After growing by 1% a year from 1998 to 2002, beer shipments fell by 0.3% in 2003, according to industry newsletter Beer Marketer's Insights. Low-carb diets were partly to blame.
"The rapid growth of the low-carb phenomenon was having a dampening effect on the entire beer industry," says Pat McGauley, senior director of high-end brands for Anheuser-Busch.
While some expect to see the low-carb craze to peak by year's end, it remains a major marketing challenge for brewers.
"Consumers are really driving the category," says Sara Mirelez, brand director at Coors Brewing Co. for Aspen Edge and Killian's Irish Red.
A-B was the first to capitalize on the low-carb trend by rolling out Michelob Ultra, which sells at a premium price. After a national rollout in late 2002, the brand took off. Shipments skyrocketed to 3.1 million barrels in 2003 from 400,000 in 2002, according to BMI.
New low-carb products have come out of the pipeline since. A-B reformulated Natural Light to reduce its carb count to 3.2, the same as SABMiller's Miller Brewing Co.'s Miller Lite. In June A-B introduced Bacardi Silver Low Carb Black Cherry; at 2.6 carbs, it's the lowest spirit-branded malt alternative on the market.
EDGE from COORS
Coors rolled out Aspen Edge and in June tried low-carb Coors Edge in the Dallas market.
The low-carb craze has "Cut into Bud Light's growth, accelerated Bud's decline and given an opening for Miller Lite," says Benj Steinman, publisher and editor of BMI.
Indeed, Miller's success with Lite has prompted responses from A-B. For example, it ran ads from ad agency Cannonball, St. Louis, saying that all light beers are low in carbs and consumers should choose on taste, i.e. Bud Light. Miller played off those ads, thanked its rival for making the recommendation, and noted Lite was the best tasting beer.
A-B countered by launching its "Unleash the Dawgs" marketing effort. Part of that included ads and point-of-sales materials describing Miller Lite as the "Queen of Carbs." A-B hasn't only been aggressive in going after its competitors. It also ran newspaper ads that blasted what it calls misinformation in the "South Beach Diet" book that says beer shouldn't be a part of a low-carb diet.