These are busy -- and somewhat tumultuous -- times at MillerCoors. Five months after revamping its ad-agency roster, the nation's second-largest brewer is still seeking to reignite its struggling Miller Lite brand while keeping momentum going for Coors Light, which will soon roll out the first spots [see one below] from WPP's Cavalry.
At the same time, MillerCoors is dealing with backlash from distributors over its attempt to block its largest distributor, Reyes Beverage Group, from buying a smaller distributor in Virginia named Chesbay Distributing Co. MillerCoors, which is fighting the acquisition in court, says it is merely exercising its right of first refusal in order protect the brands it owns. But distributors see the move as an assault on their sacred "three-tier system," which protects the independence of suppliers, distributors and retailers.
The dust-up -- which involves complicated legal questions dealing with state and federal alcohol laws -- took center stage at this week's annual meeting of the National Beer Wholesalers Association meeting in San Diego. The event drew nearly 2,000 attendees and culminated Tuesday evening with a beer-filled celebration of the organization's 75th anniversary aboard the USS Midway.
During the festivities, Ad Age caught up with MillerCoors Exec VP-Chief Marketing Officer Andy England to get his take on the dispute and check in the brewer's marketing efforts. We asked him a six-pack's worth of questions, including whether the brewer will continue to support the sluggish Miller Lite brand and surging Coors Light brand at the same level. But we started with the question on everyone's mind in San Diego:
Ad Age : Some people have suggested that the fight over the Chesbay deal is proving to be a distraction to MillerCoors as you seek to grow your brands. Do you agree?
Mr. England: I'm not a lawyer so I won't comment on [the legal case]. What I will tell you is we have great brands. I don't lose any sleep over whether or not this contractual issue will impact our brands. I know we'll get it worked out one way or the other and we'll get back doing what we've done since Prohibition, which is selling lots of beer at margins that work for our distributors and I'm excited about doing exactly that .
Ad Age : You guys are supporting two big mainstream light beers, Coors Light and Miller Lite, roughly at equal levels. But Coors Light has been doing a lot better than Miller Lite. Does there come a time soon where you must pick a winner, and throw most of your support behind that brand?
Mr. England: Obviously, I'd like to see both of those brands rocking and rolling. … I'm obviously delighted with the performance of Coors Light and I have every confidence we are going to continue it in 2013 and beyond. I think Miller Lite, it's a turnaround story, there's no doubt about it. I think the [new] "It's Miller Time " campaign is a strong campaign for the brand. If you look at brand metrics in terms of how consumers react to the advertising and how they feel about the brand, those brand metrics are improving on a month-to-month basis, so I obviously feel good about that . It just hasn't shown up in the volume yet, and that 's obviously a frustration. We continue to work it very hard.
From a resource point of view, we see them as being separate identities: What do we need to get the growth we are looking to get out of the Coors franchise? And what do we need to get the growth we need to get growth out of the of the Miller franchise?
Ad Age : When you switched Coors Light from DraftFCB to the newly created Cavalry shop, you said you wanted more integration, including better alignment of digital and traditional creative. How is that going?
Mr. England: What we've been working on is a different way to brief our agencies and have our agencies present back to us with a full-360 approach. That's actually not just Cavalry but it's also Bromley and Commonground, who are our multicultural agencies who work on Coors Light, and also Integer, who works on the promotion side and Landor, who works on the graphics side.
Ad Age : So are all the agencies briefed in the same room?
Mr. England: Not always, but typically. If you want integrated work, you can argue about the best way to get there, but often times if you brief everyone together and say "the best idea wins" and then we'll all engage around that best idea across the platform -- across all the different parts of the mix -- that seems to be the best way to work. And that 's really what our approach is built around and the way we've structured Cavalry is a great enabler of that .
Ad Age : Do you have any new digital programs in the pipeline?
Mr. England: To me the standout is the new Miller Lite Facebook app. We're launching it on the eve of Thanksgiving, which we call "Beersgiving Eve." I believe it's the second-largest beer night [at bars] behind St. Patrick's Day. So it's the perfect time to launch this app, which is going to enable guys or gals to integrate all their Facebook activity for that night into one "story" of that night.
Ad Age : You seem to be taking a different approach with innovations than Anheuser-Busch InBev. While they are launching big line extensions nationally, such as Bud Light Platinum, you guys have been launching new brands and rolling them out regionally, such as Coco Breve.
Mr. England: I think smart people can disagree about the best way to build a business. And I speak as someone who's been involved in both new product launches and line extensions over time. I launched so many line extensions of Reese's when I was at Hershey that I was criticized for doing that . So I'm certainly not averse to doing line extensions. I just think you need to do them with the right financials in mind: Is it going to appeal to new consumers? Is it going to expand consumption? Is it going to drive the price point? Is it going to stick around? Is it going to take shelf space away from what you are going? And how incremental is it going to be to your business and to the business of your distributors and retailers?
What I'm excited about with Third Shift [a new small-batch lager brand], is that I think there's a huge mid-level price opportunity. I think there's an awful lot of beer that 's indexed either at 100 or at 150 and I think there's a midlevel price opportunity there that I think third shift is going to hit between the eyes. In my view I think that works best against a new brand.