Molson Breweries has seen its share of the $3 billion-plus Canadian domestic beer market dip to less than 48% from 52.2% five years ago. No. 2 Labatt topped 45% this year, up from 42% in 1990.
Molson has been slower than competitors to enter the price segment, and this has hurt its share.
In addition, Molson has been outmarketed, Toronto-based analyst Ian de Verteuil said in a report by national Canadian investment dealer Nesbitt Burns. He added: "Labatt's advantage has been its focus on the domestic market and on market share. Labatt has....been quicker to react and more innovative."
Paul Cooke, exec VP-marketing and sales at Labatt, credited his company's emphasis on regional brands, innovative products and more effective marketing spending. And spending is likely to increase, too.
"We're rethinking some of the ways we characterize our brands," Mr. Cooke said. "We'll be putting even more into brand building" by committing more dollars to marketing.
Widely reported to have spent about $169 million on marketing in 1992, Labatt has cut its marketing budget in recent years. The brewer won't reveal exactly how much it spends, though a spokesman did say Labatt spends less on marketing than Molson, which shelled out about $115 million last year.
In Labatt's latest promotional effort, Labatt Genuine Draft and Labatt Ice hit the basketball court last month with sponsorships and promotions for the new Vancouver Grizzlies and Toronto Raptors, the first National Basketball Association teams from Canada (see story at left).
These deals come in an environment where Labatt sponsorship spending is down 60% from what it was five years ago.
"Trying to hang your shingle at an event .*.*. made us feel good but it was very difficult to trace any business impact behind that," Mr. Cooke said.
For its NBA linkups, in-store displays in Vancouver and throughout British Columbia are highlighting a specially priced 15-pack of Genuine Draft, complete with Grizzlies graphic on the case. Labatt Ice buyers in Toronto and elsewhere in Ontario will find a Raptors keychain in every case, along with a scratch-and-win coupon offering a chance to win one of 200 pairs of Raptors tickets.
The Genuine Draft and Ice brews have contributed to Labatt's surge. Launched just three years ago, Genuine Draft is now Labatt's No. 3 beer. In the latest Genuine Draft TV commercials from Ammirati & Puris/Lintas, Toronto, a half-dozen party-theme spots sport a humorous "Genuine" twist.
Less than a dozen of Labatt's brands are marketed nationally, and local brews that tap the culture of a region are key to its portfolio of 45-plus beers.
In British Columbia, for example, Kokanee-described in ads from Bryant, Fulton & Shee, Vancouver, as "B.C.'s own mountain beer"-is the province's top seller; it's brewed by Labatt-owned Columbia Brewery there. In Nova Scotia, a Labatt brew called Keith's has a similar local spin that has made it that province's No. 1 beer.
Under Belgium's Interbrew SA, which acquired Labatt last summer, the Canadian beermaker will turn to a longer-term approach to brand building and be willing to support a beer over a 10-year or longer period before it deems the brand a success or failure, Mr. Cooke said. Also, Labatt will spend more in media than in recent years.
At Molson, Canada's top brewer attributes its share slide largely to a slow response to a changing market.
Beer drinkers have gradually swung to lagers from ales-the latter Molson's longtime strength-and the low-price segment has skyrocketed, growing from almost nothing just a few years ago to about 15% of Canada's domestic beer market now.
"We're addressing the fundamental issues," said David Perkins, senior VP-marketing.
Molson's family of beers under the price brand Carling is now being marketed outside Ontario, while a new lager called Grand Nord was launched last summer in the Quebec market. Cossette Communication-Marketing, Montreal, handles. Grand Nord appears to have helped Molson recover enough share to hit more than 49% of the national market in September, said Mr. Perkins, the best so far this year.
Analyst de Verteuil expects Molson's share to stop sliding, but remain largely flat over the next few years.