The market for beer can be divided into numerous segments, each looking for something else in the beer they buy and consume. The key to the successful marketing of beer is understanding what’s unique about each segment and targeting them with the right products and messages.
One of the most popular methods for performing beer market segmentation uses psychographic factors like likes/dislikes, personality and lifestyle.
Other methods use behavioral factors like spending habits, brand loyalty and benefits sought.
In this article, we will segment the market for beer using the following 9 variables: type of beer, price, color, ingredients, occasion/seasonality, packaging, country of origin, alcohol content and brand.
But first, let’s start by understanding why it is important to use market segmentation when making/brewing or selling beer.
The Importance of Segmentation of the Market for Beer
The segmentation of the market for beer is essential because it allows beer makers and retailers to target specific groups of consumers with laser precision.
By understanding the needs and wants of different segments, businesses can create products that are more likely to appeal to them and retailers can stock beer that their customers are most likely to buy.
The market for beer ranges from those looking for a quick refreshing drink on a hot day to someone searching for a specific brand of beer or a premium beer from a part of the world that is famous for it.
But all beers are not equally popular with all beer drinkers. While some may find a lager to be too light and fluffy others may find an ale to be too heavy.
The segmentation of the market for beer allows businesses to identify and target these different groups with products that are more likely to appeal to them.
Variables for Beer Market Segmentation
Beer market segmentation can be performed along the following 9 axes:
- Type of Beer
- Price
- Beer Color
- Ingredients Used
- Occasion and Seasonality
- Packaging
- Country of Origin
- Alcohol Content
- Brand
Most beer manufacturers choose not to cater to all types of beer consumers, but rather focus on those segments that are most likely to buy their products.
This also has an impact on branding because different brands have different associations in the consumer’s mind and brands.
And so a brand that establishes itself as a premium beer brand cannot easily switch to targeting the budget beer market without damaging its reputation.
For example, in many markets around the world (although not in Germany), Erdinger from Bavaria is positioned as a premium beer and so cannot be targeted toward those looking for a cheap, budget beer without hurting Erdinger’s brand.
That’s because many people equate price to quality. So beer distributors and retailers perform price segmentation and divide the market based on a customer’s willingness to pay, which is greater for some beers than others.
Let’s now look in detail at each of the 9 variables used in beer market segmentation.
#1. Segmentation Based on Type of Beer
Beer comes in a very wide range of types. The most common types of beer include:
- Ale
- Lager
- Stout
- Porter
- Wheat beer
- Fruit beer
- Spiced beer
- Kolsch
- Pilsner
- Trappist
- Beer cocktails (eg Panache/Radler)
… and many more.
Beer manufacturers know that consumers have strong preferences for the type of beer they will habitually and so they will segment the market based on this variable.
For instance, there is a very clear distinction between lager drinkers and ale drinkers with most people preferring one over the other.
So manufacturers like Heineken will make and sell both types of beer to target both segments while other manufacturers like Carling focus only on lager as that is what their target market wants.
The type of beer is the most important variable in segmenting the beer market as it is very difficult to change someone’s preference for a certain type of beer once they’ve made up their mind to drink it.
#2. Segmentation Based on Price
Price is a minor segmentation factor for beer because, unlike many other products, there isn’t a wide price swing between different types of beer.
The exception is when beers have been imported from other countries and have been subjected to import duties and transportation costs.
So while there may be some price segmentation at the high end of the market, most beers are priced quite similarly.
Some beer manufacturers have tried to break out of this strait-jacket by introducing premium and super-premium beers that are priced much higher than regular beer, but these have not always been very successful.
One exception has been craft beers especially those brewed by local microbreweries.
These often command a slightly higher price because of the small-scale production and the added value that consumers place on buying local products that they perceive to be better than mass-produced beers.
#3. Segmentation Based on Beer Color
Most people have a preference for either blond, brown or very dark beers.
The beer’s color can be attributed to the type of malt that is used in brewing as well as the length of time that the beer is left to ferment.
While most people have a preference for one color over the others, there is some evidence that people’s preferences change over time and with different life experiences.
For instance, young men often start by drinking blond beers and then progress to darker beers as they get older.
Women, on the other hand, tend to stick with blond beers or move to fruit-flavored beers as they age.
Beer color is an important factor in beer market segmentation because of the visual impact it has on a buyer’s purchase decision. Many people will go into a store and pick a beer not on the brand, or the price but on the color of beer in the bottle.
This decision-making process also extends to the color of the bottle. If a bottle is brown or dark in color, people expect the beer inside to be of a darker shade.
And so beer color matters.
#4. Beer Market Segmentation Based on Ingredients Used
The ingredients used in a beer are a primary factor that determines the taste of the final product.
The four main ingredients in most beers are water, yeast, malt and hops.
Water makes up 90% of beer so it’s not surprising that the quality of the water used has a big impact on the taste of beer.
Yeast is responsible for fermentation and there exist many different strains of yeast that can be used.
Malt is made from grains like barley, wheat or rye and it provides the sugars that are fermented by the yeast to produce alcohol.
Hops are the flowers of the hop plant and they give beer its bitterness as well as a range of aromas.
Consumers who really understand their beers can sometimes make purchase decisions based on the ingredients (especially the provenance of these ingredients) that have been used to make a beer.
Beer experts, when they select a new beer to try out, will often look at its ingredients before choosing one beer to buy over others.
#5. Segmentation Based on Occasion and Seasonality
Occasions and seasonality play a big role in beer market segmentation.
Different beers are often consumed on different occasions.
For instance, while lagers and pilsners are often the beers of choice for watching a game on TV, ales are more likely to be drunk in a pub or restaurant.
Beers like stout and porter are generally associated with winter while lighter beers like wheat beer are drunk more in the summer.
Some beers are even created specifically for particular occasions.
For example, Oktoberfest beers are only brewed for a few weeks every year and sold during the Oktoberfest celebrations across Germany.
Other seasonal beers include Christmas ales and pumpkin ales.
Some breweries produce special editions of their beers for particular occasions or seasons.
For instance, Guinness produces Mother’s Day stout, and there exist many different St. Patrick’s Day-themed beers in March.
In the same way that people buy Christmas cookies or pumpkin pies during the holidays, they also tend to buy seasonal beers.
And so, retailers often use occasion segmentation to change their beer displays based on the season and time of year.
For example, in the summer and on hot weekends, they might display certain beers more prominently or carry discounts on them, while in the winter, they will display other beers that are more likely to sell when it’s cold outside.
#6. Segmentation Based on Packaging
Packaging has an impact on the perceived quality of a beer and can be used as a marketing tool to segment the market.
For instance, beers that come in stubby bottles are often seen as being more casual, while those that come in long-neck bottles are seen as being elegant and therefore more premium.
Similarly, beers that come in cans are often seen as being more convenient for drinking outdoors or at a picnic, while those that come in bottles are seen as being more suitable for drinking at home or in a bar.
Packaging can also be used to convey special messages about a beer.
For example, some craft beers come in bottles that are designed to look like they were made in a home brewing kit, which conveys the message that the beer is artisanal and handmade.
Packaging can also be used to segment the market by price.
For instance, beers that come in six-packs are often seen as being more affordable, while those that come in four-packs or singles are seen as being more premium.
Finally, packaging can also be used to segment the market by target audience.
For instance, beers that come in cans or bottles with sports team logos on them are often seen as being more geared towards male sports fans.
#7. Segmentation Based on Country of Origin
An easy way to segment the beer market is based on the country of origin. The country a beer comes from conveys certain messages about the beer.
For instance, beers from Germany are often seen as being high quality and well-made.
Beers from Belgium are often seen as being artisanal and unique, while those from the United States are often seen as being more mass-produced and mainstream.
Finally, beers from Japan are often seen as being exotic and different.
This is because the brewing traditions in Japan are slightly different from those in other countries. For instance, Japanese brewers sometimes use rice as one of their beer’s ingredients, to give a light and crisp taste.
Sometimes consumers will buy a beer that comes from a specific country because it reminds them of the time they visited that country or because it makes them feel like they are part of a certain culture or simply because they want to try something new.
Either way origin country-based beer market segmentation helps drive more sales of beers from certain countries.
#8. Segmentation Based on Alcohol Content
Beers can be classified based on their alcohol content into three broad categories: non-alcoholic beers or low in alcohol content; light beers; and regular beers.
Non-alcoholic beers are targeted toward people who are driving, pregnant women, or those who are trying to stay sober for religious reasons.
Light beers, which often have fewer calories, are usually targeted toward people who are watching their weight or who are trying to stay sober.
Regular beers, which are the most common type of beer consumed, are targeted toward people looking for drink options for socializing or relaxing.
#9. Beer Market Segmentation Based on Brand
Finally, no beer market segmentation would be complete without categorizing beers based on brand.
After all, the brand is such a powerful factor in the purchase decision process of any consumer and especially someone looking to make a quick decision about what to drink during a summer barbeque.
Broadly speaking beer brands can be classified as either mass-market brands or craft brands.
Mass-market brands, such as Budweiser, Miller, and Coors, are often seen as being more affordable and accessible, while craft brands, such as Sierra Nevada and Dogfish Head, are often seen as being more premium and niche.
Conclusion
As you can see, the target market for beer can be segmented using many variables and can be analyzed from different angles.
In this article, we performed beer market segmentation following these 9 factors: type of beer, price, color, ingredients, occasion/seasonality, packaging, country of origin, alcohol content, and brand.
By segmenting the market, beer manufacturers are able to create new beers to better suit the needs and tastes of consumers. Similarly, retailers are able to carry the brands and types of beer that are likely to be most attractive to their client base.