With the beer market inundated by fruity flavored brews, pricey craft brands and Justin Timberlake ads, what ever happened to Joe Six-Pack?
He's still there, chugging cheap beers after work, but brewers are dedicating fewer dollars to reach him as the "subpremium" segment declines. Instead, beer marketers, on a quest for fatter profit margins, are encouraging drinkers to trade up to pricier line extensions such as Bud Light Platinum or new concoctions like Redd's Apple Ale.
Brewers are advertising economy brands less: Measured-media spending on the five largest low-end brews -- Natural Light, Busch Light, Busch, Miller High Life and Keystone Light -- fell to $6.9 million last year from $22.4 million in 2011, according to Kantar Media. That compares with the $32 million that Anheuser-Busch InBev spent last year launching Bud Light Platinum. Redd's Apple Ale, introduced by MillerCoors this year, is getting a similarly hefty push, while the brewer last week launched the first national TV ads for Leinenkugel's that spotlight its lemonade-flavored Summer Shandy offering, whose sales soared 90% last year, according to the brewer.
Add in the fact that the economic downturn hurt blue-collar drinkers the most and the result is that the sub-premium segment has been on a long-term slide, falling to 13.5% in 2012 from 15.7% of beer sales at supermarkets in 2009, according to SymphonyIRI. During the same period, craft-beer sales grew to 11.9% from 8.3%, while so-called superpremium beers, like Blue Moon and Shock Top, jumped to 10.7% from 9.1%.
How has beer been able to get consumers to trade up in a sluggish economy? "It comes down to emotional engagement," Trevor Stirling, a beverages analyst at Sanford C. Bernstein, said. "Consumers are much more likely to "brand' themselves by what they drink, be it a quirky, heavily hopped IPA, or a "sophisticated' Stella; whereas Natty Light and Beast Light have, if anything, negative brand badging."
New drinkers -- think Joe College -- are a lot more experimental than they used to be, sampling craft beers, cocktails and flavored malt beverages, rather than relying on the same old Keystone or Natural Light. Younger drinkers "grew up with so many different flavors that it's not unusual for them to want to try different things," said Dan Wandel, SymphonyIRI's senior VP-beverage alcohol client insights.
Marketers have also spurred the shifts by hiking prices on subpremium brands. A-B InBev for the past few years has been closing price gaps between mainstream beers like Bud Light and its value brands in an effort to rebalance its portfolio -- and the American beer market at large -- toward premium beers. "Our strategic intent is to grow our share of the value segment, but without growing the segment itself," said Edison Yu, VP-value brands at A-B InBev.
Still, big brewers cannot risk alienating economy drinkers for fear of losing them to cheap liquor or smaller beer brands like Pabst Brewing Co.'s Pabst and Old Milwaukee, whose locally targeted, quirky Will Ferrell ads have gotten a ton of free media attention.
There are signs that A-B InBev and MillerCoors this year are paying a bit more attention to their low-end brands, rolling out new packaging, campaigns and promotions. The goal is to protect share in a segment that still accounts for 18.4% of dollar sales, according to SymphonyIRI. Although declining, the segment is still larger than imports (14.4%) and crafts (5.4%).
"When you are a big mega-brewer like [A-B InBev] or MillerCoors, you are looking to be all things to all people," said Benj Steinman, president of Beer Marketer's Insights. "And if subpremiums are 20% of the business, you damn well want to play there." Economy brands are more about "fast nickels" than a "slow dime," said Ashley Selman, marketing director-economy brands at MillerCoors. "We make less per barrel, but we sell a lot of volume."
As they narrow their focus, value brands are zeroing in on core drinkers. Keystone Light is replacing its "Keith Stone" ads that targeted younger drinkers with a partnership with tournament-fishing organization FLW. Its mostly in-store campaign targets Walmart-shopping, middle-age drinkers.
Busch is seeking to hook more anglers with a limited-time promo this spring in which 50,000 special "fishing-lure" cans will be randomly inserted into cases. Fans who upload pictures of the cans to the Busch Facebook page can win prizes, including a fishing trip with star angler Kevin VanDam.
Miller High Life is launching a campaign that plugs the beer's role in "everyday celebrations," teaming with Harley Davidson for in-store promotions that tout the fact that both brands are turning 110 years old this year.
Despite the competition from crafts, economy brands are not giving up on younger drinkers. A-B InBev's Natural Light, which targets college-age consumers, is seeking to stand out with new "stubby" bottles, dubbed "Fatty Natty," rolling out nationally. MillerCoors is targeting hipsters with its Hamm's brand via grassroots marketing.
The brew is part of the marketer's "classic" economy-brand lineup, which is meant to compete with crafts. "These guys are still challenged by the economy," Ms. Selman said. "And they don't have the money to buy crafts all night long."