The making of a Miller comeback

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It's Miller time, finally. Miller Brewing Co. lost its way inside Philip Morris Cos., and there was little reason to believe its fortunes would change when the tobacco and food giant unloaded Miller in 2002 to a U.K.-based brewer little known in the U.S. But new owner SABMiller put Miller back in the game through smart execution of a business strategy that plays off its challenger position and plays up its product.

For proof of Miller's resurgence, look no further than Anheuser-Busch Cos., seller of half the beer in America. A-B, upset that Miller's "President of Beer" ads tweak the "King of Beers," is developing TV ads that show Miller is owned by foreigners. From a business standpoint, we hope Bud gets wiser and realizes the leader shouldn't go on the defensive. But from an ad standpoint, it's fun when a challenger takes on the leader-and more fun when No. 1 responds.

A-B already has cut prices in some markets to fend off Miller Lite. This isn't to suggest Miller is winning the game. A-B sales last year reached $13.5 billion in the U.S. (and $14.1 billion worldwide), and its U.S. beer shipments rose about 1% to 3.2 billion gallons.

Miller is a distant No. 2 with fiscal-year sales of $4.8 billion (out of SABMiller's $12.6 billion worldwide). U.S. shipments for the year were off slightly (down 0.4%). But Miller had a robust 5.9% shipment gain in the second half based mainly on the resurgence of Miller Lite, which got a boost from ads showing Lite has fewer carbs than Bud Light.

SABMiller is first to admit Miller will be a multiyear turnaround. Yet the makings of a comeback are there. Miller is executing a strategy backed by disciplined research, good brand positioning and improved marketing in everything from promotion to advertising. Miller, after early creative misfires under SABMiller, is producing solid work from a strong stable of agencies. Bud has the Clydesdales, but Miller is turning this into a two-horse race.

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