"The market has matured," said Frank Walters, research director at Impact, a spirits trade journal based in New York. "All this ice beer and new products and the market not expanding have caused a tremendous amount of competition in a mature market."
Added Rich Lalley, group director for brands carrying the Miller name at Miller Brewing Co.: "It's been a challenging year for established brands that are not light beers."
The pressure is coming from imports, especially by Corona and Heineken; specialty beers; and Miller's new Red Dog, an instant hit.
Even some newer, just-recently-popular competitors are feeling the sting. Take Zima Clearmalt. The beverage from Coors Brewing Co. started out going gangbusters when it was introduced in 1993, and last year, its national rollout generated very profitable volume.
Coors has again promoted Zima this year with a new campaign from Foote, Cone & Belding, San Francisco; an extensive Web site; and the introduction of a new Zima Gold product. But that hasn't prevented a major falloff, with Coors acknowledging that '95 sales give the brand a 0.8% share, less than half last year's 2%.
Coors claims that's still pretty impressive for a new brand and said last year's success was due to testing.
If there's good news, it's that consumers have traded up to try new red beers; new brews with "red" in their name if not their hue (Red Dog); imports; and specialty beers. The growth, though, has come at the expense of popular-price and subpremiums brands.
As of late May, Information Resources Inc. said, only Miller High Life and Coors' Keystone Light, of the country's top 20 brands, escaped the carnage. Anheuser-Busch's No. 8 Busch beer dropped 5% in volume; No. 10 Busch Light Draft slid 4%; and Stroh Brewery Co.'s Old Milwaukee, its biggest beer, was down 9%.
For ice beers, last year's wave has subsided, and consolidation is taking place into a few big brands. Brewers say Miller's Icehouse and A-B's restaged Bud Ice along with Molson Ice remain strong but other ice products haven't done as well. Ice beers appear to be down to 5.5% of industry volume, from a peak of 7.5% last year.
Big headaches for No. 1 brewer A-B and No. 2 Miller come from the fact that two of the nation's largest beers have seen major slides. Budweiser, the world's top beer, continued its decline last year and is still slipping at about 2%, though A-B claims the rate of decline is lessening. Bob Lachky, VP-Budweiser brands, believes established brands like Budweiser will benefit as some of the excitement of new brands fades. "Our view of product proliferation is that it was good in that it brought some excitement to the category and brought premium brands back into focus," he said. "But now you are seeing a shakeout."
Mr. Lachky said advertising from new Budweiser agency DDB Needham Worldwide, Chicago, has helped stem the decline, and A-B believes it will yet end Budweiser's skid this year.
Miller Genuine Draft last week announced it would launch a red beer under the Genuine Red name in western states and southern Illinois starting Aug. 7, using ads from Bates USA, New York. But the main brand, which just three years ago was showing double-digit growth, is continuing to decline with industry figures showing the brand down 7%.