Will Busch Light Hurt Premium Lights?

Historically high price gap against Miller Lite.

Will Busch Light drag down premium light brands like Miller Lite?

It’s a question worth asking because the price gap between Busch Light and Miller Lite is at a historically high level. And wide price gaps can encourage people to trade down. Recall when A-B reported first quarter earnings, the Busch and Natural Light franchises were the only big brand families that grew during the first quarter.

For the quarter ended March 29, the total aggregate price gap (a national weighted average price gap) between Miller Lite and the Busch franchise was $4.33, according to beer sales statistics from Nielsen. During the same period, 30 percent of market volume had experienced higher Busch Light discounting.

For context, during the year-earlier period the price gap was $3.94.

Corona Preparing for May 5 Showdown

New advertising, promotions on tap.

Coming off its first down year in more than a decade and facing a new challenger from Anheuser-Busch, Corona Extra is gearing up for a critical Cinco de Mayo holiday.

Brandweek has the details about Crown Imports’ efforts behind the brand, which include a new Cinco de Mayo TV commercial as well as radio support, countdown calendars in bars and nightclubs and “themed online invitation templates on Evite.com.”

Corona is facing challenges as it heads into the holiday season. From Brandweek:

Corona Extra shipments declined 0.8% last year after growing steadily since 1991, per Beer Marketer's Insights, West Nyack, N.Y. The slump continued into the first quarter where case sales—in supermarkets, c-stores and drug stores—declined 5.9% for the 52-weeks ended Feb. 23, compared to the year-ago period, per Nielsen. However, Corona Light's case volume increased 3.2%, while imported beer sales overall slipped 0.8%. Measured media spending in the U.S. last year was $60 million for Corona Extra and $9 million for Corona Light (excluding online), per Nielsen Monitor-Plus.

Corona faces fresh competition this Cinco de Mayo as A-B prepares to roll out Bud Light Lime. Again, from Brandweek:

Showdown!

Bud Light Lime coming to town.

Talking to distributors last fall about Miller Chill's success, top Miller Brewing Company sales executive Tom Cardella made a prediction.

“We were first out the gate with a differentiated product that makes us all a lot of money,” said Cardella, executive vice president of sales and distribution. “[Anheuser-Busch] sees that and wants a piece of the action.”

Cardella’s prediction soon will come to pass as A-B prepares to push Bud Light Lime into stores in time for Cinco de Mayo. Ads already are airing for the brand.

The latest issue of Brew magazine took a look at A-B’s rollout of Bud Light Lime and how it’s introduction is laying the scene for fierce competition. If you would like a free subscription the print version of Brew, drop a line with your name and street mailing address here.

From the issue:

Cinco de Mayo is shaping up as one of the biggest scraps the beer business has seen in a while.

That’s the day Anheuser-Busch rolls out Bud Light Lime, a lime-flavored line extension. And it’s backing it with a $35 million marketing budget.

The beer is a clear shot at Miller Brewing Company’s Miller Chill, the chelada-style light beer that swiftly gained share and distribution during its national rollout last summer. And, Bud Light Lime’s May 5 rollout suggests to some that it’s also aimed at Corona Extra – somewhat ironically given that A-B has a 50 percent stake in Corona brewer Grupo Modelo.

Will Bud Light Lime Distract A-B?

Could Bud Light Lime douse A-B’s “hot hand?”

Analysts and observers have suggested that Anheuser-Busch lost focus on its core brands as it added a bevy of crafts and imports to its portfolio.

Now come suggestions that the same thing could happen as A-B prepares the aggressive launch of Bud Light Lime, a line extension that’s clearly aimed at Miller Chill.

From a Wall Street Journal story about the launch:

John Greening, a former advertising-agency executive who represented Anheuser, said he is concerned the brewer is diluting its top-selling brand. "I worry they're losing their focus," said Mr. Greening, now a professor of marketing communications at Northwestern University. "Their hot hand has always been Bud Light. This takes the attention away from the hot hand."

Meanwhile, a story in Adweek detects skepticism in the distributor ranks about Bud Light Lime:

"Just like with Land Shark, we can put it in 8 to 10 percent of our accounts and if it doesn't grow, it doesn't grow," said a Southwest wholesaler, referring to another A-B entry. "Personally I question it. We've got a great strategy put in place for Bud Light, and we're looking for a great year. We got hammered with Bud Select, and I don't know if (Bud Light Lime) is incremental business, new business, or what."

The Wall Street Journal story (subscription required) can be seen here.

The Adweek story can be seen here.

Brew Blog's previous coverage of Bud Light Lime can be seen here.

A-B Rolling Out Chill Clone

May 5 launch.

Anheuser-Busch has confirmed that it’s planning a national rollout of Bud Light Lime.

Bud Light Lime, whose launch was first reported by Brew Blog, will be introduced nationally on May 5. It will be backed with a $35 million marketing campaign, according to reports in beer industry trade magazines.

The brand, which will come in a clear glass bottle with an APL label, will be rolled out with no test-marketing.

A-B has launched literally dozens of new products over the past two years in an effort to mine niches and seek new sources of volume (it’s already discontinued some new products). Now that Miller Chill has proven itself in the market, A-B appears to be going after it.

A-B Rolling out Chill Knockoff?

Following “denigrate, replicate” playbook.

Is Anheuser-Busch poised to introduce a Miller Chill clone?

There have been rumblings from the field that the No. 1 brewer is getting ready to do exactly that. According to industry sources, A-B has been quietly laying the groundwork for a lime-flavored version of Bud Light.

The brand, to be sold in six packs, is priced above Bud Light, the sources said. Refreshment will be a key selling point.

In other words, the taste profile, price point and positioning all bear a striking resemblance to Miller Chill.

Are the Beer Wars Back?

A-B keeps up the heat.

“Are the beer wars back?’ asks the headline of an Associated Press story.

Could be, as Anheuser-Busch continues to lash out at Miller Brewing Company over a Miller Lite commercial that playfully uses A-B’s dalmatian mascot.

A-B on Wednesday ran in the Milwaukee Journal-Sentinel the same “Keep up the bad work, Miller Beer” advertisement that appeared in Tuesday’s editions of the USA Today and St. Louis Post-Dispatch. Brew Blog reported on that yesterday.

But, as the AP story noted, Miller “isn’t backing down.” Miller today ran in ad in the USA Today to drive Miller Lite’s “Good Call” message. The ad shows the back of two Miller trucks that carry the message that Miller Lite has more taste and fewer carbs than Bud Light.

“The facts speak for themselves,” the ad says.

The AP story goes on:

“Miller President and CEO Tom Long said in a note to distributors Tuesday that the company will have more showings of the ad this weekend during football games on several networks.

"’The 'able challenger' is alive and well, and if A-B thought the Miller system would lose its competitive edge in the months to come, they don't know us or you very well,’ Long wrote.”

It’s important to remember that the ultimate goal of comparative advertising -- good comparative advertising, at least -- is to differentiate your product.

A-B should know: It used comparative advertising to drive Bud Light sales back in the 1980s with its “Make it a Bud Light” advertising.

That campaign worked -- and so has comparative advertising for Miller Lite that touts its carb, calorie and taste attributes.

Comparative advertising, such as the “blue and whites,” has been a key part of Miller’s ad mix ever since the brewer made the “hard right turn” to focus on the beer.

And during the six months ended September 30, essentially the period since Miller took the turn, Miller Lite sales to retailers have increased by 2.1 percent.

It’s worth asking whether that trend, and not the playful use of an A-B icon, is what prompted A-B’s response.

So will the beer wars continue? Advertising Age yesterday reported that A-B CEO August Busch IV told distributors that the “Bad work” ad was a one-off (possibly timed to the A-B distributor meeting?). But in the past A-B has gone on the attack after saying it wouldn’t.

Ultimately, it may all depend on whether Miller Lite’s growth trend raises concerns in St. Louis.

The AP story can be seen here.

The Ad Age story can be seen here.

Previous Brew Blog coverage can be seen here.

Dogfight

A-B swings back at Miller over dalmation ad.

Anheuser-Busch on Tuesday lashed out at Miller Brewing Company over a Miller Lite ad that playfully uses the Budweiser dalmation.

“Keep up the bad work, Miller Beer,” thundered a full-page ad in the USA Today. The ad goes on to say that the ad has prompted A-B to give a donation to animal rescue groups.

The ad -- in which a dalmation leaps from a Bud wagon into a Miller Lite delivery truck after reading the “more taste” and “fewer carbs” slogans -- marks the latest step in Miller’s hard-right turn back to advertising focused on product attributes. The commercial was created by Miller Lite agency BBH.

The A-B ad, decrying the Miller Lite commercial as “negative advertising,” continues: “Apparently, Miller Beer believes they have to say negative things about our brands to sell their beer.”

Actually, comparative advertising is a time-honored marketing strategy of No. 2 able challengers. Avis’ “We try harder” is probably the classic example.

And it’s worth recalling that Miller Lite sales increased when Miller first ran comparative ads in 2003 and 2004.

From a story in the online version of Ad Age:

"That fight seemed to benefit Miller, which gained market share in both years and didn't lose momentum until A-B slashed its long-held price premium in early 2005."

Back then A-B responded with harsh attacks, including denunciations of Miller’s “foreign ownership.” Then A-B publicly declared it wasn’t going to attack anymore -- though it did so again.

Indeed, A-B’s latest decision to blast back at Miller is somewhat surprising given that marketing execs there had previously told Ad Age they would not respond.

From an October 22 story:

"A-B marketing executives -- who greeted news of Miller's coming spoof of their icon with groans -- said repeatedly they will not let themselves be dragged into a similar battle again."

Indeed, a St. Louis Post-Dispatch story on Nov. 3 about Miller’s return to comparative advertising characterized the response of A-B’s top marketing exec as “muted.”

From the story:

"Regardless of any competitor's actions, we remain focused on raising the image of beer," David Peacock, vice president of marketing at A-B's domestic beer subsidiary, said in a statement. "In the interest of the entire industry, we remain committed to generating beer growth."

That said, at its distributor conference on Tuesday, A-B showed a modified version of the Miller Lite ad, according to a report in Ad Age. The twist: The dalmation defecates on a case of Miller Lite.

The St. Louis Post-Dispatch story can be seen here.

Today's Ad Age story can be seen here.

The Ad Age piece about the A-B's modified version can be seen here.

Miller Chill Fastest Growing Beer of the Summer

Miller Lite also cracks top 10 list.

Miller Chill was the fastest-growing beer of the summer in supermarkets, according to beer sales statistics from Nielsen.

Miller Chill, which was launched in test markets in February and launched nationally over the course of the summer, moved 896,968 cases in supermarkets during the 13 weeks ended September 8, according to Nielsen.

That amount exceeds the incremental gain of No. 2 Smirnoff Ice by more than 100,000 cases (though there are caveats to Smirnoff Ice’s ranking; see below). Miller Chill’s volume exceeded Bud Light’s incremental gain by more than 370,000 cases, according to Nielsen.

Miller Lite was the 10th fastest growing brand of the summer, in order of incremental volume increase. Its case volume was up 0.9 percent.

Anheuser-Busch had three brands in the top 10: Bud Light at No. 3, Michelob Ultra at No. 4 and Bacardi Silver at No. 9.

Coors Brewing Company also had three brands in the top 10: Coors Light at No. 5, Keystone Light at No. 6, and Blue Moon Belgian White Ale at No. 8.

Femsa’s Tecate was the only import to crack the top 10 list. It came in seventh.

The second-fastest growing brand of the summer was Smirnoff Ice, but that was driven in part by re-issued UPCs and the renaming of some existing products.

A-B to Create Miller Chill Knockoff?

Appears to be dusting off “denigrate, replicate” playbook.

Anheuser-Busch appears set on creating a brand to fight Miller Chill, according to Beer Business Daily.

BBD reports that A-B appears to be conducting Internet market research surveys to gauge consumer interest in brands with Latin influences. These bear more than passing resemblances to Miller Chill.

One of concepts is Bud Light with lime, which BBD says is described as having “a hint of citrus for your perfect summer refreshment.” BBD notes that “it is depicted in a clear bottle with a yellow citrusy label.

The survey also sought responses to Rolling Rock with lime. It’s described as having a “hint of natural lime that gives a tart refreshing balance to Rolling Rock’s signature sweet finish."

Other concepts include Bud and Bud Light Chelada, characterized as a “chelada style beer … Bud Light with a hint of natural lime and salt for more flavorful refreshment.” BBD says this “would be even closer to Miller Chill’s profile.”

The report also notes that A-B also is gauging reaction to an extension of its Bud Clamato, set to go national next year, that has a hint of chili pepper.

If A-B’s moves seem familiar, it’s because it appears to be acting out of an old playbook. As described in Philip Van Munching’s “Beer Blast,” a common A-B response to new products was to “denigrate” them and then “replicate” them. That was how it responded to light beer, for instance. And Bud Select, with it carb profile, was somewhat of an imitation of Miller Lite.

Recall that earlier this summer, A-B issued a deck to retailers, citing proprietary numbers, claiming that Miller Chill was a bad deal for retailers. Miller countered.

Having failed so far to stifle the growth of Miller Chill, A-B now seems intent on creating a brand that resembles it.

While it’s too early to say that Miller Chill is a success, it’s clearly gotten A-B’s attention.

The Beer Business Daily home page is here.

Miller Gains Share During July 4th Week

Miller Lite, Chill drive gains.

Miller Brewing Company gained share in supermarkets during the week ended July 7 thanks to the performance of Miller Lite and Miller Chill.

Miller Lite picked up two tenths of a point of case share during the period.

Newly launched Miller Chill, available in 63 percent of measured supermarkets, secured a half point of share during the period.

Overall, Miller gained six-tenths of a point of share during the week period. Anheuser-Busch’s share dropped by eight-tenths of a point as the Budweiser family lost a full point of share (Bud Light lost a tenth of a point). Coors Brewing Company, meanwhile, gained an eighth of a point of share.

Category volume was down 2.3 percent in supermarkets during the week..

For the longer four-week period ended July 7, Miller gained a third of a point of share. Miller Lite added a tenth of a point of share, helped by broad-based gains and an increase in baseline (non-promotional) volume.

During that four-week period, A-B’s share slipped by two-tenths of a point and Coors’ share increased by three tenths of a point.

Because the Fourth fell during the middle of the week this year, it’s difficult to get a read on how the category did during the holiday period. Some suppliers are looking at a three-week period to assess performance.

All the King's Beer

A-B has changed its business model by tying up crafts and imports.

In 2005, Anheuser-Busch was struggling in face of a resurgent Miller Brewing Company as well as fast-growing craft and import brands.

In 2006, it fought back. It began churning out a steady stream of new products. It also inked licensing deals for high-margin craft and import brands -- including InBev's European brands -- to augment the portfolios of its restricted distributors.

Those moves demonstrated A-B's strength. But they also reflected how A-B felt it needed to take dramatic action to improve its fortunes.

The April issue of Brew Magazine explores A-B's actions, including its implications for distributors.

From the issue:

Indeed, the central irony of A-B’s aggressive moves is that the brewer is trying to extend its dominance over more brands even as its control over the U.S. beer industry is slipping.

Consider:

-- The biggest brewer’s market share has been declining for three years. According to filings with the Securities and Exchange Commission, A-B had a 48.4 percent market share in 2006 compared to nearly 50 percent in 2004.

-- Budweiser, A-B’s second-biggest brand and accounting for roughly a quarter of its volume, has been declining for nearly 20 years. It shipped 25.8 million barrels last year, a little more than half its peak of 50 million in 1988, according to figures from Beer Marketer’s Insights.

-- Budweiser Select, a brand that was launched in 2005 to take on the surging Miller Lite, has been declining despite receiving $170 million in advertising support, according to Advertising Age.

-- Once by far the biggest brewer on the planet, A-B has been the subject of reported takeover rumors in the past year. Indeed, CEO August Busch IV last month told distributors the brewer must grow more than 5 percent a year “so that the stock price moves north so that a corporate raider doesn’t attempt a hostile takeover,” Beer Business Daily reported, paraphrasing the Fourth.

Against this background, A-B – which in 1997 told Fortune magazine it wanted 60 percent market share by 2005– changed its business model. Seeing that it couldn’t dominate the industry with its own brands – or with its own creations, such as World Select – it picked up brands in the fast-growing import and craft categories.

****************

The key question for A-B is whether it can grow share and what kind of execution risks it faces. After all, A-B now markets roughly 80 brands, compared to 26 in 1997, a shift that Wired editor Chris Anderson noted on his blog, longtail.com.

Another challenge for A-B is ensuring that its distributors maintain focus on their brands – including declining ones such as Bud and Bud Select – once they pick up hot brands like Stella Artois.

A-B rode to prominence by commanding 100 percent share of mind of its distributors. But in this new era it’s depending, more than ever, on the cooperation of its distributors. That’s a significant shift.

The change was underscored by a request August Busch IV made at A-B’s wholesaler meeting.

“Let’s focus on the core,” the newly minted president and CEO of A-B said, according to Beer Marketer’s Insights. “If we get too far off the reservation, we could jeopardize the core.

To see a PDF of the April issue, click here.

If you want to receive a free subscription to Brew Magazine, drop a line.

Miller Returns to Brand Focus for Miller Lite Ads

New spots tout Miller Lite as the light beer that invented light beer.

Faced with an increasingly competitive light beer market, Miller Brewing Company is introducing new television ads that focus on the taste and heritage of its flagship brand. The spots will replace the popular Man Law campaign, which Miller said will continue on-line and may return to the airwaves opportunistically in the future.

The first wave of the new episodic advertising approach broke over the weekend. The “GHT” ads featured a guy preventing people from drinking light beers with “GHT” and instead giving them Miller Lite. The ads position Miller Lite as ‘the light beer that invented light beer’, the original light beer that’s always been brewed to be great.

Miller plans to run GHT above the line advertising – it currently has three spots – through the middle of April. Then it will break a new episode of ads.

The shift comes as competition heats up in the light beer segment. The biggest example of this heightened competition is the proliferation of import and craft lights – notably Heineken Premium Light – as well as Anheuser-Busch’s increased support for Bud Select.

The Man Law campaign did its job of generating buzz and bolstering Miller Lite’s social currency. But Miller executives say the current consumer environment requires a more explicit focus on the benefits of the beer.

The new work is being done by Crispin Porter & Bogusky, which handled the Man Law work.

While Miller is taking a new direction in advertising, it plans to continue exploring opportunities to use the Man Law concept for the brand. One possibility: Reprising Man Law during the football season.

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.

If you would like a subscription to the print version of Brew, please drop us an email.

Inverse Relationship?

As Budweiser sales drop, number of Bud items increases in supermarkets.

Anheuser-Busch’s Budweiser brand has been in long-term decline.

Yet the number of different Bud stock keeping units supermarkets carry has been increasing, according to figures from ACNielsen.

Budweiser’s share in supermarkets in August 2006 is down 13.7 percent from August 2004, according to ACNielsen. Yet the number of items carried actually has increased 4.9 percent, to 8.6.

The items seeing the biggest gains in distribution (percentagewise): 4-packs of 16-ounce aluminum bottles and longneck 18-packs.

Number of items carried is a surrogate – though imprecise – for space on shelves. While it’s unclear if A-B is gaining space by proliferating SKUs, at a minimum it appears to be trying to generate interest in the space it has. Innovative packaging is one way. Price-oriented packaging is another.

Miller Lite – which surpassed Budweiser as the No. 2 beer in supermarkets earlier this year – also has seen an increase in items carried. But the amount lags Bud’s.

Supermarkets carried an average of 6.9 Miller Lite items in August 2006, up 6.2 percent from August 2004, according to figures from ACNielsen. Miller Lite’s case share grew 3.6 percent in that period.

Don't Forget to Wash Your Hands

Sea World visitors still treated to A-B jabs against "foreigners."

Back when we noted Anheuser-Busch had trademarked the phrase Entre Amigos No Hay Fronteras (Spanish for Between Friends there are no Borders), Brew Blog wondered whether A-B was leaving behind its attacks on Miller Brewing Company’s ownership by “foreign interests” (i.e. SABMiller plc).

After all, the “American owned” portion of A-B’s website was down. And it’s been working overtime to bring imports into its distribution system, bagging Tiger and Grolsch. (Though the InBev and Modelo portfolios have eluded A-B, at least for now).

As it turns out, the attacks continue -- at least in the mens restroom at A-B-operated Sea World in San Diego where signs still take shots at "South African Breweries Miller." An alert Brew Blog reader took a picture of this one: (click on photo for larger image).

For more about the restroom signs, go here.

Miller Lite Steps Up Focus on Product Attributes

New comparative ads take on Bud Light with taste, carbs, calories and heritage.

Miller Lite once again is going head-to-head against Bud Light, largely based on the physical properties of the two beers.

This time, “athletes” – one representing each beer – square off in contests in ads that break this weekend.

From today’s Milwaukee Journal Sentinel:

The ads show a mock competition between two "athletes," one representing Miller Lite and one for Bud Light. In one spot, each player pours a bottle of his beer, a machine counts the calories in each bottle, and the players' respective "scores" are displayed. Another spot shows a competition in which the carbs are measured for each beer.

"They're playful. They're fun," Marino (Miller spokesman Pete Marino) said. "But they clearly demonstrate how our brands are different, and better."

The comparison ads, along with the Men of the Square Table spots, debuted at the Miller Distributors Conference this past spring. As the Journal Sentinel notes, the new comparison ads will be the only Miller Lite advertising on air between this weekend and early September, just before the kickoff of the National Football League season.

As previously reported in Brew, the Men of the Square Table spots have already seeped into pop culture and influenced the beer dialogue. Now the new comparison spots continue Miller’s ongoing push to emphasize the differences between Miller Lite and Bud Light – humorously.

Indeed, the comparison ads will continue to run when the next flight of Square Table ads start. Crispin Porter & Bogusky is the ad agency behind both campaigns.

Miller turned heads in the beer business when it took on Bud Light three years ago in comparative ads that first touted Miller’s lower calorie and carb count, and then that Miller Lite had more taste than Bud Light.

Those moves also helped reignite Miller Lite sales.

Competition Heats Up Among High-End Light Beers

Cannibalization setting in among craft, imported light beers?

The launch of Heineken Premium Light -- on top of other moves in the small-but-growing high-end light segment -- apparently has nicked Boston Beer’s Sam Adams Light.

In an Aug. 8 earnings release announcing overall strong results for the second quarter, Boston Beer President and CEO Martin Roper said:

While Sam Adams Light experienced a slight decline in the second quarter due to competitive activity, we are encouraged about the bright future of Better Light Beer, and we are prepared to invest in and grow in this emerging category.

It’s safe to say the “competitive activity” Roper refers to (at least in part) is the launch of Heineken Premium Light.

What’s interesting about this report is that when HPL was launched, the expectation was that it would take share from domestic premium light beers. And no doubt that’s happening.

But this latest development suggests that new craft or import light beers could take a bite out of existing ones as well. It’s too early to tell to what level of cannibalization will take place in this segment, but it bears watching.

So far Heineken Premium Light, off to a fast start since its launch this spring, has been a source of incremental growth for the light import and craft segment. Imported light beers held a 2.4 percent share of supermarket beer sales for the 4 weeks ended July 29 compared to 1.8 percent in the year-earlier period.

Heineken Premium Light held 0.5 percent share during the period, making it the No. 2 light beer in supermarkets behind Corona Extra Light. (Corona Light's share increased to 1.1 percent from 1.0 percent.)

Heineken’s Amstel Light, the first major imported light beer, declined during the latest four weeks. It suffered an 11.3 percent volume decline during the period; over the 12-week period it slipped by 11.4 percent. (Total Amstel Light shipments fell by 4.1 percent in 2005, according to figures from Beer Marketer's Insights.)

Light craft beers are a much smaller niche, holding a 0.2 percent share. Sam Adams Light volume actually increased by 8 percent in supermarkets during the latest 4-week period.

The launch of Heineken Premium Light was just the latest move by import marketers to cash in on the popularity of light beer and the broader consumer trading-up trend. InBev had previously launched Beck’s Premier Light. And Corona Extra launched its light extension years ago.

Just-Drinks (subscription only) has more on the topic.

A-B Seeking to Restrict IRCs in Illinois

Part of broader effort to clamp down on couponing.

Anheuser-Busch is seeking to restrict instant redeemable coupons in Illinois, Brewblog has learned.

A-B -- which has used IRCs in Illinois -- is complaining that the use of such coupons is open to abuse and needs to be tightly restricted. It's believed A-B wants to enact regulatory changes to clamp down on the frequency of IRCs.

A-B's effort to restrict IRCs in Illinois fits in with a broader push to restrict couponing activity elsewhere in the country. Miller Brewing Co., meanwhile, has consistently opposed efforts to restrict competition.

For instance, A-B and its Florida wholesalers are urging the state regulator to more strictly define what constitutes a coupon program. A-B -- which unsuccessfully sought to amend couponing law in the legislature -- says the current system is too confusing.

But representatives of more than a dozen organizations and businesses including Miller, Coors Brewing, the Wine Institute and Diageo in June sent a letter to the Florida regulator opposing such a move. They argued the rules -- on the books for at least 10 years -- work well and are clearly understood.

Miller Lite and Bud Light Square Off on Familiar Canvas

Man laws versus caveman laws?

As the competition continues in the aisles of America’s supermarkets, convenience stores and bars/restaurants, the nation’s top two brewers are hoping their ad campaigns will convince beer drinkers to increasingly choose their top products, Miller Lite and Bud Light. Two stories yesterday pointed out the campaigns the brewers are using to court favor with beer drinkers.

While Bud Light recently debuted its caveman, Miller Lite’s “Men of the Square Table” have been deciding man laws since mid-May. Yesterday's Wall Street Journal story suggested that both brewers are returning to humor at the expense of directly comparative ads that were used over the past two years. A-B has always used slapstick humor to appeal to the lowest common denominator 21-27 year-old male. Miller Lite’s campaign uses humor but, as previous coverage in The New York Times (and others) has pointed out, tries to do so in a little smarter way. Brewblog also doesn’t think using humor or direct comparisons need to be mutually exclusive. To the best of our knowledge, Miller never said it was going to stop using directly comparative advertising.

A-B-Corona Deal May Be Off, Report Says

The King might be backing off over antitrust, other concerns.

A rumored joint venture between Modelo, Barton Beers and Anheuser-Busch to import Corona Extra and other Modelo brands apparently will not include A-B, Beer Business Daily is reporting.

From the story:

The chatter on Wall Street is that in order to prevent antitrust problems, among other problems, the plan that A-B will be part of the new Modelo USA importing company is shelved at this point. That certainly doesn't mean that A-B won't be part of the deal in the future, but initially it looks as though Modelo will continue forward with Barton, and A-B won't hold up the deal.

Seizing distribution rights for Corona would be a coup for A-B, which is seeking to implement its "funnel strategy" to provide high-margin imports and craft brews to its restricted distributor network.

Assuming the report is true, this would mark the second time in two weeks that A-B's funnel strategy was clogged. A rumored deal between InBev USA and A-B fell through last month.

Losing Corona would be a big blow to some wholesalers who also handle Miller products. Regarding the potential of distribution staying put, Beer Business Daily notes, "This comes as a relief to many non-A-B Corona distributors."

That may be the understatement of the summer.

"We're breathing sighs of relief, I can tell you that," says James "Bubba" Moffett Jr., president of Crescent Crown Distributing, a wholesaler with operations in Phoenix and Louisiana that markets Miller Brewing's brands as well as InBev and Modelo brands. "If it is true, it's a big win."

Distribution, Aggressive Pricing Drive Imports in C-Stores

A-B share near flat as domestics struggle.

Imported beers surged in the convenience-store channel during the four-week period ended June 17, according to figures from ACNielsen. Imports gained a full point of share, the segment’s biggest share gain in three years and its 21st consecutive month of year-over-year share growth.

Imports now command a 6.7 percent share in C-stores.

The growth is driven partly by increased distribution in C-stores – a phenomenon also lifting imports in supermarkets.

It’s also fueled by more aggressive pricing. During the period, import pricing was up only 0.4 percent vs. a year ago. Brands from the three largest sources of imports – Mexico, Canada and Europe – have been reducing year-over-year price increases since January 2005.

Mexican import pricing has been hovering near flat since August 2005.

Meanwhile, the major domestic brewers are struggling. A-B’s share grew by a tenth of a point during the latest four-week period, according to ACNielsen. That’s the ninth consecutive period with an increase. But it’s also the smallest gain since November 2005 and comes despite A-B’s push to gain more space.

Miller Brewing Company and Coors Brewing Company both lost share during the period.

California Fireworks?

How will A-B respond to Memorial Day share losses?

Anheuser-Busch suffered 3.0-plus point share losses in California supermarkets during the Memorial Day holiday period.

A-B doesn’t like losing, so it bears watching to see how it responds during the Fourth of July period.

California has been a tough market for mainstream domestic beers while crafts and imports have taken off, a topic Beer Marketer’s Insights Express touched on earlier this month. “Calif supermkt data shows just how challenged top 3 can be in major metro mkts,” BMI said.

The Los Angeles market is one where A-B has been challenged. For the four-week period ended June 17, malt beverage volume in supermarkets grew by 0.4 percent, according to figures from ACNielsen.

Miller Brewing, which took some pricing actions, increased volume by 7.1 percent in that time frame, according to figures from ACNielsen.

A-B volume fell 4.2 percent and Coors Brewing Co. slipped by 0.3 percent. Imports were up 4.3 percent.

Coalition Opposes A-B Efforts to Restrict Coupons in Fla.

Letter: "Deliberate move to limit legitimate competition."

A coalition of of beer, wine and spirits marketers, distributors and trade groups is opposing an effort by Anheuser-Busch to change Florida regulations covering the use of couponing.

A-B and its Florida wholesalers are urging the state regulator to more strictly define what constitutes a coupon program. A-B -- which unsuccessfully sought to amend couponing law in the most recent legislative session -- claims the current system is too confusing.

But representatives of more than a dozen organizations and businesses including Miller Brewing Co., Coors, the Wine Institute and Diageo on June 21 sent a letter to the Division of Alcoholic Beverages and Tobacco opposing such a move.

They argue that the rules -- on the books for at least 10 years -- work well and are clearly understood. "Couponing has worked well in Florida for the ultimate benefit of alcohol beverage consumers in this state, is very popular with consumers and has been administered by the industry in a fair and equitable way," the letter said.

They argue that the "cumbersome special conditions and restrictions on couponing" pushed by A-B would stifle the effective use of couponing.

From the letter:

The Division should recognize AB's efforts to amend Florida's couponing regulations as a deliberate move to limit legitimate competition in the market. AB apparently no longer wishes to utilize coupons in marketing its brands in Florida. Consequently it does not want any other manufacturer to avail itself of this long accepted practice. In essence, AB appears to be attempting to use the Division and its rule making process to advance its own anti-consumer and anti-competitive agenda in Florida.

The letter can be seen here.

Miller Lite Now Second-Biggest Beer in Supermarkets

Laps Budweiser during Memorial Day period.

Miller Lite surpassed Budweiser during the Memorial Day holiday period to become the No. 2 beer in America’s supermarkets, according to figures from ACNielsen.

Miller Lite increased its share to 9.3 percent, up 10 basis points, during the two weeks ended June 3, according to ACNielsen. Meanwhile, Budweiser slid 90 basis points to an 8.6 percent share.

“Anytime you have a change in the order of the top-selling brands, that’s a notable achievement,” says Tim Calkins, associate professor of marketing at Northwestern University’s Kellogg Graduate School of Management. He adds: “It’s just one battle, and the longer-term conflict continues.”

The coup in supermarket aisles marks the latest accomplishment for Miller Lite, which has undergone a dramatic turnaround over the past two-and-a-half years. The big question now is how Anheuser-Busch will react to Miller Brewing Company's top brand knocking off the King in supermarkets. Wall Street has raised concerns about pricing.

Overall, the beer industry experienced a 1 percent decline in volume during the two-week period while pricing was up by 3.4 percent.

Brew discussed performance of the first week of the Memorial Day period here.

Anheuser-Busch Keeps Up Attack on Chicago

Adds craft brew Goose Island to distributor network.

As Anheuser-Busch tries to find ways to grow, it's zeroing in on Chicago -- long a stronghold of Miller Brewing Company.

A-B last week brought local craft brew Goose Island into its distribution network (see the release here). According to a story in the Chicago Tribune (registration required), A-B paid the incumbent distributor, Union Beverage, as much as $12 million for distribution rights.

But this was just A-B's latest move in the country's third-biggest market. In March it inked a deal to name the renovated Wrigley Field bleachers the "Bud Light Bleachers." In January. it struck a 10-year, $100 million sponsorship deal with the Chicago Bulls, Blackhawks and the United Center. It replaced Miller in those deals. (Miller continues to have relationships with the Chicago Bears and Chicago White Sox).

A-B is making these moves in a town where its market share significantly lags Miller's. In 2005, A-B had 19.8% share of supermarket beer sales, according to figures from ACNielsen. Nationally its share in supermarkets was 43.7%.

Miller, meanwhile, commanded 46.4% share, according to ACNielsen.

Besides inking sponsorship deals, A-B for some time has been running promotions, putting their prices below Miller products, says Kevin Burke, president of Chicagoland Miller beer distributor Burke Beverage.

"They are dumping tons of money in here," he says.

Mr. Burke says he expects A-B will use Goose Island to gain traction in the on-premise business.

The Goose Island deal is between the Chicago brewer and Widmer Brothers Brewing Co., a Portland, Ore., craft brewer affiliated with A-B. The deal also paves the way for Widmer to purchase a minority stake in Goose Island.

Goose Island's move to the A-B distribution network was expected, although early reports suggested A-B was going to buy a stake in the brewer.

"Consumers expect choices, and we continue to increase the range of popular beers and beverages offered by our distributors," A-B President August Busch IV said in a release. "We are proud to include Goose Island among the high-quality, distinctive brands we carry."

The global game

Miller, A-B battle goes beyond U.S. shores

The United States is only one front in the contest among consolidating global brewers. And as an online-only article accompanying BusinessWeek’s profile of Norman Adami points out, Miller Brewing Company parent SABMiller is positioned well for that battle.

As detailed in the story, Anheuser-Busch once strode the international beer industry like a colossus. But others have caught up, including SABMiller. Since the 1990s, SAB Miller has acquired brewers around the world. It now has strong positions in mature markets like the U.S. as well as developing markets like China. No single country accounts for more than one-third of its earnings.

A-B, meanwhile, is tied to the U.S., which accounts for 76% of its revenues. Its international businesses represent only 7% of revenues.

These trends are reflected in the market capitalization of each company, a measure of how investors view a company’s prospects.

From 2000 to the present SABMiller’s market cap has grown fivefold to $31 billion. A-B’s has fallen by more than 10% to $36 billion. While these numbers sound abstract, they have real-world relevance in the global competition.

The BusinessWeek story quotes a Wall Street analyst:

"[SABMiller was] able to help put the brakes on AB's stock appreciation in the U.S., and they were able to continue to expand their geographic footprint," says Bear Stearns analyst Carlos Laboy. "Anheuser no longer has a premium valuation [to peers], so when you look at global consolidation it no longer holds a huge advantage."