Heineken is refusing to let America’s cider boom die.
Cider sales saw a massive decline in growth in 2015, with sales increasing just 10.8% according to Nielsen. In 2014, sales increased by 71%, and in 2013, 89%.
The theory that the cider craze had reached its end is backed up by the fact that some of the biggest cider brands in the US, including Angry Orchard, Woodchuck, and Johnny Appleseed, reported significant sales declines in late 2015.
“We obviously saw the [cider] category slowing in growth, but to go negative in fourth quarter was probably something that we had not planned for as a category,” Martin Roper, the CEO of Boston Beer Company, the parent company of Angry Orchard Hard Cider, said in the company’s earning call in February. “I certainly think that we’re probably losing some casual cider drinkers, who tried it and maybe are moving on.”
Despite this, Heineken believes that the cider craze has just begun, as it plans UK-favourite Strongbow’s American takeover.
“We are placing a big bet,” Ronald den Elzen, Heineken USA’s CEO, told Business Insider. “We are big believers in cider.”
“It’s grown like craft beer on steroids,” says Alejandra de Obeso, Strongbow’s brand manager in the US.
According to Heineken, the apparent end of the cider trend is just the defeat of cider brands who misunderstood what consumers wanted.
“We’ve got a lot of of brands that came in very quickly, with big distribution, big budgets, and obviously not every brand in the market is going to be a success,” says de Obeso.
The cider craze, sparked in 2012, is an undeniable fact. The number of households with cider drinkers in the US jumped to 18 million from 6 million, with the category growing an estimated 60% in five years.
Heineken became the parent company of Strongbow, today the No. 1 cider brand globally, in 2008, when the company bought Scottish & Newcastle. In 2011, the company announced plans to begin selling the brand (previously only sold in the UK, China, Malaysia, and Singapore) in the US and other countries around the world.
Today, as much of the cider industry is slumping, Strongbow continues to shine. The brand has reported 15 consecutive months of increased sales, growing eight times faster than the wider category. In the past year, the brand has tripled its market share in the US, with two years of more than 65% sales growth.
According to Heineken, the brand has continued to shine by refusing to allow cider be just another trend, instead drawing on the long history of cider in Strongbow’s homeland.
In the UK, cider accounts for 22% of the beer market. In the US, it is just 1% — and that’s after five years of explosive growth.
Den Elzen says that in the UK, Heineken is known for being a family-owned company, and Strongbow is known as a reliable favourite, harvesting from endless acres of apple orchards
. That’s a good fit for the modern American drinker, who is seeking beverages with history, authenticity, and natural roots thanks to the rise of craft beer.
“Craft educated consumers. So, now millennials are eager to know more about the product,” says Nuno Teles, Heineken USA’s CMO, who believes such authenticity can’t be faked. “These millennials, they Google everything. And rightfully so! They want honesty.”
Strongbow has pushed the narrative of craft and quality in the US, recently launching an ad campaign starring actor Sir Patrick Stewart highlighting the brand’s awards (Strongbow won best tasting hard cider it the 2015 World Cider Championship). While the brand has launched new flavours, most recently Strongbow Cherry Blossom, it has emphasised the new flavours are all based in traditional cider production methods, unlike the recent crop of hard sodas.
The power of Strongbow, according to Heineken executives, is that a high-quality cider can draw consumers from the beer, wine, and spirits categories. It appeals to craft beer drinkers, with Heineken reporting that while cider makes up just 1% of sales in the US, in craft-beer paradise Portland, Oregon, cider accounts for 4.2% of the market.
Heineken believes that that 4% penetration can become the new normal for cider across the US, with Strongbow taking the lead in making the beverage a reliable go-to, instead of just another short-lived trendy drink.
“Twenty-two per cent [of the beer market] would be very nice, but we’re not going to get there — at least in my lifetime,” says den Elzen.
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