Future rules?

The brewers are laying the groundwork for future changes in the beer business.

Over the past week, Brew Blog has looked at how the rules of the beer game are changing.

Today it looks ahead to future rules.

The past few years have demonstrated that business plans that have delivered results for years can become obsolete overnight. And given changes in the consumer landscape, change will only come faster.

Here are seven dynamics that stand to shape the beer business in years to come.

Innovation In the past two years, Anheuser-Busch’s new product assembly line has been working overtime, throwing off more than three dozen new products ranging from Bud Select to a blueberry beer. Miller Brewing Company bought Sparks and struck a new product development alliance with McKenzie River Corp.

Diversification Anheuser-Busch has made no secret it is looking at extending into spirits. It already rolled out a liqueur brand, Jekyll & Hyde. Media reports speculated it might make a run for Absolut vodka if it goes on the market. Other suppliers may follow into non-beer products, including non-alcohol beverages.

Distributor evolution Expect distributors to branch beyond beer. Says Eric Levin, vice chairman of South Florida’s Gold Coast Beverage Distributors, which handles Miller and other brands: “We, along with other beer distributors in Florida, have launched a wine and spirits division to 'steal back' some customers who have migrated away from beer.” Distributors will continue to seek high-growth, high-margin complementary beverage products. Indeed, some may branch beyond beverages. Consolidation will continue apace, driven by rising costs and increased complexity. Industry consultant Michael Mazzoni earlier this year envisioned a scenario in which A-B distributors acquire their competitors.

Premiumization of light The initial success of Heineken Premium Light has sparked speculation that light beer – the biggest slice of the beer business and dominated by the big brewers – is due for a trading-up trend. Will other importers and craft brewers make this a reality? And how will the domestic brewers respond?

Consolidation Merger and acquisition activity in the new millennium transformed the industry by creating InBev, SABMiller plc and MolsonCoors. Consolidation is going to continue. The only question is who will be the next at the altar.

Next-Generation Imports Heineken and Corona Extra dominate the business, but a lot is happening beneath them. Which import brand will be the next sensation? Rising imports such as Stella Artois and Newcastle Brown Ale are close to cracking the top 10 imports list. Meanwhile, the major breweries are getting into the act. Anheuser-Busch, seeking to give its restricted wholesalers high-margin brands, has inked distribution deals for Grolsch and Tiger. Miller Brewing Company has been pushing SABMiller premium import brands Peroni Nastro Azzurro and Pilsner Urquell. Miller now is preparing to roll out additional SABMiller brands aimed at consumers who know them from the brands’ countries of origin — Aguila (Colombia), Cristal (Peru) and Cusquena (Peru). And Miller also is expanding distribution of the Polish brew Tyskie.

Cruising crafts After stumbling in the late 1990s, craft beers are back. Distributors can’t wait to get their hands on beers made by the hot New Belgium Brewery. The big brewers recognize the consumer demand for distinctive flavors and are hurrying to meet it. Anheuser-Busch has reached a distribution deal with Chicago’s Goose Island Beer Company and has rolled out seasonal craft-style brews such as Beach Bum Blonde Ale. Miller Brewing Company’s Jacob Leinenkugel Brewing Company has expanded its recently launched Leinenkugel’s Sunset Wheat outside its Upper Midwest stronghold. And Miller is ramping up efforts behind Henry Weinhard’s.

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Comments

[Jim Wegerbauer]

Conspicuous cultivation over conspicuous consumption. That's what's going on today. Once upon a time it was all about what you owned. Your car, your clothes, etc. Someone laid out what was cool and you did your best to pick that plum. Now being in the know is the route to go. An Amstel or Leinie's Sunshine Wheat in your hand shows that you're in on the secret handshake. That you have taste. And that you can think for yourself. And that you're confident in your choices. Ironically, it's those who can turn inward that appeal to the outside world.