Selling premium U.S. beer in Latin America: Think global, act local

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To sell premium U.S. brands in Latin America requires careful calibration to go local while also staying true to a brand’s global identity.

Jose F. Rios, general manager for Latin America, Caribbean and U.S. military for beer maker Molson Coors, pictured above, discussed his experiences in finding the right mix during WorldCity’s CEO Club on Feb. 6.

While U.S. beer sales have been dipping, Rios said, opportunities in Latin America for premium stateside brews remain yeasty. But making inroads overseas means adapting to local markets, from taking part in local celebrations to supplying coolers to retailers.

Making a profit on exports also requires overcoming the challenges of transporting heavy and bulky containers across long distances and paying tariffs up to $10 per case, he said.

While the wine and spirits market lets many players prosper, the international beer market is largely dominated by a handful of multinationals, Rios said. The heavyweights have consolidated through acquisitions in recent years, generating stiff competition.

Indeed, Canada’s Molson joined with U.S-based Coors in 2005 to better compete.

“The beer industry is a volume business,” Rios said. “The margins are low. It takes almost six weeks to produce a product.”

Still, North America’s Molson Coors is growing in Latin American markets, said Rios, “little by little.”

One bright spot: the Caribbean islands, where its beers have gained market share against smaller, local brands.

Rivalry is tougher in larger nations in South and Central America, where multinationals such as Anheuser-Busch InBev, SABMiller and Heineken typically have acquired large local breweries and often produce their own global brands locally too, he added.

Creating excitement at the point of sale

So, how do you enter a new market with a premium imported beer?, asked WorldCity President Ken Roberts.

“It’s not rocket science,” Rios said. “Store execution is so important for consumer packaged goods…You all know where the decision is made – at the point of sale. You have to create not only visibility but excitement” to spur consumers to try the item.

Molson Coors has boosted its presence by providing coolers with its products in many stores. “People want cold beer, it’s as easy as that,” he said.

Jim Hogan, president for Latin America at medical device maker Medtronic.

Jim Hogan, president for Latin America at medical device maker Medtronic.

“Does the taste of beer really matter in the selection of beer?” asked Jim Hogan, president for Latin America at medical device maker Medtronic.

“That is a good question,” Rios replied. “It is an acquired taste.”

Brand loyalty clearly carries weight. About 60 percent of beer drinkers stick with one brand, said Rios. Molson Coors offers brands including Coors Light and Blue Moon.

“The trick is acquiring that customer in the first place,” he said.

Further complicating the brand landscape: Competitors may go head to head in one country and then, link arms in a licensing deal at their brewery in another, Rios added.

Using holidays and events to boost visibility

Has Molson Coors used holidays or local events to boost visibility, the way that Mexico’s Corona beer has with Cinco de Mayo celebrations in the United States?, asked Juan Rillo, vice president of supply chain enterprise solutions at mSE Solutions.

The company is generating awareness and product trials through Carnival in Panama, a small and open Central American nation, he said.

Juan Rillo, vice president of supply chain enterprise solutions at mSE Solutions.

Juan Rillo, vice president of supply chain enterprise solutions at mSE Solutions.

“The first year we were small, but present” at Carnival, said Rios. The second year, Coors Light customized cans with a Carnival theme. The third year, it improved can design and ran TV commercials. Coors Light sales rose 69 percent in Panama last year, he said.

Yet different countries call for different approaches.

In some Latin American nations, up-and-coming young professionals aren’t much concerned with supporting local brands but are intrigued by premium imported brews.

That variety underscores why international products can’t stray too far from their global identity, even as they localize, CEO Club participants agreed.

“If you want to encourage sales, I think the right way to do it is to keep your image,” said Oscar Rospigliosi, a partner at business advisory firm Newport Board Group.

“You can still keep your identify and premium brand and the image of being from somewhere else, while trying to attract the local flavor,” added Al Osle, vice president and managing director for the Americas region at Viking Life-Saving Equipment.

The CEO Club is one of five event series organized by media company WorldCity to bring together executives in greater Miami area on international business topics. The CEO series is sponsored by the University of Miami School of Business Administration and by real estate company CBRE.

The next CEO Club session is set for March 6.