opportunity to elevate quality-beer-drinking moments - both at home and in the pub - and make them special.'
Cost concerns
Growth in the beer sector's in-home drinking market has largely been driven by two factors: the loss-leader sales of lager by supermarkets and the rising cost of going out, according to Tom Huxtable, managing director of ad agency 23red, which works with drinks brands Bacardi and Grey Goose. As a result, he believes that Kronenbourg could promote more frequent premium drinking at home.
Alex Waters, director of brand consultancy The Value Engineers, shares this view. 'The challenge is convincing the trade that Kronenbourg truly is a premium brand and that it should be priced accordingly,' he says. 'This means exploring new behaviours, target consumers and products for Kronenbourg. It could target a demographic that is not well served by lagers currently, such as 35- to 45-year-olds, where it could play to its brand heritage of the Brasserie Kronenbourg and become the lager choice for those who know their beer or want to be seen to know it.'
Helen Light, associate director of Cardinal Research, believes the Dynamo Systeme does make the beer more drinkable, and the smoother delivery boosts the product's premium credentials. However, she also suggests that Kronenbourg needs to add brand relevance and a reason for consumers to spend more on it.
Another development that could have an impact on the alcohol sector as a whole, is the proposal made by government health watchdog the National Institute for Health and Clinical Excellence for a minimum price per unit.
However, Nick Gill, planning director at ad agency DCH, which has Fullers as a client, believes that if this were implemented, it would have a negligible effect on brands such as Kronenbourg.
'Its current price point is above the minimum price per unit being touted,' he says. 'The minimum price is intended to stamp out abuse by hitting the bulk-buying of high-alcohol-content own-label or tertiary brands you can buy in cash and carries. Responsible brands that are already above the threshold will see little effect.'
According to Joe Hale, client director at brand consultancy Dragon Rouge, research shows premium-lager consumers already drink alcohol more often at home. This, coupled with a growing trend among consumers to regard home comforts as being as good as going out can only benefit Kronenbourg - and other brands that may follow suit by focusing on this market.
Ultimately though, in its efforts to bring a more upmarket experience into the home, Kronenbourg needs to ensure it remains accessible to core consumers, by rediscovering its brand heritage and communicating it clearly.
KRONENBOURG SALES
- In the 12 months to October 2009 Kronenbourg recorded a decline of 8.8% in its off-trade sales, to a total of £103m.
- Kronenbourg was ranked seventh out of the top 20 bestselling beer brands in the UK last year.
- It was also ranked seventh in the top 50 off-trade beer brands.
- Off-trade beer volume sales are forecast to overtake the on-trade in the last quarter of 2010 or first quarter of 2011.
- Kronenbourg's owner, Heineken UK, is the UK's biggest brewer following its 2008 takeover of S&N.
- Cans with the Dynamo Systeme account for 12% of total Kronenbourg 1664's off-trade volume sales.
Source: Nielsen.