Beer Distributors Meet Amid 'Worst Trends We've Ever Seen'

Unemployment Takes Toll, but Business Is Still Stable, Profitable

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CHICAGO (AdAge.com) -- The beer industry still has a young adult male problem -- as in they aren't drinking enough.

Total beer shipments were down 2.1% for the first eight months of the year and five of the top six mega brands are slumping -- the exception being Coors Light, which is up a meager 0.2% -- according to Beer Marketer's Insights president Benj Steinman, who shared the depressing stats here at this week's National Beer Wholesalers Association Convention.

"They're the worst trends we've ever seen," Mr. Steinman said, blaming the fall on the high jobless rates among young adult male blue-collar workers -- the industry's traditional workhorse.

Mike Rinella, of Chicago-based distributor City Beverage-Illinois, put it this way in an interview: "People drink when they come together. And they come together less when they are unemployed."

Here's what else is on the minds of the more than 1,100 wholesalers who gathered at the Hyatt Regency Chicago:

Despite the sales slump, beer remains a stable business and the big brewers are still profitable, even though they've achieved most of their recent gains through cost cutting. But the short-term sales outlook remains grim. "If we were down another 2% next year it wouldn't surprise me," Harry Schuhmacher, editor of Beer Business Daily, told wholesalers. The biggest fear is that mega brands are in a long-term decline that's unrelated to the economy.

The unquestioned bright spot is craft beers. Sales were up 11.3% through early September, Mr. Schuhmacher reported, citing SymphonyIRI data. The hottest small brewers include Sixpoint Craft Ales in Brooklyn; Terrapin Beer Company in Georgia; and Surly Brewing Co. in Minnesota, according to the Brewers Association. Marketing crafts is all about social media and personal contact with retailers. But have no fear, ad agencies -- big expensive campaigns aren't going anywhere. Though growing, crafts still accounted for just 2.5% of all sales though early September, according to the IRI data.

Speaking of big campaigns, MillerCoors unveiled its latest TV ads to its distributors on Tuesday evening. Look for more "Man Up" Miller Lite ads featuring guys in bad fashion being ridiculed by hot female bartenders. The brewer is promoting its new Coors Light Silver Bullet Pints with a new "Portraits" TV campaign that features portraits of former NFL stars Keyshawn Johnson and Mike Ditka talking to unsuspecting fans through picture frames. (The spots, from DraftFCB, use voice impersonators.)

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Wholesalers are lining up against a ballot initiative in the state of Washington being pushed by Costco that would deregulate big parts of the state's liquor industry. Beer distributors fear the measure would shift the balance of power to retailers, removing price controls and allowing for slotting fees for alcoholic beverage shelf space. Distributors worry that if Costco wins in Washington, it will set its sights elsewhere.

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