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January 14, 2002 - Strategy Magazine
Premiums & Incentives

Beer premiums get strategic
In-packs must build brand image, or marketers risk

by Wendy Cuthbert
page 22

Is there some sort of mystery formula that equates the volume of beer one drinks to the number of T-shirts one needs?

It would seem so, if the prevalence of in-case premiums in the beer market is any indication. In lighter moments, it's easy to imagine an enthusiastic beer drinker never having to shop for something as mundane as a T-shirt again.

"The use of in-pack premiums has grown quite dramatically over the last few years between ourselves and Molson," says Charles Oliver, VP of marketing for Labatt Breweries of Canada. "There are potentially four or five in-pack premiums going on at any point in time."

While T-shirts are always popular - in Western Canada, where the retail environment is more open, consumers can compare the quality of shirts before making their purchasing decision - beer marketers have also managed to fill their cases with everything from Stanley Cups to watches.

In the last two years, the activity hasn't slowed down by any stretch - but it has become a lot more strategic. "We're getting much more disciplined about researching promotional ideas," says Oliver, adding that the days of an in-pack premium simply catching a marketer's fancy are over.

"Given the scope, complexity and cost of doing these programs, you need to make sure that you're hitting the mark," he says. "It has to consistently support your brand positioning and create more of a brand experience to build loyalty - not build premium shopping."

Oliver has struck upon the sad fact of in-pack premiums. Like children choosing their own box of cereal, fickle consumers not only compare trinkets as part of their purchasing decision, but actually come to expect something in their cases.

"The problem that happens in many industries is that, over time, the playing field gets leveled and the net result is negated," he says. "The risk over time is that we're actually triggering consumers to shop for premiums, which is not building brand loyalty."

There's no question beer drinkers are shifting from one brand to another based solely on in-pack offers, says Bob Scott, president of Ascot Marketing, a Toronto-based market research firm that specializes in the beer and mutual funds industries.

"Consumers are very much expecting to find something in their packs," he says. "It's almost become part of the brand." The danger, of course, is that this activity has no proven positive results for the brands, save for short sales bursts.

The key upon which beer marketers seem to be relying is to develop in-pack premiums that leverage other promotional properties. For instance, who could forget Labatt's powerful Stanley Cup giveaway several years ago. The miniature Cups proved so popular to beer drinkers that an eight- to 10-week Ontario supply - about 750,000 cases - sold out in less than five weeks.

Since then, the company has become even more sophisticated about leveraging its sports associations (Blue is aligned with the NHL, and Budweiser with the NFL). Oliver says these types of in-pack premiums work because they are unique and strategic branding tools.

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