Miller Brewing Co.

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Miller Brewing Co. traces its beginnings to 1855 when German immigrant Frederick Miller bought Plank-Road Brewery in Milwaukee. The brewery remained in family hands for its first 111 years. Although the number of breweries dwindled during Prohibition, Miller survived by producing soft drinks, malt syrup and nonalcoholic products for home brewing. It spent World War II providing U.S. troops with Miller High Life, having discontinued its other brands.

Miller's first major ad agency was Roche, Williams & Cunnyngham, Milwaukee. In the late 1930s, it switched to H.C. Mulberger Inc., Milwaukee, which became Mathisson & Associates in the 1940s and continued to handle the brand until the 1960s. Miller High Life was promoted with the tagline "The champagne of bottled beer."

Sold to Philip Morris

In 1966, Frederick Miller's descendants sold most of their stock to W.R. Grace & Co., a chemical company, which held controlling interest until 1969. That year it sold the brewer for $127 million to Philip Morris Cos. That, along with another $100 million paid to a Catholic foundation that owned the remaining shares of Miller, turned the brewery into a division of the cigarette marketer in 1970.

When Philip Morris took control, Miller had just 4% of domestic market share, but Philip Morris set out to corner the market on sports advertising for Miller, a first among brewers. About that same time, McCann-Erickson resigned the $1 million G. Heileman Brewing Old Style business, which cleared the way for that shop to handle the Miller account.

Meanwhile, Miller snapped up almost every major sporting event on network TV, including "Monday Night Football," the college football game of the week, the World Series, the Moscow Olympic Games (in 1980) and the Indianapolis 500.

In 1975, Miller introduced Lite low-calorie beer. Lite, a trademark obtained when Philip Morris bought Chicago's MeisterBrau brewery in 1972, helped Miller attain a 23% share of the beer market. But first, it had to convince consumers that "low-calorie" did not mean "cut with water."

Unable to use active professional athletes in ads for alcoholic beverages, M-E signed 40-ish former stars such as retired New York Jets and Super Bowl veteran Matt Snell for a campaign that showed athletes in a locker room talking up the brand. In one mid-1970s McCann spot, National Football League great Bubba Smith ripped the top off a Lite can.

With McCann's "Tastes great, less filling" campaign, health-conscious consumers were reassured that they need not feel guilty about loading up on low-alcohol brews that happened to taste good. Miller greatly increased its ad spending to twice the per-barrel industry average. Not only did the company see its share almost triple, but profits rose almost fivefold, from $6 million to $29 million. The "tastes great, less filling" tagline endured for 17 years.

Segmenting the market

Miller married heavy ad spending in sports to the then-novel idea of segmenting the market. By pegging different brands and ad campaigns to different groups of consumers, Miller leapfrogged from the country's No. 7 brewer in 1970 to a strong No. 2 in 1977. By 1978, Miller had come within 10 million barrels of catching its rival Anheuser-Busch.

For Miller High Life, the brewer changed strategies, celebrating the working man rather than touting the beer as "the champagne of bottled beers" as it had been since 1906. Now it was "Miller time," with ads showing welders, farmers and factory workers heading to the bar after a hard day on the job. In 1971, "If you've got the time, we've got the beer" turned around Miller's sales.

Anheuser-Busch answered Miller's challenge with huge increases in advertising spending and the 1982 launch of Bud Light. Within a decade the two brewers' combined ad spending totaled more than $500,000 annually. Bud Light was on its way to passing Miller Lite in volume, which it did in 1994. (Bud Light was marketed to consumers who had already embraced the merits of low-calorie beer, courtesy of Miller's earlier advertising.)

Miller tried to get its market share back in 1996 when it moved the Lite account from Leo Burnett USA to Fallon McElligott, Minneapolis. Sales continued to be anemic under "Dick, the Creative Superstar" and other ill-fated Fallon campaigns; however, sales increased shortly before Fallon was dismissed in 1999 when the agency revived the venerable "Miller time" tag for Lite.

The brand continued to sag under Fallon's successor, Ogilvy & Mather Worldwide. By the end of 2000, Lite was selling just 16.2 million barrels—18% below its all-time high and about 50% of Bud Light's 2000 volume. Also in 2000, the Miller flagship was supplanted by Coors Brewing Co.'s leading seller, Coors Light, as the country's No. 3 brew overall.

Lite's decline—and that of the brewer as well—stemmed partly from an ill-fated 1980s attempt by Philip Morris to increase profit margins on Lite coupled with a decision to allow Miller's valuable exclusivity contracts in sports to lapse. When Miller pulled back, Anheuser-Busch, long blocked from network sports by its rival, filled the gap.

After it launched Miller Genuine Draft in 1986, Miller used advertising from Backer & Spielvogel, New York, that touted the brand's cold-filtering process, a technique long used by rival Coors but not mentioned in its advertising. (Coors, whose executives said they doubted the value of advertising, watched MGD sell more beer in its first year than had any other brew in history.)

Miller's share rose fairly consistently, from 4% in the early 1970s to a peak of 23.1% in 1994, but the company ended the 20th century with market share stagnant at 21%, its lowest since 1986. For 2001, Miller spent $224 million on advertising to support its beer brands, an increase of 33.5% over the year earlier. Miller sales for 2001 were $4.38 billion, up 0.8% over 2000.

In July 2002, Miller parent Philip Morris Cos. merged Miller Brewing Co. with London's South African Breweries, creating the world's No. 2 brewer behind Anheuser-Busch Cos.

In March 2003, Miller moved its Miller Genuine Draft account from JWT to WPP Group's Ogilvy & Mather, New York. In June, the brewer pulled its controversial "Catfight" commercial, also from Ogilvy. In late 2003, Miller positioned Miller Lite as a low-carbohydrate beer amid consumer clamor for low-carb products, a move that helped spark a turnaround in sales that continued into 2004.

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