Clausthaler to grow non-alcoholic beer category; can it create the thirst?

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Germany based Clausthaler Beer that entered the Indian shores in 2008, recently won the title of world’s number one non-alcoholic beer beverage by World Beer Awards 2011. The brand that is solely imported and marketed through Dalmia Continental in the Indian market, is all set to grow the category in India, with a slew of marketing and on-ground consumer engagement activities.”The marketing objective is to create awareness, emphasise the different occasions for consumption and to hence grow the category, with a secondary emphasis on brand,” says V N Dalmia, Chairman, Dalmia Continental, which is also popular for the distribution of Leonardo Olive Oil in India.

Strong distribution is key to success
Amidst the clutter of alcoholic beverages, cola and energy drinks, there is a slow but nevertheless emerging market for non-alcoholic beverages in India. There also exist other brands like Hops, Areta, Martens, Kick & Chill and Rockers and most recently Tuborg Zero, a non-alcoholic malt beverage launched by Carlsberg. The market is mostly import driven so it becomes crucial for international brands in this category to optimise the distributional strength of their channel partners in the country. Dalmia Continental happens to be the sole importer and marketer of Clausthaler beer, which is originally brewed by Radeberger Gruppe.

Clausthaler too follows Dalmia group’s national distribution network set up for Leonardo Olive Oil. “We have 26 depots across the country, as well as 90 sales personnel servicing 190 cities. The strategy is to place it in high-end stores and modern trade chains and not through discounting in wholesale,” adds Dalmia. The company has not created a separate beverage division to handle Clausthaler’s distribution, which is what would be needed in subsequent years once it expands its product portfolio with other beverages as well.

V N Dalmia, Chairman, Dalmia Continental

V N Dalmia, Chairman, Dalmia Continental

Brewing a new story
However, the growth of the segment has been sluggish as according to Dalmia, other brands that are available in the Indian market have made no attempt to educate the consumer or build a brand. Unlike in developed markets like the US and European countries where non-alcoholic beer exists as a category, it is virtually non-existent in India due to low consumer awareness and low visibility of such products. As a matter of fact, the quantity of non-alcoholic beer imports in 2011 was approximately 250 MT (million tonnes), of this, Clausthaler was 110 MT, implying a market share of 45 per cent.

Dalmia explains, “In developed markets, most restaurants have one or two non-alcoholic beer brands listed on their menus. Consumers keep non-alcoholic beer in their homes as a refreshing, healthy beverage option. Consumers are able to associate beer with taste and appreciate the nuances of different beers, rather than think of beer simply as a source of alcohol. Consumers in India are yet to develop a nuanced appreciation of beer. Moreover, in developed markets, non-alcoholic beer is a consumer product and beverage. Not so in India. Here, it is a commodity that is sold solely on price and in wholesale for the few people that drink it for assorted reasons.”

Moreover, products in this segment have not had a very high retail presence or recall. Thus, the company has made deliberate efforts to expand reach of the brand across Mom and Pop stores, kiranas, super stores, high-end stores, modern trade and cash ‘n’ carry chains. The Chairman says that the retail presence would expand greatly if the company were to enter beverage retail, in addition to premium foods retail.

100 per cent BTL
To add to the visibility of the German brand, the importer has been indulging in aggressive brand building exercises that include 100 per cent BTL activities. These include paid listing and display fees in modern trade. In addition, the company has offered visicoolers to high-end stores as well as paid display charges for prominent visibility and hired floor-stacks and endcaps in modern trade.  It conducted extensive sampling activities at Spencer’s, Big Bazaar, Metro Cash ‘n’ Carry, Hypercity and other chains as well as across marketplaces, RWAs, malls, restaurants and hotels.

For the company sampling marketing has been the core marketing strategy of the brand as the main focus is on category building and direct consumer engagement. Dalmia adds, “We have also conducted sampling in The Beer Café (now The Pint Room) in Ambience Mall, Vasant Kunj, in Delhi, as well as other bars but find that the response is greater in restaurants without a liquor license than in bars.” The company has also taken advantage of ‘dry days’ by holding special sampling events in restaurants and in corporate sports tournaments. The company also participated in exhibitions and trade fairs, including IITF Delhi in 2011, where Clausthaler received tremendous positive response.

Moreover, in 2009, the company had a six month tie-up with PVR Cinemas, in which Clausthaler was displayed and sold in the top PVR theatres across the country. In 2011, the company yet again tied up with BIG Cinemas and also conducted a joint promotion with Shoppers Stop in Delhi-NCR, giving away free cans of Clausthaler to members of the latter’s loyalty program, First Citizen.

This year, in addition to sampling in stores, the company plans to launch a digital marketing campaign as well as corporate programmes. Probably, these efforts have paid off as the company claims to have had a growth of 75 per cent in 2011 over the previous year.

Is there a market?
But without further arguments, it is also a fact that the market for non-alcoholic beer beverages is small as compared to the beer market in India and the company is trying to fill that gap by promoting the drink as a healthy option vis-à-vis sweetened carbonated colas and tonics. The company claims that the almost beer like flavour is the result of a unique, patented brewing process that was developed over many years of research and experimental trials.

The drink is said to contain twice the energy-rich carbohydrates and 40 per cent less calories than a normal beer. Touted as a healthy option over its alcoholic counterpart, the presence of electrolytes makes it an isotonic drink that also targets athletes. Some of the other popular energy drinks in the market are Gatorade, Redbull and Cloud 9, among others. However, Clausthaler is positioned differently owing to its beer like taste and look. Even the packaging is on the lines of a real beer brand creating that lifestyle appeal to the brand. But even though Clausthaler has an added advantage over its alcoholic counterpart in terms of low calories and other health benefits, it is yet not the main selling proposition of the company.

Bitter pill?
For the record, Clausthaler is positioned as a premium malt beverage that targets both men and women of SEC A+ and A and health conscious consumers of SEC B+, in particular fitness enthusiasts, underage children and people who do not drink for religious or medical reasons. But are there any takers?

Experts say it is the consumer psyche that may play a critical role for the growth of the category. Drinks such as healthy tonic water etc too have failed to create a stir in the consumer’s mind. Hence, it is still not clear if there is any market demand for such a product in the country? One expert feels that it will be a very small and insignificant market looking at the variety of non-alcoholic beverage brands that the market already has to offer. “Why will a non-drinker have a bitter beer experience anyway when there are so many brands like colas and sweetened energy drinks available, I personally would order a sweet tasting mocktail from the bar or restaurant’s menu if I had to have something to drink,” says an industry source not wanting to be named.

Though there is an overlap with all non-alcoholic beverages like colas, fruit juices and energy drinks, the company’s our objective is to create a new category for non-alcoholic beer and therefore does not pit it against any of the existing categories mentioned.

“Wittingly or unwittingly, non-alcoholic beer is perceived to compete with energy drinks but we do not promote it in that category. Clausthaler is not caffeinated. Its natural competition is all non-alcoholic drinks, including carbonated beverages. However, unlike colas, which contain artificial chemicals, Clausthaler is composed of completely natural ingredients,” Dalmia explains. However, for Clausthaler, the main competitor stands to be global brand Beck’s, another non-alcoholic beer brand.

Drinking to health
Akin to that there also exists an overlap of brand perception in the market. There are a number of energy drinks in the Indian market that almost provide similar nutrients. Plus, non-drinkers still shy away from the term ‘beer’ that may actually deter many to try the product. So, what is the brand’s strategy to stay ahead of competition and change consumer perception?

Dalmia responds, “Unlike energy drinks, Clausthaler contains no caffeine. It is completely natural. The only way it provides energy is its plentiful supply of electrolytes and energy-rich carbohydrates. Moreover, the nutrients provided by Clausthaler are a secondary benefit. Primarily, we promote Clausthaler for its great taste and for the need it fulfills due to the absence of alcohol – the fact that one can drink it with lunch, at work, while driving or when medically advised against drinking. The stigma against the term ‘beer’ can only be tackled by increasing awareness. Also, nowhere on the can is the term ‘beer’ mentioned.”

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