Stella won’t be shaken

Stella Artois is not about to change its “reassuringly expensive” positioning, despite pressure from supermarkets to keep its price in line with other premium lager brands.

In fact owner InBev (Interbrew UK in Britain) is about to resurrect an über-premium version of the UK’s top-selling lager brand. The 113-year-old Artois Bock, last brewed in the late 1950s, is particularly strong – 6.2 per cent alcohol by volume (ABV) as opposed to Stella’s 5.2 per cent (MW last week). Available in half-pints and in 275ml bottles only, it will cost between £2 and £2.50 a half-pint.

However, as a speciality beer Artois Bock is unlikely to have a major impact on overall sales in the UK. According to AC Nielsen, value sales of Stella slumped by 3.3 per cent in the UK take-home sector for the first quarter of 2005, while on-trade sales were down by 1.3 per cent to the end of January 2005. Though these figures look less alarming compared to a fall of 4.3 per cent in Stella sales worldwide, they don’t make good reading for InBev bosses.

One industry insider says that so-called “second division” premium lagers have been doing their best to make up ground on Stella through discounting and increased marketing, and the tactics appear to be paying off. Scottish Courage, which makes Kronenbourg 1664, claims that its share of the premium package lager (PPL) market by volume for the last quarter of 2004 was up year on year by 37 per cent in the on-trade sector, and by 28 per cent in the take-home sector. The brewer is also increasing its marketing support of Kronenbourg, to £18m this year, compared with £15m in 2004.

Ian McLernon, marketing director at Unwins and former marketing director of Coors, says: “The fact that Stella has been having a hard time over the past 18 months is less to do with market forces than the fact that its competitors, Kronenbourg, Grolsch and to a lesser extent Budweiser, have got their acts together. But Stella is still number one and will continue to be so for a long time.”

He adds: “Stella has not got involved with the recent supermarket discounts, whereas Kronenbourg has discounted aggressively. Refusing to get dragged into price wars and trying to re-instil the brand’s value will turn out to be a good move for Stella in the long term.”

Interbrew UK marketing director Phil Rumbol says that Stella has taken the lead on pricing and has held firm by moving forward and not getting involved in a price war, and this has had a short-term impact on sales: “Our strategy is to drive value back into the market. The success of the brand is down to quality and consistency – both in terms of product and brand marketing support.”

But others are unsure about the reasons behind Stella’s declining fortunes. Some believe it has lost its edge, arguing that brands can become so generic and popular that they are perceived as being downmarket.

However, observers contend that even during relatively tough times for the iconic lager brand, Interbrew has more than enough room to breathe and recover because of the unique relationship a generation shares with the Stella Artois name and the cinematic ads built around the “Reassuringly expensive” strapline.

Another insider says: “The tailing off of Stella’s performance is a mystery. It distributes as widely as any big name could hope for and, in terms of promotion, Stella always enjoys ‘front-of-house’ advantage.”

Yet even he admits that there have been “niggles” between the brand and some of the bigger retailers “over the funding of price promotions”. Stella is understood to have declined to help match the price promotions offered on other brands and has instead tried to put up its prices, asking major retailers to pass this on to consumers.

The insider adds: “Maybe Stella’s attitude hasn’t helped matters. It is undoubtedly a giant in branding terms, but Interbrew’s share (by volume) of the UK alcohol market is only slightly ahead of Scottish Courage and Coors.”

McLernon says that while Stella’s main rivals are ramping up their advertising and adding product extensions to attract new drinkers, Stella will re-establish itself by looking back to what originally made it special.

With scant regard for the success rivals have enjoyed with price promotions, Interbrew has decided on its response for Stella Artois – it remains “reassuringly expensive”.

Facts and figures

Stella Artois has annual sales of £1.6bn in the UK

It has a 40.6 per cent share of total UK premium lager volume sales

Stella Artois accounts for one in every two pints of premium draught lager sold in Britain

It has grown from annual UK sales of almost 110,000 barrels in 1979 to almost 3 million barrels – a 33-fold increase in sales over 16 years

Stella Artois is the number two take-home drinks brand in the UK, behind Coca-Cola

In May it launched two ads simultaneously, the 90-second “Ice-Skating Priests”, which will run on national television, and “Bench”, also in black and white and to be screened in arthouse cinemas only

This year, Interbrew is putting its highest-ever level of support (£40m) behind Stella Artois