With Coors Light in a Rut, MillerCoors Seeks Answers

Brewer Does 'Deep Dive' on Brand, Preps New Ads

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Coors Light
Coors Light

Just as MillerCoors makes progress turning around Miller Lite, another potentially larger problem has surfaced: Coors Light, long a star player in the brewer's portfolio, is declining.

The so-called Silver Bullet has misfired for most of the year, with the brewer reporting Wednesday that sales to retailers fell by "low-single digits" in the second quarter, which follows a "mid-single digit" drop in the first quarter.

"Coors Light trends [are] now worse than Miller Lite's," beer trade publication Beer Marketer's Insights recently reported, noting "that's a big deal, since Lite was down over 20% the last five years while Coors Light [was] up." Indeed, the publication forecast that unless Coors Light improves in the second half of the year, that 2014 "will be softest trend ever for Coors Light."

MillerCoors executives acknowledged the brand's issues Wednesday during an earnings call, saying that the brewer has recently performed a "deep dive" into the brand's trends. The analysis revealed that the issues are "somewhat regional," MillerCoors Chief Marketing Officer Andy England told analysts. "If you look at the West and Midwest we still have a healthy brand. Our biggest challenges are in the Northeast and Southeast," he added, especially sales at bars and restaraunts and in liquor stores.

"The good news is that we have the right positioning," he added, alluding to Coors Light's longtime cold-refreshment messaging. "But we've let it get a little tired," Mr. England added. "We need to contemporize in the eyes of the consumer." Still, he downplayed the recent decline, characterizing it as a "bit of a hiccup."

New ads by WPP's Cavalry are expected to debut in mid-September. Mr. England gave few hints about the new work except that it would get "back to the basics of what we know works with Coors Light." One creative tweak is expected to put more emphasis on the "refreshment" side of the "cold refreshment" equation. Recent ads have been overloaded with cold imagery, featuring so-called "explorers" retrieving Coors Light bottles, cans and pints from icy mountain peaks or underwater frozen caves.

Beer Marketer's Insights noted that Coors Light grew every year from 2005 to 2012, making it "easily the healthiest of the megabrands." By the end of 2011, Coors Light surpassed Budweiser to become the nation's second-largest beer brand by market share. As of 2013 it controlled 8.6% of beer shipments, behind Bud Light's 18% share, according to Beer Marketer's.

But signs of trouble began appearing last year when Coors Light declined low-single digits. Beer Marketer's suggested that this year's decline could be due in part to cuts in media spending, suggesting the brand is "less visible than it was." Coors Light spent $150 million on measured media in 2013, according to Kantar Media, which does not make 2014 figures available until after the year's end. A MillerCoors spokesman declined comment on the brand's media spending.

Coors Light's struggles come as Miller Lite, which has been in a long-term slump, shows signs of a rebound. The comeback has been fueled by retro packaging that harkens back to the brand's creation in the 1970s as the first mainstream light beer.

Lite's sales to retailers, which fell high-single digits in 2013, improved to a mid-single digits decline in the first quarter and to a low-single digit drop in the second quarter, according to MillerCoors. Notably, sales of Lite cans, which have been packaged in the retro design since late last year, increased by "mid-single digits" in the second quarter. The brewer is now implementing the design across all Miller Lite packaging.

The diverging trend on the brewer's two biggest brands raises a question: Is it possible for a single brewer to have two growing big light beer brands in the current environment, which is marked by stiff competition from craft brews and liquor?

The MillerCoors strategy has long been to push vastly different marketing messages on the two brews. Past pitches on Lite have played up taste, with the newer advertising touting the brand's heritage as "inventing light beer." Coors Light, meanwhile, has stuck with cold imagery for years.

Ad Age broached the topic with Mr. England back in 2012, asking if the brewer must eventually pick a winner between the two brands and throw most support behind a single light brew.

His response was that "from a resource point of view, we see them as being separate identities. What do we need [to do] to get the growth we are looking to get out of the Coors franchise? And what do we need to do [to get] the growth we need to get out of the Miller franchise?"

The brewer, it seems, is still searching for those answers.

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