German brewer Lowenbrau AG, which started talking with Canada-based Labatt Brewing more than two years ago, has placed some explicit brand-marketing requirements in its agreement with the company.
"The marketing will be substantially greater than what has been implemented in the past several years," said Thane Pressman, CEO of Labatt USA, a partnership between Labatt Brewing and Mexico-based Cerveceria Cuauhtemoc Moctezuma.
Executives at Labatt USA declined to give specific projected ad expenditures, but a repackaging and national advertising campaign are expected. Spending could hit several million if national TV advertising is included.
Lowenbrau's current agency is Y&R Advertising, New York. Labatt USA executives said it was too early to tell whether the ad account would shift with the marketing rights; Ammirati Puris Lintas, New York, is Labatt's U.S. shop.
Under Miller, the brand has been only lightly supported. The No. 2 brewer spent $162,100 on Lowenbrau in 1996, down 88.4% from 1995, and 92.3% for the 1994-96 period, according to Competitive Media Reporting.
As spending declined, so have sales. Lowenbrau moved more than a million barrels almost two decades ago, but sales started falling in the early 1980s, after Miller started brewing the beer domestically and positioning it as a superpremium rather than an import. Shipments in 1996 were at 400,000 barrels, flat from the year earlier, according to Beer Marketer's Insights.
FOCUS ON CORE BRANDS
The move fits with the marketing strategies of both Labatt USA and Miller. Miller increasingly is focusing on its core brands while Labatt USA has been trying to make inroads with a wide-ranging portfolio that includes Labatt's Blue, Rolling Rock and Dos Equis.
The company is running new TV commercials for Rolling Rock on cable via Ammirati after taking a hiatus last year.
Ad spending by Labatt USA is difficult to track because much of it is skewed to regional markets. But, according to CMR, the distributor spent $3.2 million, down 54.3% from 1995 and 68.3% for the period 1994-96.