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Change Is Brewing

Feminization and Millenialization in the beer business.

The latest issue of Miller Brewing Company’s Brew Magazine takes a close look at six trends that are shaping the future of the American beer business.

Over the past couple days we’ve looked at the trends of premiumization (especially of light), Latinization, fragmentation and occasionization. Today we look at the remaining two trends highlighted in the issue: Feminization and millennialization.

FEMINIZATION

What group of people embraced virtually every significant beer trend of the 1990s before white males?

The answer: women.

When women skewed more than men toward a brand -- Corona Extra, Bud Light, Coors Light and Heineken -- male share started increasing, according to Miller internal research. When women started walking away from brands -- including Budweiser and Miller Genuine Draft -- men followed.

And, of course, women have been a key driver in the growth of wine and spirits at the expense of beer.

And women’s influence is likely to grow. Among the new generation of male legal-drinking-age consumers, a higher percentage says they are closer to their female friends than in the past, according to Miller research.

So, what does this mean for beer?

For one, marketing should be inclusive of women, which doesn’t necessarily mean appealing overtly to them. It’s about the right attitudes and values. For instance, the unpretentious message of the Miller High Life campaign appeals equally to men and women.

(And there is an obvious corollary, which at times has been forgotten in the beer business: Advertising shouldn’t be offensive to women.)

It’s also more important than ever that brewers be cognizant of womens’ tastes and preferences. Part of Blue Moon’s success lies in its appeal to women. A-B’s Michelob Ultra was a hit with women, and A-B was aiming for the female market when it launched the Peels line of fruit-flavored malt beverages.

SABMiller, Molson Coors Sign Definitive JV Agreement

Deal expected to close in mid-2008.

SABMiller plc and Molson Coors Brewing Company today announced that they have signed the definitive transaction agreement for the combination of the U.S. and Puerto Rico operations of their respective subsidiaries into MillerCoors LLC.

Graham Mackay, Chief Executive of SABMiller, said, "Today’s announcement is an important step forward towards completing the MillerCoors joint venture, a combination that will ultimately allow us to better meet the needs of distributors, retailers and consumers in the U.S. marketplace by providing greater choice, product availability and increased innovation.”

Leo Kiely, Chief Executive of Molson Coors, said, “This combination of our two highly complementary U.S. businesses creates a stronger brewer and allows us to better compete. We look forward to closing the deal in mid-2008 and are cooperating fully with the regulatory clearance process.”

The transaction is still subject to regulatory clearances.

The deal was first announced in October.

A press release announcing the definitive agreement can be seen here.

Spirits Slow Down

2007 sales grew at half the rate of 2006.

There’s more evidence that the spirits industry’s growth rate is slowing down.

The Distilled Spirits Council of the U.S. on Thursday said that 2007 sales grew between 2 percent and 2.5 percent. In 2006 sales grew at a 4 percent rate.

From a Reuters story:

DSCUS estimates industry-wide volume grew 2 to 2.5 percent this year, down from a 4-percent increase last year.

The trade group's Ozgo said so-called "super-premium" brands -- those with the highest prices -- continued to grow at double-digit rates, while brands in the mid-tiers were slower.

"'Value' is declining a little bit, but it always has been," Ozgo said of the lowest end of the spectrum. "The fact that it hasn't gotten worse tells me that you're probably seeing some people that would normally drink premium brands shifting to value brands."

The Reuters story can be seen here.

Beer Marketer’s Insights Express (subscription required) also covered it. Its home page can be seen here.

Change Is Brewing

Fragmentation and occasionization in the beer business.

The latest issue of Miller Brewing Company’s Brew Magazine takes a close-up look at the trends that are shaping the future of the American beer business.

Yesterday we looked at the trends of premiumization – especially the growing premiumization of the light segment – and Latinization. Today we look at two more trends: fragmentation and occasionization.

FRAGMENTATION

In 1997, supermarkets sold a total of 672 different beer or flavored malt beverage brands.

In 2007 they sold 1,225 -- an increase of 82 percent -- according to figures from Nielsen.

The story on store shelves shows how the beer business has been rocked by the consumer trend of fragmentation.

But over the past 15 years, people have become more interested in brands that allow them to express their individuality more precisely. Customization and personalization are the orders of the day.

Fragmentation has challenged once-dominant icons, which are finding their positions tough to defend. For example, Levi Strauss & Co. is challenged both by high-end boutique brands as well as private label brands.

In this environment, the challenge for brewers is to sharply differentiate their brands and communicate what sets them apart.

They’ve been doing this with marketing: For instance, Coors Brewing Company has been hammering the “cold” messaging for Coors Light in advertising and packaging. Miller Brewing Company has taken a “hard right turn” back to the product-centric -- and sometimes comparative -- advertising that rejuvenated the brand a few years back. The high-profile “Dalmatian” ad is an example of that.

The brewers also are doing it with product development and innovation. Each of the leading national brewers has been increasing its focus on imported or craft brands with distinctive positions. With Coors it’s been by pushing -- subtly -- Blue Moon; with A-B it’s been by striking distribution and marketing deals for imports; and with Miller it’s been by promoting brands from the Jacob Leinenkugel Brewing Company as well as imports from parent SABMiller plc, particularly Peroni Nastro Azzurro.

Change Is Brewing

Powerful trends are shaping consumer behavior. What does it mean for beer?

It’s a cliché to say the only constant is change.

Then why do marketers sometimes seem to forget that -- often at their own peril?

The beer business, like any other, is constantly evolving. Not as fast as say, the iPod. Instead, incremental --sometimes almost imperceptible -- shifts transform the landscape over time. The growth of light beer from virtually nonexistent thirty-five years ago to the biggest piece of the business is a perfect example.

The latest issue of Brew Magazine looks at six big consumer trends that are shaping the beer business and other industries. They include: premiumization, latinization, fragmentation, occasionization, feminization and millenialization.

Over the next few days, Brew Blog will highlight these trends.

Today’s installment takes a quick look at the trends of premiumization and latinization.

Would A-B Fetch a High Price?

Analyst suggests a buyer wouldn’t pay exorbitant premium.

Rumors about Anheuser-Busch being bought, by InBev or by a private equity firm, bubbled up more than once over the course of the year.

The rumors came to nothing, of course, but the fact they surfaced at all was telling. The idea of A-B being the acquired, and not the acquirer, once would have been unthinkable.

Stifel Nicolaus on Monday published a report titled “On BUD’s Takeout Value.” It asked whether a buyer would pay “more than a typical takeout multiple for BUD.” Absent a bidding war, Stifel’s verdict was no.

Why? Largely because A-B remains underindexed in imports and crafts.

Stoli Adding New Vodka Flavor

Here comes “Blakberi.”

Pernod Ricard USA appears poised to introduce a new flavor of Stolichnaya vodka: blakberi.

Pernod Ricard, which picked up the marketing rights for Stoli when it acquired pieces of Allied Domecq a couple years ago, has filed a label application for the flavor with the Treasury Department’s Alcohol and Tobacco Tax and Trade Bureau.

Stoli has been a pioneer among vodka marketers in introducing novel flavors that can be used to create new cocktails and generate buzz among consumers. Flavor proliferation, now entrenched in the spirits business, has been a key part of the growth strategies of vodka and rum makers.

Some are pushing the boundaries. One distiller, for instance, has created herb-infused vodkas, including dill and cilantro.

Other Stoli flavors include: ohranj, vanil, razberi, blueberi, citros, cranberi, strasberi and peachik.

To see Brew Blog’s coverage of Garden Variety Vodka Company’s herbal-flavored vodkas, go here.

The label application can be seen here.

Heineken Splits with Ad Agency

Hires Wieden & Kennedy.

Heineken USA last week dismissed its lead ad agency.

Heineken USA confirmed to Adweek that it had dismissed Berlin Cameron United. Berlin had handled Heineken Premium Light since its launch. It added duties for Heineken only nine months ago.

The parting of ways follows the departure earlier this year of Heineken CEO Andy Thomas.

Heineken USA has moved the brands to Wieden & Kennedy, which previously worked for Miller Brewing Company on Miller High Life and other brands.

Adweek says the account represents about $100 million in media spending.

Ad Age notes that the switch comes amid slowing sales trends:

"But the shift comes as Heineken has seen its sales growth slow amid its effort to raise prices this year."

Can Miller Lite Do Crafts?

“We expect the product to be phenomenal,” says one distributor.

Miller Brewing Company yesterday unveiled its plans to roll out Miller Lite Brewers Collection, a family of craft-style light beers that sell at above-premium pricing.

Beer Business Daily offered its take this morning:

“I think you’d be wise not to write this off. Miller is said to putting decent marketing dollars behind it -- digital, billboard, and yes, maybe even TV. And low-cal better beers have proven themselves to be a viable category at this point (HPL, Sam Light, Shiner Light, Skinny Dip, et al).”

A big question for BBD: Will the Miller Lite name confuse consumers or will it create a halo effect for the Miller Lite brand?

Brew Blog knows that internal research at Miller shows Miller Lite Brewers Collection does create more excitement around the Miller Lite brand. Also, recall that Miller Chill created positive buzz around the Miller trademark. So, while it’s too early to tell what the market will decide, evidence suggests Miller Lite Brewers Collection should create that halo effect BBD mentioned.

Miller Launching Craft-Style Light Beers

Miller Lite Brewers Collection goes into test in February.

Miller Brewing Company in early February will begin test-marketing Miller Lite Brewers Collection, a family of three craft-style light beers.

The lineup includes a blonde ale, an amber and a wheat -- each with significantly fewer calories and carbs than typical beers of that style.

Miller Lite Brewers Collection will go into test in four markets -- Baltimore, Charlotte, N.C.; Minneapolis; and San Diego.

Miller executives announced the test launch this afternoon at a distributor meeting in Chicago.

“With Miller Lite Brewers Collection, we’re seeking to establish a whole new category for the industry -- craft-style light,” says Miller Chief Marketing Officer Randy Ransom. “Miller Lite is the perfect beer to introduce this innovative product because only Miller Lite provides the ideal balance of real beer taste and refreshment. And so it makes sense that we use our expertise to brew a brand with great craft-style taste and the refreshment and drinkability American beer drinkers prefer.”

Miller Lite Builds Lead Over Bud in Supers

Big edge in dollar share.

Brew Blog first reported last year that Miller Lite had passed Budweiser as the No. 2 beer in supermarkets.

Beer Marketer’s Insights Express on Tuesday noted that Miller Lite has solidified its lead over Bud in terms of dollar sales.

From the report:

Another milestone, perhaps insufficiently noted. Miller Lite passed Bud in $$ share earlier in yr in supers and is now #2 in $$ share by a significant margin. Its $$ share is flat at 8 for 13 weeks, while Bud down 0.7 to 7.4, according to IRI. Yr-to-date, Miller Lite at 8, Bud at 7.6.

Read the original Brew Blog report here.

The BMI home page is here.

Blue Moon No. 2 Craft in Supers

Edges Sam Adams Boston Lager.

Blue Moon Belgian White Ale has staked its claim as the second-best-selling craft beer in supermarkets, according to beer sales statistics from Nielsen.

Blue Moon, from Coors Brewing Company, held 6.9 percent market share of the craft segment during the 13 weeks ended December 1, according to Nielsen. Blue Moon seasonals, meanwhile, held 2.2 percent share, up 1.3 points.

Blue Moon edged Samuel Adams Boston Lager for the No. 2 spot, according to Nielsen. While statistically tied at 6.9 percent share each, Blue Moon is slightly larger. And Sam Adams share of craft actually declined during the period, dropping by 0.6 points.

That said, Samuel Adams seasonal brews held the top slot among craft brands, commanding 7.8 percent share, up 0.9 points, according to Nielsen. So at least some of Sam Adams Boston Lager’s decline can be attributed to consumers picking up seasonals.

Big Packs Driving Coors Light?

Average pack size up 8 percent.

Is Coors Light’s growth being driven by big packs or cans that turn blue?

Coors Light added 0.2 points of case and dollar share at supermarkets during the four weeks ended December 1, according to beer sales statistics from Nielsen.

During that same period, the average pack size of Coors Light sold increased by 8 percent. The only brand to see a bigger increase was Heineken Premium Light.

Brew Blog discussed in October how Coors has been placing increased focus on large packages to help drive Coors Light. For instance, Coors has been placing more promotional focus on 36-pack cans, as shown by increased feature, display and discount support.

And while 30/36 pack cans recently accounted for 19.6 percent of Coors Light’s volume in supermarkets, back in November 2004 they accounted for 15.7 percent, according to beer industry analysis from Nielsen.

A-B Keeps Heat on Wheat

Receives label approval for “Sun Dog.”

Anheuser-Busch appears poised to roll out yet another new product with an eye toward capitalizing on the popularity of wheat-style beers.

A-B late last month received label approval for Sun Dog, described as an American amber wheat ale.

Wheat beers are one of the most popular styles of craft. Coors Brewing Company has enjoyed success with its Blue Moon Belgian White Ale. The Jacob Leinenkugel Brewing Company’s wheat brands—Sunset Wheat, Honey Weiss and Berry Weiss – also are popular and distribution has been expanded (Miller Brewing Company owns Leinie’s).

A-B appears more committed to tap into the niche. It is already moving ahead with Shock Top, a Belgian white ale that’s a renamed version of a seasonal.

Sun Dog would represent a continued push behind wheats.

Sun Dog has 5.3 percent alcohol by volume.

To see A-B’s application with the Treasury Department’s Alcohol and Tobacco Tax and Trade Bureau, click here.

To see Brew Blog's original coverage of Shock Top, click here.

Bud Select Takes Page from Miller Lite -- Again

New label touts calorie count.

Budweiser Select once again is following Miller Lite.

Based on filings with the federal government, Anheuser-Busch appears poised to change the label copy of Budweiser Select to say: “Brewed longer for an exceptional taste that’s never filling … only 99 calories per 12 fluid ounces.”

(Is it just Brew Blog or does “exceptional taste that’s never filling” sound reminiscent of the “great taste ... less filling" slogan made famous by one of A-B’s competitors?)

The wording apparently replaces the previous Bud Select slogan, “Distinct & flavorful beer with a bold taste that finishes clean.”

By emphasizing an attribute that makes a difference to consumers -- calorie count -- Bud Select and A-B are following in the footsteps of Miller Brewing Company and Miller Lite.

Beer Pricing Outpaces Spirits

Spirits up a modest 1 percent in supermarkets.

There’s been a lot of talk in the beer press lately about whether spirits, which for years has been taking share from beer, is starting to slow down.

Beer Business Daily made the interesting point on Monday that retailers appear to be giving spirits less support. From the report:

"The average number of items featured for spirits is down by nearly 10% while the average number of beer items is up 5% versus a year ago, says Nielsen."

Here’s another data point suggesting spirits -- while by no means declining -- is starting to decelerate.

For the 24 weeks ended November 17, spirits average equalized pricing in supermarkets was up a modest 1 percent, according to Nielsen.

During the same period, the average weighted case price in the beer category was up 4.0 percent.

SABMiller Taps Australian Craft Beer Market

Joint venture acquires Bluetongue Brewery.

SABMiller plc’s partly owned distribution company in Australia has acquired a leading craft brewer Down Under.

Pacific Beverages, a joint venture with Coca-Cola Amatil Limited, announced today it bought Bluetongue Brewery Pty Limited for an undisclosed sum. Operating from a small brewery in New South Wales, it makes brands including Bluetongue Premium Lager, Bluetongue Premium Light, Bluetongue Traditional Pilsner and Bondi Blonde.

Bluetongue’s brews sell at the premium end of the spectrum and, in U.S. parlance, Bluetongue would be considered a craft brewer. (In Australia Bluetongue is considered a “premium brewer.”)

Through November 2007, the brewer’s sales were up 70 percent.

The premium beer market in Australia has been growing at around 15% per year over the past 6 years, much higher than the domestic mass-market brands.

Pacific Beverages is a 50-50 joint venture between Coca-Cola Amatil and SABMiller to sell and distribute imported premium beer in Australia. It imports SABMiller’s international brands – Peroni Nastro Azzurro, Miller Genuine Draft, Pilsner Urquell, and, recently, Miller Chill – into the Australian market. Pacific also sells and distributes the premium spirits portfolio of global spirits distributor Maxxium, including brands such as Jim Beam, Canadian Club, Remy Martin, Cointreau, The Famous Grouse, and Absolut.

SABMiller’s announcement can be seen here.

A-B’s Top Lawyer/Lobbyist Leaving

Succeeded by Gary L. Rutledge.

Anheuser-Busch announced last night that Mark T. Bobak, 48, group vice president and chief legal officer of the corporation will resign at the end of the year to start his own firm.

Gary L. Rutledge, 52, who currently serves as vice president of corporate labor relations and heads the company's litigation practice, will succeed Bobak in leading the company's legal, government affairs and labor relations areas, A-B said.

Bobak has been with Anheuser-Busch for 15 years. Before his current role, he headed the human resources division. Prior to joining Anheuser-Busch, Bobak practiced law as a partner with the St. Louis firm of Armstrong Teasdale LLP, A-B said.

In a release, A-B CEO August Busch IV said:

"In leading our legal department through many complex and challenging issues, Mark has done an outstanding job of advancing and protecting the interests of the company. During his time at A-B, he has been a key contributor to significant business and strategic initiatives that the company has pursued. Mark's leadership and expertise also were reflected in the success and effectiveness of our government and labor relations operations. He has been a valuable asset to the company and our industry, but we respect Mark's decision, at this point in his career, to become his own boss."

Mo' Mojito from A-B

Mango on tap.

Anheuser-Busch appears poised to expand its Bacardi Silver Mojito flavored malt beverage lineup with a mango flavor.

A-B last month received a label application approval for Bacardi Silver Mango Mojito from the Treasury Department’s Alcohol Tax and Trade Bureau. It joins the original and pomegranate flavors in the mojito FMB lineup.

A-B has big ambitions for the franchise. Last month it told distributors it hoped to add about 1 million barrels in volume from new products including Land Shark lager, Bud Chelada and the Bacardi Silver Mojito lineup.

A-B launched the mojito-flavored FMBs last year to tap into the popularity of the rum-based cocktail and it rolled out a pomegranate-flavored extension soon after.

A-B filed a label application earlier in the year for Bacardi Silver Mojito kegs – unusual in the FMB space.

To see a label image, click here.

To see the application, click here.

Big Thanksgiving for Crafts

Imports regress.

Craft brewers had plenty to be grateful for this past Thanksgiving.

Craft beers gained 0.9 points of volume share in supermarkets for week ended November 24, according to beer sales statistics by Nielsen. They also gained 1.4 dollar share points.

Sam Adams and Coors Brewing Company’s Blue Moon led the way during the holiday, gaining a combined 0.4 volume share points.

The Jacob Leinenkugel Brewing Company (owned by Miller Brewing Company) gained 0.1 points of case and dollar share.

Seasonals -- largely driven by Sam Adams and Blue Moon brands -- also were a big factor in craft growth, according to Nielsen’s beer market analysis.

Fully 87 percent of all measured markets recorded craft beer volume gains.

Spirits Slowdown?

Brown-Forman CEO says growth rate is down.

For years spirits has been growing and taking share from beer.

Is spirits finally slowing down?

It’s a question worth asking after Brown-Forman reported last week that U.S. sales of Jack Daniel’s fell during the company’s second quarter. Brown-Forman CEO Paul Vargas blamed it in part on a broad industry slowdown.

From a Reuters report:

"'The spirits industry growth rate is down a little from where it was just 12 months ago,” said Chief Executive Paul Varga.

"'Within the spirits industry, Brown-Forman is disproportionately down,” Varga said, citing factors such as consumers pulling back on discretionary spending, aggressive discounts by competitors and the company being distracted by its own reorganization."