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DEBATING THE DECLINE OF THE BEER INDUSTRY

AdAge.com Readers Speak Out

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NEW YORK (AdAge.com) -- Last week AdAge.com polled its readers about whether the continuing decline of the U.S. beer industry could be turned around with better marketing. (Read the original Decline of Beer article). Beer sales, which made up 56% of the U.S. market for alcoholic
beverages in 1999, slipped to 53.2% by last year and continue to slide as wine and hard liquor sales increase. Future signs for the beer business are not good. A Morgan Stanley study found that spirits -- rather than beer -- have become the most popular drink choice among the 21- to 27-year-old set. Even worse, say industry analysts, is that years ago brewers generally followed Anheuser-Busch's move away from advertising that differentiated their products and into advertising strategies designed as light entertainment. Sixty-one percent of those responding to our poll said it will take more than better marketing to reverse the beer business' decline. Along with seeking their poll vote, we also invited readers to share with us their own views about the current beer market situation. Below is a selection of their remarks.

-- Hoag Levins, editor, Adage.com
Beer Must Take Back the Night
If we look to our recent history, we see a bar where beer was popular and spirits were drinks for our grandparents. Through heavy promotion in the high-end and image-driven bars and clubs, and renewed advertising campaigns, spirits have managed to make their way to the top of the consumption tower. The beer industry must take back the night and show consumers that beer is cool. We must identify with the right time during the night when the spirits are too much and a beer is the right choice. Through the right advertising message we can accomplish this and bring beer back to the repertoire of drink choices throughout the night.

Lynn Raynault
Marketing Manager
Heineken USA
Dallas
~ ~ ~

Blandness Is Beer's Problem
Beer is fighting an uphill battle due to its blandness as a category. Today's 21-35 year olds were the first generations raised with a massive variety of food and drink products specifically designed to taste great. Spirits are more versatile and are better able to meet the consumer desire for variety and flavor. Flavored vodkas, brands such as Hypnotiq and flavored rums such as Captain Morgan and Malibu are all better able to deliver strong brand equity, badge appeal and great taste for consumers.

Justin Miller
Director, Innovation U.S.
Diageo
Stamford, Conn.
~ ~ ~


The Coors Twins generated controversy as beer advertising celebrities.
Pamela Anderson's were only one of many sets of breasts playing leading roles in Miller commercials.
Viewed by many as setting a new low in TV advertising was Anheuser-Busch's farting horse commercial.

Beyond Girls, Sex and Dumb Guys
I definitely think better marketing can turn the beer industry around. Tasteful, more consumer-insight-based advertising beyond girls, sex and dumb guys would be a good start. A great example is the new Fat Tire advertising (New Belgium Brewery) done by Amalgamated in NYC. No chicks, no promises of a great night, but a great insight into the beer's consumers and potential consumers.

Amy Hume
Media Director
Barnhart
Denver
~ ~ ~

Not About Big Breasts
Beer companies need to stop selling sex and start selling the merits of their product. It is about taste. It is not about big breasts. If the marketers would go back to the basics and sell the taste, or with regard to the new beers that have lower calories and carbs, sell those qualities and taste. It is getting back to the basics that will change the customer attitude towards the product.

Shari Greers
Account Executive
Clear Channel Radio
Houston
~ ~ ~

Party Juice for College Kids
Beer has mostly been positioned as party juice for college kids. There is no sophistication to the branding efforts like there used to be. Budweiser, for instance, used to be positioned by its natural, quality ingredients and brewer's art. Now Bud is a commodity little different from Milwaukee's Best or any of a dozen brews. Look how different wine is positioned. It has sophistication and thrives on differentiated qualities. The same is true of single malt Scotch. Today, beer is beer. When the keg is tapped, no one really cares about brand, as long as it’s cold.

Curt Parker
Managing Partner
B12 Marketing
St. Louis
~ ~ ~

Tasteless, Watery Swill
The so-called "beer" made by Anheuser-Busch, Miller, et. al., is just so much tasteless, watery swill. Marketing won't save them. Bill Bernbach said it best: "The best way to destroy a bad product is with good advertising."

Gary McDonald
Managing Director
C&G Marketing LLC
Portland, Ore.
~ ~ ~

Beer Industry's Marketing Minds
These types of trends tend to be cyclical and the marketing minds within the beer industry are among the most creative, progressive and adept at addressing challenges within their realm, such as tougher advertising regulations, the issue of drunken driving and past challenges from trendy competing products like wine coolers. I have every confidence that they will win back their lost share in time.

Mike Harmon
Director of Marketing
Minnesota Vikings
Eden Prairie, Minn.
~ ~ ~

Better Marketing Won't Sell Bad Beer
Why is it that ad folk think that better marketing will sell more BAD beer. American beer is awful and always has long been awful except for the stuff great micro-breweries are making. How's this for a marketing concept: Make a better product.

Ken Winston
Ken Winston Design
Sonoma, Calif.
~ ~ ~

It's Taste, Not Marketing
Yes, the marketing needs to improve. But the biggest factor in beer's overall decline is taste. The majors who dominate the market and shape sales trends get the bulk of their volume from products that are bland and getting blander by the year. The craft brewers -- many of whom are seeing rising volumes -- have gotten the taste equation right but contribute only incrementally to industry sales. Until the Anheuser-Busches, Coorses and Millers of the world figure out how to mass produce beers that offer more taste excitement than spirits and wine, they'll continue losing share.

Bill Menezes
Senior Counselor
Carmichael Lynch Spong
Denver
~ ~ ~

Beer Companies Forgot the Consumer
Beer companies have spent too much time and money fighting each other that they forgot about the consumer.

Kit Benavent
President
Leo Burnett Puerto Rico
San Juan, Puerto Rico
~ ~ ~

Stale, Outmoded and Counterproductive
Marketing alone isn't salvation. With changes in consumer tastes, the consolidation of the production tier globally and the retail trade nationally, the consequent changes in drinkers' buying habits, and the emergence of new supply-chain management technology, there is every reason to believe brewers', importers' and distributors' business and profit-sharing models are stale, outmoded, counterproductive and conflicted. These models need serious rethinking. The decline most likely will continue until this is done and producers materially modify (or at least tweak) their profit-sharing models to reward distributors to put more shoe leather on the street and distributors learn to accept, adjust to and innovatively cope with the "gale of creative destruction" that their business is experiencing.

Mark H. Rodman
Chief Consultant
Beverage Distribution Consultants
Swampscott Mass.
~ ~ ~

Only Themselves to Blame
Of course mass-market beer is declining -- they have only themselves to blame. The big breweries have succeeded in their goal to make beer bland, inoffensive and highly accessible. And during their 50-year campaign, consumer tastes have evolved from white bread to artisan wheat; from Velveeta to Pecorino. But the three major beer companies (and their marketing agencies and industry talking heads) continue to churn out and promote beer as a commoditized product, still spinning the tired "drink this and the hot chicks will dig you" routine.

If better marketing will save the beer industry, it's through promoting the wide range of flavors and styles of REAL beer: Belgian dubbels, hoppy IPAs, lambics and barleywines. Sadly, the big breweries are still stuck in 1960s industrialism, having created the image, the distribution network and the taste of this entertainment product they call "beer."

Meanwhile, the specialty beer industry continues to grow: 7% last year, according to the Brewers Association. Is this because of better marketing? Not at all. It's because consumers increasingly demand flavor, quality and creativity in all their product choices -- even beer.

Sean Wilson
President
Pop the Cap: North Carolinians for Specialty Beer
Chapel Hill, N.C.
~ ~ ~

Missing the Boat on the Sophistication Craze
The beer category is not dead -- not by a long shot. However, in order compete with the hard liquors, brewers need to recognize that with the increased interest and influx of the Playboy lifestyle -- a guy who wants to be more mature and more sophisticated and therefore attract a more sophisticated partner -- beer will be pushed out of their vernacular unless beer makers learn to address this audience more effectively.

Demonstrate that beer is not just a blue-collar, sports-minded beverage. Don't walk away from that history, but recognize your competition, learn from it and expand on it. There are plenty of brew houses and brew masters that cater to the ideal of beer and it does not involve the Coors Twins or just sporting events.

Position beer as the alternative to hard liquor drinks that make you "look" mature. Speak to this consumer -- Do you really like the taste of Scotch? Wouldn't you be happier if you had a beer right now? If only beer had the perception of sophistication that hard liquor has, then you would be more apt to order it when you are out, to toast with it and to celebrate with it. If you didn't look like you were uncultured ordering a beer when everyone is having a Scotch, you know that you would do it in a heartbeat. You love beer and you always will. But social pressures can wreck havoc on loyalty.

Beer is a part of Americana, but is being threatened by a perceived lack of sophistication. With nonstop exposure to celebrity lifestyles and wealth, men are just looking to get in on the game. And the way beer is currently positioned, it doesn't help them attain the lifestyle and image they hunger for.

Beer companies have been so focused on the carb-craze that they are missing the boat on the sophistication-craze. Well, it's time to pick your head up off the bar and wipe away your beer tears and get on with it. Save your category. Start now.

Jennifer Mead
Account Supervisor
OMD
New York
~ ~ ~

James Bond and Beer
When James Bond ordered a vodka martini "shaken, not stirred," vodka martini sales skyrocketed. Beer is in desperate need of a better image and that challenge requires intelligent, creative marketing, not TV comedy.

Walter Sasiadek
Owner
Business Development Strategies
Las Vegas
~ ~ ~

Nike's Lesson for Beer
People do not buy Nike sneakers because they are the best-quality athletic shoe. They buy them to be part of the environment and feeling created in Nike's fabulous marketing and advertising. Beer companies can do the same. People are more intellectual and cultural these days, and farting horses and talking lizards don't get it. Time to do some new research and make beer a bit classier. Marketing and advertising can certainly turn the industry around.

Karen Watier
Brooklyn, N.Y.
~ ~ ~

Fizzy Piss Water
The three largest breweries -- Anheuser-Busch, Miller and Coors -- which account for more than 90% of beer sales make tasteless, fizzy piss water that has been dumbed down for the masses. Import and craft beer sales (which only make up 3% each of the market) have actually increased.

Jim Dickison
Independence, Mo.
~ ~ ~

Craft Brew Sales Up 7%
Unfortunately, you are only paying attention to the domestic majors, specifically Anheuser-Busch. You are not paying attention to the Craft Brewing Industry. This industry has grown for 35 consecutive years and grew at a 7% rate in 2004. It is taking market share away from imports and the domestic major beers. In 2004, craft brewing sales grew faster than that of spirits, wine and imports.

Ron Mixon
CEO
Woodstock Brands
Smyrna, Ga.
~ ~ ~

Got Beer?
Brewers need to defend and differentiate in order to protect their franchise. A single brewer can't turn the tide especially and grow the category. Perhaps by forming some type of industry campaign to promote beer vs. all others they could slow the decline and attract some new drinkers. Got Beer?

Gary Szenderski
Senior Partner
Ergo Worldwide
Irvine, Calif.
~ ~ ~

High-content Brews
Yes, marketing can turn around the trend. However, the Goliaths will have to change their focus. It appears that beverages with higher alcohol content are becoming the drink of choice. Many microbrews produce high-content brews and barleywines that are consumed from a snifter. The Big Brewers will have to attend to particular market segments and rethink strategies in order to regain market share.

Mark McDaniel
Marketing Instructor
Wilmington College
Georgetown, Del.
~ ~ ~

Ignoring Boomers
The decline in beer sales could have been predicted 15 years ago. In fact, it was. David Wolfe, author of Ageless Marketing, predicted changes in many categories as the majority of consumers in America age past 40 and 50. He says there are 134 million consumers over 40 and only 89 million between 18-39.

With baby boomers turning 50 at the rate of 10,000 a day, it's no surprise beer sales are declining. Beer consumption drops off considerably after 50.

It's been reported that Michelob Ultra's success is because it is the perfect beer for aging boomers. Yet some 90% of their marketing spending is targeting the traditional young male beer drinker, 21-30 years old (see the current TV campaign featuring barely legal 22-year-old Sergio Garcia, the professional golfer from Spain). Michelob Ultra isn't actually trying to build the brand among boomers, and that's a mistake that will ultimately cost them. Don't they know the consumer "owns" the brand? Have you ever seen anyone under the age of 30 drinking an Ultra?

Don't be surprised if Ultra becomes another fad beer like "Dry" beer was 10 years ago that falls off the bar stool.

Matt Thornhill
President
Boomer Project
Richmond, Va.
~ ~ ~

Cheerleaders with Big Boobs
For years I have been angered and disappointed by beer ad campaigns heavily geared toward young, "one thing on their mind" boys. I have been a beer drinker (as are a majority of my girlfriends) for many years and I recall only one ad campaign that was relevant to me. That was a Michelob print campaign that showed two women toasting their Michelob Lights after a long day in the office.

Where are female customers like me represented in the beer industry's product strategies? There are a lot of us but the only women we ever see in beer marketing materials are barmaids and cheerleaders with big boobs. Even that wouldn't be a problem if they were shown enjoying the product instead of serving it. Women enjoy beer too -- and there may be an opportunity in that fact for those brewers wise enough to rethink their old marketing habits.

Nancy Starzynski
Newark, N.J.
~ ~ ~

Ignoring Women
It is far more acceptable for women to have a "nightlife" today than ever before, and those women are not frequenting neighborhood tap rooms, "sucking down suds." Instead, these women are found in trendy, hip nightclubs, daintily and sexily sipping a martini or other such "hot" beverage. If the beer industry is to get a handle on the situation and subsequently thwart declining share and profit, then it would appear the best way to do so is to reach women (who will draw the men) by linking beer drinking to being sexy, confident and independent instead of a classless hussy. The campaigns of the past, I believe, still focus primarily on men -- when females clearly spend the money in this country.

Kelly Piel
Account Executive
Bonneville International
St. Louis
~ ~ ~

The 'Gotta Have' Is Missing
Take a page from the spirits companies and create those special environments where having a beer defines the time and why you, the drinker, feel so good as a result. You're searching for beer's special qualities of thirst quenching, "up" moments in memorable places -- events that remain etched in your life. Creating these moments of "specialness" via a campaign of some length (12 to 24 month.) will bring to the label a desire of "gotta have" that is strangely missing across the entire category!

James Davie
Chairman
Davie-Brown, Inc.
Los Angeles, Calif.
~ ~ ~

Lower the Drinking Age to 12
Yes. I think we can all help rebound this vital sector of our market. Perhaps we can lower the drinking age to 12. I myself will double my daily intake of beer to help the cause (burp!).

Paul Crossey
Manager, Multimedia
Chicago Tribune
Chicago

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