"Young drinkers have demonstrated a remarkable demand for change, innovation and new products," says Tom Pirko, president of beverage consulting group Bevmark. "They're not going to stay pat with old-fashioned brands. They really want to see things presented in new ways ... It's like `Show me something I've not seen before.' Companies are forced to be innovative, forced to change."
After a drop in births from 1965-75 led to commensurately slack beer demand, volume last year rose 0.7%, according to sales figures from Beer Marketer's Insights. The lift was less than expected-and actually would have been a deficit had it not been for the new flavored alternative malt drinks-but it bodes well for the future. The new boomlet is "what everyone has been hoping for, waiting for and dying to see," says Eric Shepard, executive editor of the newsletter.
For the 52 weeks ended May 19, beer volume in supermarkets rose 3.3%, while dollar sales were up 7% to $8.1 billion; flavored malt beverage volume jumped 57.7%, and sales rose 69.5% to $343 million, according to Information Resources Inc.
young and fickle
The abundance of options has made young consumers fickle. To keep them interested, brewers have ramped up research and development. In the 1980s, Anheuser-Busch had about five brands. Now it's upwards of 30. "Consumers have more choices, and more choices mean less brand loyalty," says Frank Walters, research director at Impact, a spirits industry publication.
Many of those choices are sweet alt malts designed to lure twentysomethings. The segment was spawned last year by Diageo's Smirnoff Ice. This year, at least nine competing big-budget alt malts will hit.
Though it's uncertain whether the segment will take off like imports or fall flat like wine coolers, brewers have jumped in: Anheuser-Busch with Bacardi Silver, Coors Brewing Co. with Vibe, and Philip Morris Cos.' Miller Brewing Co. with Sauza Diablo, Jack Daniel's Original Hard Cola, Stolichnaya Citrona and Skyy Blue.
Extrapolating media spending levels from Taylor Nelson Sofres' CMR, these and other marketers are on track to spend more than $350 million in media backing the malt alternatives this year, compared with $563 million last year for the top 10 beer brands.
For all the new products and big budgets, beer today isn't so different from the past 25 years. Young men drink twice as much as everyone else, as long as it's not their dads' beer; sports is a big draw; and so is advertising with hot babes. The changing landscape "requires [us] to better understand our consumers, increase investment ... and have a quicker time to market," says Ed Gawronski, Miller VP-marketing and business insights.