Special Effects

In a marketing battle with giant competitors, Hudepohl Brewing Co. has found that special events can give it an edge.

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Darkness fell, and rockets pierced the sky. Robert Pohl, the 35-year-old general manager of Cincinnati's Hudepohl Brewing Co., joined the throng lining the banks of the Ohio River as more than $70,000 of his company's slim marketing budget literally went up in smoke. That is the price Hudepohl paid to sponsor its hometown Labor Day fireworks display, a lavish affair that annually draws upwards of half a million people at the height of Cincinnati's Riverfest.

Hudepohl can't afford such theatrics as a mere gesture of civic pride. The closely held, family-run beermaker spends only $1 million a year on conventional advertising, small change compared with the dollars poured into media-buying by the national breweries that dominate the industry. And for the time being at least, Pohl has declared the company will "hold the line" on its ad budget. Not so, however, with Hudepohl's rapidly growing commitment to special events. Fireworks displays, tennis tournaments, bluegrass concerts, and ski races now make up a promotional budget of $200,000 annually.

Make no mistake, Pohl intends to accomplish more than just selling some "Hudy" beer during those events. Hudepohl is one of the few small companies that have begun to use special events as marketing tools. But it is a tactic already popular with a host of larger companies -- many of them such consumer-product giants as General Foods, R. J. Reynolds, and Anheuser-Busch. Lesa Ukman, publisher of Special Events Report, based in Chicago, estimates some 5,000 special events and festivals will be staged in North America this year, to the tune of more than $850 million in corporate sponsorships. Most sponsors see special events as a way to put their products directly before a target market. As Ukman puts it in the argot of the 1980s, "special events reach consumers at the lifestyle level."

Hudepohl has plenty at stake in the lifestyle department. Lee Oberlag, Hudepohl's advertising director, says brand loyalty in beer "is all image." The right image, she says, is youthful and sporting. It is an image carefully nurtured by such slick and expensive advertising campaigns as the ex-jock soap operas that elevated Miller Lite to the number two brand in America. That image is fundamental to the beer business, and while Oberlag says Hudepohl cannot hope to compete with the prime-time media-buying of larger brewers, she believes the company can generate the same kind of "feeling" through the right special event. Perhaps more important, Hudepohl needs to reestablish local allegiance to its brand name in its home market. Hudepohl's image in Cincinnati in recent years has been all wrong.

"Hudepohl has come to be perceived by younger people as a local, old-fashioned beer," says Oberlag. "They see it as the beer of past generations. And we think our ads have not overcome that tendency."

But Hudepohl does think a well-chosen series of special events can help overcome that stodgy image. At $70,000, the fireworks are far and away the company's biggest single special event to date. Eight years old, the Labor Day fireworks celebration was until last year the sole property of WEBN, a top-rated local rock-music radio station, which broadcasts a simultaneous music program timed to the display. WEBN has a virtual stranglehold on Cincinnati's young adult population, a market Pohl and Oberlag believe is crucial to reversing flagging sales of their standard-bearing regular beer, Hudepohl Gold. When WEBN decided to expand the fireworks program this year, Hudepohl jumped at the chance to co-sponsor.

"We want to get top-of-the-mind awareness with the youth market that listens to that station," says Oberlag. "Beyond that, we're also associating Hudepohl with the largest event in Cincinnati. We're reaching more than a half-million people on site, not to mention what comes through TV coverage and the advance promotion."

The key to Hudepohl's involvement is a partnership with WEBN. This, says Oberlag, is what makes event sponsorship fundamentally different from simply buying ad time on the station. The airwaves are crowded with advertising, short messages that say, "Buy our product," Oberlag explains. The impact of an event is broader: "See who we are and what we do to have fun." It is a bit of a surprise for listeners to hear stodgy old Hudepohl linked up with youthful WEBN. In theory, at least, the effectiveness of that exposure will grow over time as the phrase "Hudy GoId/WEBN Fireworks" becomes planted in the public consciousness.

"We're not in this for a one-year deal," says Oberlag. "And we expect to get more for our money with each succeeding year." Hudepohl, in fact, has committed to at least a five-year sponsorship of the fireworks -- regardless of cost.

Hudepohl has good reason to continue its marketing strategy well into the future. The beer industry has undergone major contractions in recent years, with small, independent brewers among the heaviest casualties in a war of attrition and acquisition. There are fewer than 25 small breweries still operating in the United States, not counting the newer "micro breweries," which produce beer for very limited, usually local, distribution. Hudepohl, with annual sales of $18 million to $22 million by INC. estimate, will be 100 years old next year and is one of only 2 brewers left in Cincinnati, once a major brewing center.

And competition is only going to get tougher. Although federal legislation appears certain to force the drinking age to 21 nationwide many industry analysts contend such a move will mainly result in more underage drinkers. Whether they are right or not the target market itself is shrinking. Persons between the ages of 18 and 24 -- just over 17% of the drinking-age population -- consume about 25% of the beer sold in the United States. But the size of that age group peaked in 1981 at a little over 30 million, and will head steadily downward until the mid-1990s, when there will be just over 23 million people between Chose ages. The effect of the shrinkage is already being felt: In 1982 and again in 1983, growth in U.S. beer sales was essentially flat -- the lowest growth rate since 1958.

Those realities only compound the endangered-species status of the independent brewer. In 1980, following the death of its general manager, Hudepohl was already suffering after a string of "very tough" years. The board turned to a young and untested Bob Pohl to run the company. The great-grandson of founder Louis Hudepohl (the name similarity is a coincidence of marriage; Hudepohl had five daughters), Pohl had his own notions about how the company ought to change, following what he saw as a period of potentially disastrous complacency.

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