In an exclusive interview for WARC Marketer’s Toolkit, Grant McKenzie – Chief Marketing Officer, Europe and International at Asahi – talks to WARC’s Anna Hamill about sports sponsorship, media fragmentation, moving on from gender stereotypes, and the impact of climate change on the beer industry.
This is an edited excerpt. To listen to the full interview on The WARC Podcast, click here.
Based on data from WARC Marketers Toolkit 2024, we've seen that economic recession and inflation are still the most important issues for marketers going into the next year. What's your view on how it's impacting consumers in your categories?
I think it's fair to say that inflation is real and people are being a bit more cautious with their spending. If you look at what's happened with the beer category, we've had huge input price pressure, so our costs have gone up and we've had to pass on some of those cost increases to consumers, so prices are up. Part of the impact of that has been a reduction in volume.
Across Europe, beer volume is slightly down, but spending on beer remains strong. It's slightly up because of those price increases. It didn't help, I think, this year that the weather was generally poor in the summer. That's super important for us in driving category sales.
It's a reality that volumes are under pressure, but on premiumisation – which has been the story of certainly our category and I think most categories in the last 10, 15 years – we see no evidence of that changing at all. Particular to our category though, and what is important is we are seeing the channel mix change. So in other words, on-trade – i.e. the restaurants and bar scene – people are economizing there and that channel is under pressure. People are buying more of our products in retail outlets where obviously there's lower cost. People are economizing and not going out, so that's having an impact on our business or category.
But I would say, marketers at these times have to be very careful not to change the strategy where it doesn't need to change. The strategy of premiumisation and increasing, in our case, our business in non-alcoholic beers definitely is the right strategy. It's not a unique strategy, it's the right one and it would be very dangerous to change that.
How do these pressures change your decision-making calculus in terms of the marketing choices that you're making or the media investment choices that you're making as a brand?
I don't think the strategy changes. I think it may change the timing of certain things. So when you launch an innovation, quite often the first year of an innovation launch is not a profitable year. It pays back over two, three years. And therefore you might decide in some places not to launch an innovation next year. I'll wait until the year after. But it doesn't change your strategy because as I said the key... drivers of long-term demand in our category remain stable.
The premium and super premium category has gone from 10%, 12%, 15% of the category to 40%. It's a dramatic premiumization. We've also seen the growth of non-alcoholic beer FROM almost nothing to a very, very substantial part of the category. In Central Eastern Europe, it's 10% of the beer category.
Beer is a category which has perhaps seen a lot of gender stereotyping over the years, especially in how it markets itself to men. How are you thinking about connecting with evolving profiles of beer drinkers?
I would argue we've stereotyped women and we've stereotyped men as well, which was really stupid. To alienate half the population is not a great marketing strategy. I think we've learned from that. So I don't think we target a gender anymore and we're also at the end of targeting ages. Demographics as a targeting concept in beer make no sense whatsoever. I think what we try to target is a need state or an attitude.
It matters nothing to me if you're 18 or 80, if you're a man or a woman, it's irrelevant… When we develop our marketing strategy or plans, we really talk about groups of like-minded people, regardless of their demographics – what things they look for, where they go to eat or drink, what things interest them. Those are the people we want to talk to.
When we do our advertising or activations, we're very careful to make sure that we represent a broad spectrum of people that are relevant in that market, which is why when we do partnerships with Manchester City, we do a lot of work with the women's football team as well to make sure that it's a statement that this is for everyone.
How are you translating those changes in demographics to the marketing choices that you're making?
When we choose influencers, we choose them to represent a fairly broad demographic profile, but people with interests in what we want to do.
So when we have the British Formula One Grand Prix, we invited different influencers but ones whose audience would be interested in our product, and they were very different demographically in terms of age and gender. I think it's really much more now about attitude and need state. In all of our marketing inputs and documents, that's what you'll see. The last thing I suppose that still exists with some age targeting is media because we're forced to choose on the ages.
But you're right, I think beer has had a troubled history with this. It's also been reflected in the fact that, historically, in most beer companies, the senior executives were all men. That's changing and needs to change more. Certainly in my marketing team, so from the 200 plus people in marketing in Asahi, I think just over 60% are women. But more importantly, in the leadership, I think five of the nine marketing directors now are women. So that's not a surprise, but it's a change from what it was because when I started in the business they were all men.
Do you feel that brands could be seen differently or negatively in the future if they fail to evolve from that stereotyped portrayal?
I think they'll probably just be less relevant, you know, so I think the punishment they'll receive will be lower sales and lower market share. So I think there's a degree of truth there. You know, there may be categories where it makes sense to focus on certain genders, I don't know, but I think you have to be careful to be authentic and recognise honestly that your consumer group is probably much more diverse than you think it is.
I think the more you focus on needs and attitudes and less on demographics – whether they're age, gender or anything else – the more likely you are to succeed as a brand, whatever category you're in.
WARC survey data showed that brands are more likely than agencies to dismiss the importance of sports events for mass reach. Nearly a third of those believe that sports aren't really important at all anymore. What's your view on that?
We have a very different perspective, obviously. In our category, beer is incredibly relevant with sports. What we know is that sports are genuinely a passion point for a consumer. We live in a world where there's a lot of polarization, but sport really gets people together.
We know that when your brand does a good and credible job with a sponsorship partnership that the fans rate your brand considerably higher than people who are not engaged with that. It has a very big knock-on impact, and it overcomes some of the challenges with fragmentation because you can really reach a very, very broad audience.
In Formula One, which we've been involved with for three years, the profile of that is changing a lot. People used to think it was like middle-aged men…But it's a lot broader than that now. Over 40% of the fans are women, a lot of younger people coming in. It's getting big in America. That was always like a weak spot, etc. So that's becoming a really global partnership and property.
You have to be effective as a brand, you have to have a point of view, you have to have an authentic voice there, but if you do it well, it definitely does the two things of short-term and long-term brand building. For long-term brand building, you're associating yourself with something of great passion. Short-term, yes, it drives sales. It drives trial and it drives positive experiences, because you're likely to enjoy our products in the company of friends with an exciting event, so it gives you a very nice memory.
Sponsoring the men’s Rugby World Cup is obviously a massive event. Have you been excited by the explosion in opportunity around women's sports? Do you have any plans to get more involved in that?
I think it's overdue, isn't it? I think it's great. We do have plans. I can't talk about all of them, but definitely it would be inconsistent of us to not be involved in that – partly because it's good business and because the audience numbers and the engagement is really high. It's just simple, good business. If you have a commitment, as we do, to have representation of all society, you can't only partner the men's event. So watch this space.
In other markets, we're beginning to partner more female athletes and ambassadors because it's an important part of what we do. When we promote non-alcoholic beers, we're always careful and considerate to include both men and women influencers and athletes as part of that.
What are some of those key challenges that climate change specifically poses to a beer brand like yours?
We're an agricultural business, so we rely on the products of agriculture to make our beer. Hops in particular are the product which gives beer its distinctive bitterness and its many of its unique aromas and flavours, and hops are a temperature and climate sensitive crop, as is barley to a large extent. Those products potentially could be under threat from climate change because of their historic sourcing locations. There are not that many places in the world that make hops.
Therefore, our responsibility is to work with the farmers directly – which we do – to ensure sustainable practices. An individual farmer may not have the resources to build the technology to understand how to optimize his crop, but we can do that. We can build the best practice. We work with over 1,500 farmers in Italy to ensure that Peroni barley is secure and we work with over 500 farmers in the Czech Republic to ensure that the hops are carefully managed. I think our responsibility is to work with them to bring best practice and bring the best technology and insight in the world from the best universities so that they get it.
Things like water consumption, which is a key driver for us: how many liters of water do we use per liter of beer? We have to reduce that and we are reducing it. We have to do that because water is going to become a scarce commodity.
Do you think marketing plays an important role in telling that sustainability story and even potentially repositioning your products as a more sustainable option compared to other competitors?
Is there a role for marketing? Absolutely. I think we need to talk about what we're doing because we're doing a lot and it's very important. I think you have to find the right tone of voice and I think as time goes on, all of us realized that if you preach at people or make this too serious, it's actually off-putting. I think it has to be engaging a little bit. I don't want to say fun or lighthearted, but you have to find a sweet spot that engages with people, and then I think they're really interested in this subject.
Of course, sustainability has different pieces. On some of our brands, we're talking about circular packaging. All of our packaging should be recyclable or returnable. In some of them, we're focusing on water reduction if the brand is from an area with potential water scarcity. And in other brands we talk about agriculture. We tend to choose a subject or topic and talk about that with the brand. Otherwise people can become overwhelmed.
Is this a competitive advantage? I don't know, because I think everybody should do this. I'm not sure it's an area I should compete in, as opposed to cooperating. I think all beer in all our countries should have circular packaging. you know, because it's right for the planet, and therefore it shouldn't be my competitive or our competitive advantage. It should be, hey guys, we all need to do this together.
Is there anything in particular that you're prioritizing strategically in tech or media investment at the moment?
I would say that we are, like most businesses, on a data and digital journey… Having first party data, having it organized, knowing what to do with it. We were at the beginning of that journey.
We're looking at how we can bring a bit more marketing in-house. I don't believe that all marketing services can be in-house, but I think some definitely can. It's not about cost, although that matters. It's about speed, and I think it's about quality as well. Fragmentation is a big problem, but then I think you need to look at properties. We've talked about that, sports marketing and things which actually bring you that scale.
I would say that AI is the big topic this year. I think it's the latest marketing buzzword. I think we see practical uses for it. It can speed up testing and development of certain things, it can take away some labor intensive, relatively low-value added tasks. But it definitely doesn't replace human insight, and it doesn't replace ultimate creativity. So we're starting to use it, but it's not going to change our business.