Case study: Miller turnaround hits one-year mark for surging Lite line

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Miller Lite achieved a rare feat in the beer industry: 12 straight months of year-over-year sales increases after several years of declines.

The turnaround, begun in the third week of August 2001, is particularly stunning because Miller Brewing Co. did it without deep discounting.

Instead, aggressive marketing aimed at best-selling Bud Light has helped drive the comeback. Miller sparked the rally with ads last September saying Miller Lite has half the carbs of Bud Light. It's keeping up the heat with ads touting taste-test results showing Lite beats Bud Light.

Lite shipments, driven by a late surge, increased 0.6% to 15.7 million barrels last year, the first increase since 1999, according to Beer Marketer's Insights. They kept climbing: Supermarket sales figures-which represent 20% of industry sales-show Miller Lite commanded an 8.3% share year-to-date through July 11, up from 7.2% in the year-earlier period.

But Miller, a unit of SABMiller, can't rest easy. Miller Lite starts hitting tough comparisons in the fall. Past recoveries-none as strong as this one-proved short-lived. And the low-carb craze that fueled much of Miller Lite's growth is abating (see story at right).

Touting the brand's taste becomes increasingly important. It's been a part of Miller Lite's message since last fall. Now Miller has been increasing its attacks on Bud Light on this front.

Archrival Anheuser-Busch Cos. questions whether Miller can keep it up. "Miller Lite's growth is a direct result of its low-carb, diet-beer positioning," said Mike Owens, VP-sales and marketing at A-B. "This is a very narrow marketing platform that does not necessarily improve a brand's image."

Still, Miller has done wonders for a brand that hit a peak of about 20 million barrels in 1990. Credit goes to a change in ownership from Philip Morris Cos. to South African Breweries, and management that brought fresh thinking to the No. 2 in the U.S. beer industry.

`challenger'

After SAB Chairman Norman Adami took the reins in February 2003, Miller launched an exhaustive review of its brands and decided to position Miller Lite and Miller Genuine Draft as "challenger" brands. Attacking No. 1 A-B was a component of that broader strategy.

Lite "had good resonance in the minds of consumers," said Bob Mikulay, exec VP-marketing for Miller. "We found a way to bring that to life and articulate that."

Miller took the strategic direction of the brands in-house. To get the best ads, it made agencies compete for assignments. The result was the "Good Call" campaign for Miller Lite and Miller Genuine Draft that broke in fall 2003. Ads hammered the better-tasting alternative message-sometimes assailing Bud Light directly, sometimes not.

Independent Wieden & Kennedy, Portland, Ore. ran the "president of beer" ads that urged drinkers to "vote" for Miller beers and mocked A-B icons such as the Clydesdales. WPP Group's Y&R, Chicago, created "the "Epidemic" spot in which non-Miller drinkers cried they couldn't taste their beer.

It all helped. Miller Lite "seems to have better brand equity," says Benj Steinman, publisher of Beer Marketer's Insights.

Arguably the most effective ad was from WPP's Ogilvy & Mather. That was simply a closeup on the beer with voice-over and text explaining that Miller Lite has less than half the carbs of Bud Light.

Miller Lite has continued the shots at Bud Light. In response to recent Bud Light advertising touting freshness, Miller ran a print ad saying all domestic beers are fresh.

Expect Miller to stay aggressive.

"I can tell you that [A-B is] not invincible, because we have better beers," said Mr. Adami in a speech last September. "We've got to exploit that superiority."

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