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Whatever happened to Steinlager - New Zealand's finest?

A truly iconic brand is worth fighting for—so what happened to Steinlager? ‘Our beer’ is barely heard from these days and even owner Lion Breweries admits its marketing has gone a bit flat. Deborah Hill Cone wonders if they’re drinking our beer anywhere

Whatever Happened to Steinlager? feature

Idealog July/August 2006, page 38. Art by Adrian Clapperton

A truly iconic brand is worth fighting for—so what happened to Steinlager? ‘Our beer’ is barely heard from these days and even owner Lion Breweries admits its marketing has gone a bit flat. We ask if they’re drinking our beer anywhere

The world is flipping over our films, going loopy over our music and quaffing our vodka but when it comes to drinking ‘our beer’—Steinlager—it’s all gone a bit, well, flat.

In Lion Nathan’s most recent annual report Steinlager gets two cursory mentions as an item in a list of the UK-owned brewer’s brands—the equivalent of mumbleburyitmumble in marketingspeak.

And last month Lion announced the unthinkable—dropping the sponsorship of the All Blacks—with managing director Peter Kean saying “if someone wants to get international exposure for a brand then we’re prepared to step back”.

Huh? What happened to the brand which once captured the nation’s imagination, embodying the Kiwi underdog taking on the world?

It didn’t used to be like this. Way back in 1983 Lion took a full-page ad in the Auckland Star congratulating itself on selling one million litres offshore. “One of New Zealand’s foremost success stories,” the ad proclaimed. Just four years ago in its annual report Lion skited about its star: “As the brand behind the All Blacks and Team New Zealand’s

America’s Cup defence, Steinlager speaks volumes about Kiwis taking on the world.”

Now, though, I’m wondering: are they drinking our beer, anywhere?

To be a Kiwi in London in the late 80s was a terrific thing. With a swag of rowdy Kiwis still bathing in World Cup glory and the UK falling in love with all things downunder, you could earn pounds sterling and yet drink your own beer. To really get a sense of the lost opportunity with Steinlager you need to picture the UK pub scene. On tap are your usual array of flat brown UK brews. On the bar is a mini fridge, with cold, smart-looking Steinies inside. The fridge was an innovation brought by Lion to drive Steinlager as the premium, bottled lager to rival the rising stars of Stella Artois and Fosters. Duncan Harris, Lion’s UK export manager from 1985 to 1991, recalls the success. “It could have been great. We were selling heaps of Steinlager and getting good distribution. The US guys were having even more success than us. I don’t think we were making much money. But each country has its beer—Steinlager could have been up there now.”

The success of Steinlager was in some ways a mistake since its origins are anything but auspicious. In the 1958 ‘Black Budget’ the Minister of Finance, Arnold Nordmeyer, restricted beer imports and challenged New Zealand brewers to come up with their own international-style lager. The resulting product was originally called Steinecker after the packaging equipment used to make it. Heineken took issue with the name and the beer was renamed Steinlager in 1962, but it was still a long way from becoming the brand we know today.

Whatever Happened to Steinlager? feature

It was a local brand, nicknamed ‘Jungle Juice’, with 7.5 percent alcohol, sold cheaply in a brown bottle with a blue label. Its first export market wasn’t California or Cannes, but the Pacific Islands. In 1973 export sales to the American market began with the beer repackaged in a green bottle and also in a six-pack to tap into the lucrative supermarket trade.

“Lion Breweries was a real New Zealand producer then,” recalls Richard Holden, one of the key figures behind the early development of the brand. “You’d get bottles with three labels on, or the labels wouldn’t be put on square or the six packs would fall apart. They didn’t understand they had to look clean.”

It could have been great. We were selling heaps of Steinlager and getting good distribution. The US guys were having even more success than us.

Holden, a former window dresser who went on to become head of rival Carlton United Breweries, says he was called into Lion Breweries managing director John McFarlane’s office and told he was to be export manager. He swotted up on trade law with the books of Clive M Schmitthoff and took to the job with gusto, finding distributors who were prepared to take on a New Zealand beer: Shaw Ross in Miami and Paradise Beverages in Hawaii.

“We started thinking internationally, thinking beyond the boundaries of New Zealand, which still had a cringe mentality then. If you had proved yourself offshore you could make it at home.”

The Steinlager team included talented marketers such as Craig Lawson, now head of Adidas in New Zealand, and Ray O’Connor, who went on to run Tip Top. Holden describes his salesmen as like a force of elite fighter pilots who “lived and breathed the beer” and believed the product-as-hero maxim.

Another reason Lion wanted to export: Prime Minister Robert Muldoon’s export incentives meant for every dollar the brewery spent it received 67.5 cents back in tax benefits.

Lion’s official ‘Steinlager story’ boasts that the beer quickly started winning beer-tasting competitions, but those who were there reckon winning gongs was a bit of an accident.

Holden says the first win was the top beer prize in a small tasting held by a wine club in the US, helped by a diligent New Zealand trade official who made sure new supplies of Steinlager were delivered to the tasting so it was fresher than the other contenders.

“The media picked up on it here and gave us write-ups. A little wine tasting got blown out of all proportion. It was really gimmicky but it became the product-as-hero. All of a sudden Steinlager went through the roof.”

In keeping with Holden’s opportunistic approach of being ‘product champion’ he seized on the little-brand-taking-on-the-world idea at every opportunity, with international press exposure and opportunistic stunts such as taking on Queensland Premier Joh Bjelke-Petersen after he banned New Zealand chocolate and beer in 1985 at the time of the nuclear warships debate.

Whatever Happened to Steinlager? feature

“I was allowed to be a bit silly,” says Holden. “I’d be fired for it in today’s climate.”

In the 1980s Steinlager continued to win awards, including the Best Beer in the World award in the UK and the Les Amis du Vin competition four years in a row. Adman Terry King capitalised on the success with the line that now has entered the Kiwi lexicon. Picture a French café where you’d think they were sipping Kronenbourg or some dark Trappist brew. But no: ‘They’re drinking our beer. Here.’

“I went to the board of New Zealand Breweries and said you’re missing a huge opportunity: every major country has a beer which represents that country as part of their national pride,” King says. “I said Steinlager could be that beer. They agreed.”

http://www.youtube.com/watch?v=xb3islS4Vr4

Brand building: Steinlager pioneered the ‘Goldstein effect’, using foreigners to tell us we’re okay

King says his agency, MacKay King, initially convinced the brewery they had to advertise in a small way, highlighting the brewing process. The cinema commercial—liquor advertising was banned on television—won a Gold Axis award.

Later, King learned Steinlager had won another best-beer-in-the-world award in the UK although the marketing department had not capitalised on it. That meant Steinlager could be promoted as New Zealand’s international award-winning beer. “I said here is your opportunity. What we should now do is take that and develop a whole campaign of national pride.”

King says he and creative director Roy Meares wanted to show that other people outside of New Zealand were buying Steinlager. King came up with the line ‘They are drinking our beer here’ as the brief but it stuck as the tagline. King and Meares would be the first to admit the campaign was somewhat contrived as they stretched the truth about where the beer really was sold: “It wasn’t necessarily being widely sold in those countries,” says King. “We took a few liberties.”

But the pitch worked, and the brand went from strength to strength. The next big Steinlager campaign was a television spot using comedians Mel Smith and Griff Rhys Jones. It cleverly left the viewer to guess what was being advertised to avoid breaching the ban on TV advertising. The ad won the best alcohol commercial in the world award at a New York competition in 1987.

“The product continued to grow and led the growth of lager,” King says.

In the late 1980s and early 1990s the Steinlager brand was strengthened with sponsorship of yachting and rugby. Steinlager made the All Blacks look glamorous and glossy for the first time using slow-motion photography and stylised art direction in the ‘Stand By Me’ campaign.

Whatever Happened to Steinlager? feature

In 1990 another major campaign emphasised the brand’s export cred by featuring a New York taxi driver taking a punter around Manhattan to find a Steinlager.

Says Meares: “At the time I worked on it in the mid to late 1980s there was an emerging pride in anything New Zealand—and to have a beer that was so good that people were buying it around the world, we tapped into that.”

A little wine tasting got blown out of all proportion. It was really gimmicky but it became the product-as-hero. All of a sudden Steinlager went through the roof.

It wasn’t all just hype either. “The growth got as far as it could with the distribution that we had through the Bass brewery chain,” says former Lion UK man Duncan Harris. “These pubs were of a higher status, more upmarket. It was a great achievement getting into these pubs—but it showed how well the beer was perceived.

“To succeed in the mass category you have to have tons of money, and we didn’t. So we used to position ourselves against the Aussie beers. We ran a billboard campaign asking ‘What do you call a sophisticated Australian? A New Zealander.’”

Then something changed. Despite the momentum in the UK, Lion made two decisions in 1990 that annoyed Harris enough for him to leave. First it moved Steinlager from bottle to tap—immediately devaluing it from premium to ‘mass premium’. Then it shifted the brewing to Sweden to increase the volumes. “I always thought it should stay authentic and be made in New Zealand. The whole badging thing was taking off and Steinlager was growing as a premium packaged product,” says Harris.

It was an admission that despite all the fancy advertising lingo back home, Lion didn’t have the bottle to build a premium, international lager. You can hardly blame Lion. Beer travels poorly, especially across the equator. And it’s costly too. Combine that with the immense cost of fighting the dozen or so international lagers in the UK and you can see why brewing kegs in Sweden made sense.

And then there’s the Heineken factor. By the early 90s DB was threatening to rain on Lion’s home parade by importing the Dutch brew down under, which it finally did in 1995. Meares found himself working on the Heineken launch at new agency M&C Saatchi. “Heineken was glamorous and international,” he says. “There was never any local content [in its advertising]. It was a sitter for the guys down at the Viaduct and Steinlager suffered from that.”

Lion needed to respond. But instead of hunkering down, Lion seemed to wobble, dropping its ‘New Zealand pride’ positioning for Steinlager and opting for image-related, aspirational advertising such as the Lust for Life campaign. It then changed again shifting to ‘Beer with bite’ followed by a boxing thing and then, well, can you remember what you’ve seen lately?

“Steinlager is flailing about trying to find itself,” says Lew Bentley, a researcher with Clemenger BBDO who has worked on beer brands before. “Along with Export Gold, it got hammered by Stella and Heineken from above and the rise of the brown beers like Tui and Speights from below.” The result, he says, is that drinkers don’t know what it stands for. “They see it as the marketing beer. The beer that buys the All Blacks.”

And they don’t even do that now.

You might expect Lion Breweries to leap in and defend the jewel in its crown, but the brewer is surprisingly subdued. Unlike Holden’s team who lived and breathed the product, today’s Steinlager marketers are initially reluctant to even talk about it. Lion insists questions must be submitted in writing and the answers, when they finally arrive, are not exactly gung-ho.

Asked why Steinlager is barely mentioned in the company’s annual report, the brand’s marketing director, Danny Phillips, replies: “Steinlager is still a very vital part of our business, both nationally and internationally.”

How vital? It’s hard to tell as Lion will not divulge figures on whether the brand is growing or how much money is being put into marketing. “Steinlager is a key player in the Lion Nathan beer portfolio and is very well resourced,” Phillips says.

But the figures which are available show Lion has historically been losing market share, dropping from 61.5 percent in 1997 to 60.6 percent in 2001. More recently the brewer has not released figures, but says it is facing “challenging trading conditions” and in the year to October 2005 posted a profit of $75 million, down 17 percent on the previous year.

In the fight for share of the premium market Steinlager has been decimated, forced to share space with Heineken and Stella. Steinlager is a clear number two to Heineken, with $24.15 million in sales to March 2006 compared to Heineken’s $30.15 million.

But Lion’s new group marketing director, Arno Lenior, is happier to talk about Steinlager and readily admits Lion has some ground to make up. “It’s a brand that’s extremely well-loved, but to say that we’ve stalled is somewhat accurate. Not in sales, which continue to grow and exceed expectations—but in brand terms we haven’t done enough to promote and talk about it.

“That,” he says, “is about to change.”

Whatever Happened to Steinlager? feature

What about the export success story? Steinlager could be a case study for why export incentives don’t work in the long term. Lion Nathan International director Jack Talbot admits exports are not growing as strongly as the most recently released figures—Northern American exports were up 14 percent in 2003—but he blames much of that on exchange rate fluctuations. Lenior says sales are still strong in the UK and Steinlager is the third most-popular imported beer in Hawaii. “But in the US we could do more—we have slackened off there.”

It’s a brand that’s extremely well-loved, but to say that we’ve stalled is somewhat accurate. We haven’t done enough to promote and talk about it.

So why did Steinlager not become a great New Zealand export success story? Lion’s former chief operating officer Kevin Roberts, now chief executive of Saatchi & Saatchi, says ‘They’re drinking our beer. Here’ was a great idea but, in fact, Lion just couldn’t penetrate offshore. The first problem, he says, is that Steinlager is a German name, not Kiwi. (Meares agrees: “Kevin’s comment is incredibly valid. It’s okay for a domestic market that knows and loves it, but it’s bloody hard to push it overseas. People just assume it’s some German brand. It’s not the smartest name.”)

Other reasons why Steinlager hasn’t made it, according to Roberts: there is no New Zealand beer heritage; no product and taste ‘story’ to sell; and there was no Peter Jackson mystique to New Zealand in the late 1980s and early 1990s.

Lion also suffered from not having committed partners on the ground and no sustainable marketing and sales support in the US and UK, he says. “Bugger!”

Richard Holden, another who knows how hard it is to flog beer, says it’s vital to have ‘gun’ sales people on the ground. “You can have people in the boardrooms talking till the cows come home but it doesn’t sell the brand.”

Lion Nathan is now 46% owned by the giant Japanese brewer Kirin. The old Steinlager hands don’t see the ownership as an issue but they do point to a revolving door in the marketing department, which hasn’t helped. There have been five Steinlager marketing directors in five years: Brett McMeekan, Dan Gilbert, Adam Prentice, Cormac van den Hoffdaker and Phillips.

But marketers say the company also has a culture of research-driven decision making which does not favour bold campaigns. “You have to have a commitment to an approach and stick with it,” one source says.

Maybe Steinlager has been too good at promoting national pride. There is so much patriotism swishing about these days that positioning a brand in that territory is a blandly me-too proposition. But that doesn’t mean Steinlager can’t find its own new place in the proud New Zealand brandscape. Says Roy Meares: “Why can’t it just be a cool Kiwi brand? There’s a wonderful emerging new enthusiasm for Kiwi things. I think Steinlager’s done with the export approach. That was in the 1980s and 1990s when it was cool. But I reckon you can still create a local hero—it could be a local hero in the late 2000s.”

Brand mechanics

Adman Terry King reckons Steinlager could be resuscitated if Lion went back to the brand’s roots and did the same national pride positioning, but in a modern way. Others agree.

“I believe Steinlager could still be the biggest-selling lager in this market. The product’s fantastic, as good as Heineken … but there’s been a lack of faith. I don’t think it’s a spent force at all.”
Richard Holden, former export manager

“I think Steinlager does still have a real opportunity—despite having a German name. However if it is to succeed in the top end of the beer market it does need international credentials. A locals-only beer is unlikely to ever get any cachet at the top end of the market. So it needs to reclaim some international reputation for it to be a success at home in the premium category. The ‘They’re drinking our beer’ campaign was a bloody winner and could still work today.”
Geoff Ross, 42 Below

“I passionately believe Steinlager could be reinvented as a very exciting and real Kiwi beer, in the same way as L&P. People still have a huge affection for it.

“The brand has not yet freed itself from the association with the All Blacks. That’s good and bad. It should be drunk by kids who couldn’t give a fuck about rugby. It should be the Huffer of beers [Huffer is a hip local fashion brand favoured by skateboarders]. Steinlager should be so cool you would have Steinlager tattooed on your arm.”
Roy Meares, MTC

It seems Steinlager is back on Lion’s radar. Just days after the brewer announced that it would drop its sponsorship of the All Blacks, group general manager Arno Lenior told Idealog that he’ll soon roll out a new Steinlager campaign.

“We’ve done a huge amount of work with new agency Publicis Mojo to identify the key brand benefits,” he says. “The new way we will talk about it is similar to the way you have positioned [Idealog]—it’s all about the new New Zealanders. Steinlager has been there and done that before, but we haven’t kept up with the times.

“We’ll be focusing on New Zealand’s reputation for purity, but still position it as New Zealand’s finest beer.”

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