As Bud slips, Heineken plots further shake-up of US light beer

As investors try to assess the fallout on global brewing leader Anheuser-Busch InBev (ABI.BR) from a backlash against Bud Light, rival Heineken (HEIN.AS) is spending $100 million to promote a new light beer to Americans.

The Dutch brewer sees Heineken Silver driving fresh momentum into its US business, where sales of standard Heineken have broadly stagnated in the past decade. It aims to profit from major changes in the vast US market for light beer – which has reduced alcohol, calories and carbohydrates – although it faces tight competition.

Even before the conservative backlash against Bud Light over a social media promotion last month with transgender influencer Dylan Mulvaney, sales volumes of established “light” brands have slid at a faster pace than the US beer sector as a whole over the past six years, according to Euromonitor International, as first craft beers then hard seltzers lured drinkers away.

Sales of light beers, which also include Molson Coors’ (TAP.N) Miller Lite and Coors Light, still make up nearly half of the US beer market, which Euromonitor International says generated $118 billion in 2022.

Heineken Silver hit the US market in late March. Heineken USA’s Chief Executive Maggie Timoney told Reuters in an interview that there is room for Silver to grow among more expensive “premium” lagers, that comprise only 25 per cent of light beer sales against about half for all US beer.

She said the brewer plans to win over Americans with more than two million free samples this year, some during its partnership with the US Open tennis in late summer and as title sponsor of November’s Las Vegas Formula One Grand Prix.

Spiros Malandrakis, drinks analyst at Euromonitor, said he had been enthusiastic about the brewer’s earlier non-alcohol Heineken 0.0 beer launch, but had reservations about Silver.

“This is a bit of a hazy proposition and it’s fighting an uphill battle,” he said, adding younger Gen Z consumers seemed to be moving away from beer to spirits and ready-to-drink mixes.

Timoney said the target audience would be younger, with more women and perhaps not yet Heineken or even beer drinkers.

They might include Madeline Raineri, a 26-year-old social media marketer from St. Louis, Missouri, who prefers craft beers. “I can count on one hand the amount of times I’ve drank Heineken…. (but) if Heineken offered a light beer that was good for sipping by the pool or on the river, I would absolutely try it,” she said.

SILVER VS GOLD

Heineken is the world’s second-largest brewer but in the United States it is ranked No. 4.

AB InBev dominates the light beer segment and Bud Light is the clear leader even after US sales have fallen more than 20 per cent since the April 1 social media post. AB InBev, whose shares have fallen 10 per cent since then, says it is too early to assess the full impact of the backlash.

And there is a newer star in premium light Michelob Ultra, whose sales doubled between 2016 and 2021 according to Euromonitor. Last year, it was the second highest selling US beer.

It is the model Heineken wishes Silver to follow, rather than that of Heineken Premium Light, which it introduced in 2006 but now sells in low volumes in the United States as its retained bitterness has not suited most American palates.

Heineken Silver was introduced in Vietnam in 2019 followed by other Asian countries and across Europe last year. In Vietnam, one of Heineken’s biggest markets, Silver has overtaken sales of regular Heineken as more consumers opt for its less bitter taste.

The US version is less bitter still, but it does come at a cost, with a 12-can pack selling online for $15.99 versus $10.49 for the mainstream US light lagers.

Lindsay Webb, a 29-year-old design researcher from Washington, D.C. and a habitual Miller Lite drinker, said the price might prove a prohibitive factor.

Silver will still have to fight Michelob Ultra, now boasting an organic “Pure Gold” option, while Constellation Brands (STZ.N) has just launched its Modelo Oro (‘oro’ is Spanish for ‘gold’) across the United States. All are similarly priced.

Trevor Stirling, beverage analyst at Bernstein Research, said Heineken also had to battle a perception of being an old brand that “your Dad or Granddad drank”.

“This liquid could have more appeal to US consumers, but it will need a lot of work to get people to reconsider the Heineken brand,” he said.