Americans Downing Less Beer, Sparking Brawl Among Brewers
CHICAGO (AdAge.com) -- Crack open a beer this summer. Please.
The $100 billion U.S. brewing industry is staggering into its crucial selling season from its weakest position in years. Sales for 11 of the biggest brands fell in the four weeks ended May 16, according to SymphonyIRI, and only four of the top 30 -- Keystone Light, Modelo Especial, Yuengling and Pabst Blue Ribbon -- posted gains. Meanwhile, despite massive measured-media support, category titans Bud Light, Coors Light and Miller Lite all declined.
What's happening? People are drinking less off the stuff. Industry shipments are down 4%, according to the Beer Institute. Several factors play into the trend, key among them the recession. MillerCoors Chief Marketing Officer Andy England said that unemployment remains particularly pronounced among the 21- to 35-year-old men who are the primary targets of beer companies, and also among Hispanics, another key segment. In many cases, they're opting for cheaper brews, or saving their consumption for a special occasion by splurging on craft-style beers. As a result, the "premium" lights are being squeezed by moves in both directions.
Consider: Anheuser-Busch's Bud Light, the largest U.S. brand, is down 5.3% year to date, and the drop is in comparison to 2009, the first negative year in the brand's 28-year history. It's no less grim at No. 2 U.S. brewer MillerCoors, where the company's leading lights, Coors Light and Miller Lite, are down 0.5% and 7.5%, respectively.
Neither A-B nor MillerCoors can afford to let its biggest and most important brands keep bleeding. Bud Light accounts for nearly 40% of A-B's U.S. shipments, and Coors Light and Miller Lite equal about half of MillerCoors'. Kantar Media reports that Bud Light saw $219 million in measured media support last year; Coors Light saw $152 million and Miller Lite $134 million. Those outlays are in addition to the brands' numerous and pricey sports-sponsorship deals.
Naturally, both brewers are pulling out all the stops this summer with everything from special bottles to ramped-up spending, hoping to at least slow the declines.
Bud's new spots
A-B is readying six new Bud Light TV spots under the "Here We Go" tagline it started using for the Super Bowl (to replace its failed "Drinkability" campaign), and it is increasing its activities in the digital arena, according to VP-Marketing Keith Levy.
MillerCoors is also boosting its budget behind Coors Light and Miller Lite, but much of its focus will be on product innovations intended to emphasize the brands' respective focus on cold refreshment and great taste. There will be a new Miller Lite "Vortex Bottle" (which supposedly unlocks flavors and aromas in the beer by aerating it as it pours) and to get the cold train moving again, a Coors Light 12-pack with a window that lets would-be purchasers see if its temperature-sensitive color-changing bottles are cold.
But even as executives at both brewers express optimism about those plans, they acknowledge that returning their brands to growth will not be easy. Part of the problem with the premium lights has been of the brewers' own making.
Mr. England said about 25% of MGD 64 drinkers come from outside the category but that another 25% are sourced from within MillerCoors' own portfolio.
Neither company sounds like it'll be dissuaded from pushing the new brews, which seem to have found a lucrative niche. Mr. Levy said A-B's summer plans include a 15-story hot-air balloon shaped like a Select 55 bottle that will travel to festivals across the country. The brand also continues to see significant media support.
Bud Light has also continued to roll out brand extensions, although its latest, Bud Light Golden Wheat, has failed to make the same sort of dent as its successful predecessor, Bud Light Lime. The brand saw $18 million in measured media spending during the first quarter, but has only amassed a 0.2 market share in year-to-date IRI data, and that figure slipped to 0.1 in the most recent four-week period.
Beyond that, all three major importers are ramping up big campaigns for light-beer versions this summer. Heineken Premium Light, which was marketed in tandem with its full-calorie sibling last year, is getting a new campaign focused on getting drinkers to trade up from premium domestic lights. Corona Light is currently getting its first-ever standalone campaign. And Diageo has launched Red Stripe Light, with a national TV push from Omnicom's BBDO.
Though Red Stripe, Heineken Light and Corona Light barely account to a rounding error in the grand scheme of Bud Light, Miller Lite and Coors Light, they're yet another obstacle to a turnaround. It's "death by a thousand cuts" for the brands, as Beer Marketer's Insights publisher Benj Steinman put it.