Miller Eyeing Expanded Rollout of MGD 64

Outperforming in test markets.

Based on MGD 64’s success in test markets, Miller Brewing Company “will seek to roll it out just as fast as we can,” CEO Tom Long said Thursday in a teleconference.

From the Milwaukee Journal Sentinel:

MGD 64 has performed better than expected in recent test marketing, and it could end up as a national brand sooner rather than later, Miller Brewing President Tom Long said Thursday.

"We will seek to roll it out just as fast as we can," Long said during a teleconference discussing financial results posted by London-based SABMiller PLC, Miller Brewing's corporate parent.

"We've really been surprised by the health and growth of MGD 64," Long said.

Miller Earnings Up 27 Percent

Worthmore portfolio grows 49 percent.

Miller Brewing Company’s earnings before interest, taxes and amortization increased 27 percent to $477 million during the year ended March 31, the brewer’s parent reported today.

Revenues grew by 4.8 percent to $5.12 billion.

Miller’s results were driven by growth by Miller Lite, double digit growth by its worthmore portfolio, an industry-leading increase in revenue per barrel, and ongoing cost savings, SABMiller said.

Miller's US domestic sales to retailers (STRs) were up 3.1% when adjusted for one additional trading day against the prior year (up 3.5% unadjusted). Miller’s shipments grew 3.9% on an unadjusted basis, and were up 1.5% on an organic basis (excluding Sparks and Steel Reserve).

Revenue per barrel increased by an industry-leading 4 percent.

What’s in Bud Light Lime?

Hint: Not Bud Light.

Bud Light Lime is named after the best-selling beer in the country. But the resemblance is only label deep.

The base beer in Anheuser-Busch’s new product is not Bud Light, reports Monday’s installment of Beer Business Daily.

From the issue:

Regarding Bud Light Lime, he [a brewmaster cited by BBD] said that “it's not possible to tell precisely what the base it is although we have a guess or two. Not an exact match to any other beer via what we know from routine market sampling,” but that it ain't Bud Light as they have different “hopping schemes.”

Doug Muhleman, A-B’s group VP of brewing operations & technology, AKA chief brewer, told BBD: “We formulated for max refreshment and interaction with lime. It has Bud Light bones. Other than that, Harry, brewmasters don't share their secrets.”

The article notes that Miller Chill is not based on Miller Lite or any other preexisting beer from Miller Brewing Company -- which is true. (And why it’s not called Miller Lite Chill.)

Miller Chill Gains Share in Supers

Sales rise along with temperature.

One of Miller Brewing Company’s priorities for the summer selling season is building Miller Chill.

It’s going to be a long summer -- particularly as Anheuser-Busch ramps up efforts behind Bud Light Lime. But Miller’s initial efforts, which include new packaging and pushes in the on- and off-premise alike, appear to be working.

Miller Chill held 0.3 percent volume share for the four weeks ended April 26, according to beer sales statistics. That's up 0.1 points from the four-week period ended March 29.

Demonstrating that its superpremium positioning remains solid, Miller Chill's dollar share increased by 0.1 points to 0.4 percent.

Meanwhile, total distribution points -- a measure that Nielsen uses to track breadth of distribution -- showed a sequential increase of 7.7 percent, according to Nielsen. And the average number of items carried increased by 7.4 percent.

Also telling: The two original packages -- the 6-pack and 12-pack bottles -- are on Nielsen’s list of top 25 growth items (12-pack at No. 8 and 6-pack at No. 14) in supermarkets for the year-to-date through April 26.

Meanwhile, in the off premise, Miller has been driving placements for the new 12-ounce can and gaining Miller Chill displays.

On-premise, the Miller system has secured features and promotions as well as placements of the Miller Chill aluminum bottle.

Brew News

Brew Blog’s picks of news stories from the beer business and beyond.

Supermarket beer volume fell 0.4 percent during the four weeks ended April 26, according to beer sales statistics from Nielsen. Miller volume share fell 0.5 points while dollar share fell 0.3 points. Anheuser-Busch volume share declined 0.1 points and dollar share dropped 0.4 points. Coors volume and dollar share both increased by 0.8 points. Imports gained 0.1 points of volume share but dollar share slipped by 0.2 points. Craft volume share was up 0.3 points and dollar share was up 0.7 points.

The entry price for a Super Bowl commercial will be $3 million next year, the Wall Street Journal reports. But longtime buyers won’t necessarily have to pay that much. From the story: “Anheuser-Busch, for example, has locked in a rate of about $2 million for each of its spots, according to a person familiar with the matter.”

The St. Louis Post-Dispatch explores the potential impact of an economic slowdown on the beer business.

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.

WSJ covers Brew Blog

Highlights scoops on beer beat.

Brew Blog would be remiss if it didn't mention it was the topic of a front-page story in Thursday’s issue of The Wall Street Journal.

From the story:

Last month, beer reporter James Arndorfer broke a story that Anheuser-Busch Cos. was readying a new brew called Budweiser American Ale. Trade publications and Anheuser's hometown paper quickly chased the scoop. With his dispatch, Mr. Arndorfer beat the giant brewer's own publicity machine to the punch. Making the story more irritating for Anheuser-Busch: Mr. Arndorfer's beer-news site is owned by Bud's biggest rival.

Mr. Arndorfer, 37 years old, is a full-time employee of Miller Brewing Co., the U.S. arm of SABMiller PLC. A former reporter for Advertising Age, he now runs Brew Blog, a free Web site dedicated to breaking news about beer. Especially news about Anheuser-Busch's beer.

Brew Blog is the latest and perhaps most unlikely front in Miller's drive to rattle Anheuser. Mr. Arndorfer tracks the St. Louis company's every move, from earnings reports to management changes. He relishes revealing details of its products before Anheuser does.

Brew Blog would just like to take this opportunity to thank its readers for visiting. And here’s the rest of the WSJ story about Brew Blog.

Miller Posts Sales Gains

Net revenue per barrel up 4 percent.

Miller Brewing Company posted a 0.7 percent increase in sales to retailers on an organic basis during the fiscal year ended March 31, the brewer’s parent reported today.

The growth was driven by Miller Lite and a double-digit showing by worthmore brands, SABMiller reported in its trading statement release. Miller's total sales to retailers grew by 3.1 percent.

Miller Lite was up 1.1 percent for the full year, SABMiller reported.

The worthmore portfolio -- which includes Miller Chill, Sparks, crafts and imports -- grew by 49 percent. Peroni Nastro Azzurro and Leinenkugel’s grew double digits.

Worthmore brands now represent 5.8 percent of Miller’s portfolio, SABMiller reported.

Miller’s domestic net revenue per barrel increased by 4.0% for the full year, reflecting continued strong pricing due to increased mainstream brand equity, as well as reductions in promotions and favorable brand portfolio mix.

The SABMiller release can be seen here.

UPDATE: MarketWatch covered the earnings here.

SABMiller, Molson Coors Name JV Execs

CFO-, CIO-designates named.

SABMiller plc and Molson Coors Brewing Company named two executives for the proposed MillerCoors joint venture.

Tim Wolf, the chief financial officer of Molson Coors, was named chief integration officer-designate of the JV, which is subject to regulatory approval and expected to close this summer.

Gavin Hattersley, the senior vice president of finance for Miller Brewing Company, was named chief financial officer-designate.

As previously announced, Leo Kiely, current CEO of Molson Coors, will be the CEO of the joint venture, and Tom Long, current CEO of Miller, will serve as President and Chief Commercial Officer.

The press release can be seen here.

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.

Miller’s Migrating Portfolio

Progress made on higher-margin brands.

Migrating Miller Brewing Company’s portfolio to higher-end and higher-margin brands has been a key business priority in recent years.

Miller executives laid out the progress the company has made in driving the growth of so-called exploit brands – which includes imports, Leinenkugel’s, Miller Chill, and Sparks – on Tuesday and Wednesday at the Miller Distributors Conference.

Miller CEO Tom Long made the point during his opening remarks:

“You've seen us establish Peroni as a clear player in the next wave of fast-growing imports, on the same growth trajectory as Stella (Artois). And you've seen us focus the support behind Leinie's, support that has made it one of the leaders in the emergence of national crafts, with is increasingly powerful force in the American beer industry.”

Miller Driving Miller Lite “Ultimate Light Beer” Message

“Talking about why Miller Lite is the best light beer works.”

NEW ORLEANS -- Miller Brewing Company is planning to step up the “ultimate light beer” messaging behind Miller Lite.

New advertising, new packaging and product innovation are among Miller’s plans to drive the brand’s volume going into the summer.

Another part: Miller is changing the brand’s tagline to “The Ultimate Light Beer.”

Miller CEO: “The Future Is Now”

Hails Miller’s achievement of past four years.

NEW ORLEANS -- Miller Brewing Company is determined to drive the momentum of its portfolio leading up to its proposed joint venture with Coors Brewing Company, Miller CEO Tom Long said on Tuesday.

“We’re determined to go into the JV rolling. We have real portfolio momentum, and we insist on accelerating that momentum in the coming days, weeks and months,” Long said, speaking to distributors assembled here for Miller’s wholesaler convention.

“The future is now,” he said.

“We’re not waiting to stoke Miller Lite. We’re doing it now,” he said. “We’re not waiting to exploit new growth opportunities. We’re doing it now. And we’re not waiting to protect our heritage brands. We’re doing it now.”

Miller Lite Brewers Collection Going National

Going into markets by September.

After exceeding expectations in test markets, Miller Lite Brewers Collection -- a trio of craft-style light beers -- is going nationwide.

“We are going to take Miller Lite Brewers Collection national and we’re going to do it by September,” Miller Brewing Company CEO Tom Long said from the stage on Tuesday at Miller’s distributor meeting in New Orleans.

In making the announcement, Long recalled last year’s conference when Miller announced it was accelerating the national rollout of Miller Chill. The result: It became the year’s biggest new product, generating $40 million of sales in supermarkets.

Tom Cardella, Miller’s executive vice president-sales and distribution, pointed out Miller Lite Brewer’s Collection’s strengths in its four test markets. Two big ones: It’s exceeded volume targets by 40 percent and it’s also exceeded distribution targets.

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

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 is aimed at mainstream light beer drinkers and capitalizes on three beer industry trends: the popularity of light beer; consumers seeking more variety, including crafts; and people willing to pay more for brands that offer a unique experience.

Leinie’s Expanding Summer Shandy Distribution

Hits store shelves next month.

The Jacob Leinenkugel Brewing Company is expanding distribution of its popular seasonal Summer Shandy.

Leinie's will be marketing Summer Shandy in 40 states this summer. Leinie's stuck mostly to its core Midwestern states for the brand's debut last summer.

Leinie's is expanding distribution due to Summer Shandy's success in its first year. It vastly exceeded sales expectations; established itself as one of the fastest growing brands in supermarkets despite its regional distribution; and helped drive share gains for the total Leinie’s portfolio.

Commenting last summer on the brand’s success, Dick Leinenkugel, vice president of marketing and sales for Leinie’s, said: “Crafts are hot … People are looking for differentiated styles of beers. We have been able to deliver that from Leinenkugel’s. Leinenkugel’s Summer Shandy is a unique flavor offering and incredibly refreshing during warm weather months.”

Summer Shandy goes into retail accounts next month.

Previous Brew Blog coverage on Summer Shandy can be seen here and here.

Miller Wins 4 “Hot Brand” Awards

Miller Chill, Sunset Wheat, Peroni and Sparks Plus recognized.

Miller Brewing Company won four “Hot Brand” awards from industry newsletter Impact – more than any other brewer.

The “Hot Brand” awards go to the industry’s most dynamic products, the newsletter said. The Miller brands recognized by Impact were:

-- Miller Chill and Leinenkugel Sunset Wheat in the domestic beer category

-- Peroni Nastro Azzurro in the imported beer category

-- Sparks Plus in the ready-to-drink category

Miller Tops Distributor Survey

Supplants A-B as top ranked brewer on Tamarron’s “performance score.”

Creating a new relationship with distributors -- and being a supplier that’s easy to work with -- has been a key focus for Miller Brewing Company.

And while that’s a never-ending effort, it seems like Miller’s work is showing some results.

Miller supplanted Anheuser-Busch as the top-ranked supplier on the overall performance score measure among eight major brewers, according to preliminary results from the 2008 Tamarron Consulting Supplier Performance Survey, in which distributors grade their suppliers.

It’s the first time since survey’s 1999 inception that A-B didn’t rank first.

“This is a huge win for us,” said Tom Cardella, executive vice president of sales and distribution. “Improving distributor relations and confidence has been a major goal for Miller, and this shows we’re making headway. We’re certainly not satisfied, but we should all take pride in the changes behind these numbers.”

Can A-B Cash in on MillerCoors “Disruption”?

August Busch makes prediction.

Anheuser-Busch on Thursday reaffirmed its earnings targets, its increased commitment to its core brands -- and its belief it can make hay with the creation of MillerCoors.

A-B CEO August Busch IV told analysts and investors it believes it can take advantage of the creation of the joint venture between Miller Brewing Company and Coors Brewing Company (still subject to regulatory review).

From Beer Business Daily:

August says the J-V will be very favorable to A-B's shareholders. He admitted that he underestimated the challenges integrating the InBev brands, and he suspects Carlos underestimated the challenges in integrating Crown. "There's going to be a tremendous amount of disruption," he said.

Miller Chill Top New Brand in Supers

Racked up $40.8 million in sales, according to IRI.

Miller Chill was “by far” the top new beer brand in supermarkets last year, Beer Marketer’s Insights Express reported yesterday.

BMI, citing beer sales statistics from IRI, said Miller Chill posted $40.8 million in sales in 2007.

Anheuser-Busch’s Bacardi Silver Mojito was a distant second, with $8.1 million in sales.

A-B placed six brands on the top 10 -- including two brands launched regionally, Land Shark Lager and Bud Light Chelada. But their combined performance didn’t match that of Miller Chill.

From the BMI Express report:

AB also had #3 Landshark Lager and #4 Bud Light Chelada, plus #s 7, 9 and 10. But all of new brands #2-10 didn't equal total of Chill. Only craft brand in top 15: Alaskan IPA.

Given Miller Chill’s success, who can blame A-B for launching Bud Light Lime in hopes of taking some of that volume?

The Beer Marketer's Insights home page is here.

Previous Brew Blog coverage of Bud Light Lime can be seen here.

Good Reviews for Miller Lite Brewers Collection

Positive ratings from beer industry trade magazine.

Miller Lite Brewers Collection got positive reviews from a Modern Brewer Age consumer tasting panel.

The panel tried all three of the brews -- a blonde ale, an amber and a wheat -- that are now in test markets. And, while the panel had some criticisms of the packaging, it gave the brews positive reviews.

“Our panel sampled all three, and found them to be very drinkable, very light beers,” says the writeup in the February 18 issue of Modern Brewery Age Weekly (not yet online).

The blonde ale was considered the standout of the trio. “Beautiful in appearance, exquisitely balanced and highly attenuated, it is arguably one of the best light beers ever made,” the review says.

The blonde ale and the wheat both received a “five beer” rating from the magazine. That designation means a beer is “Superb in every respect. True to style, enjoyed by all.”

The amber received a “three beer” rating. That means: “Good beer. No flaws but garnered faint praise.”

The Modern Brewery Age home page can be seen here.

Miller, Coors Gain in C-Stores

Bud drags down A-B.

Miller Brewing Company and Coors Brewing Company gained share in convenience stores during the four weeks ended January 26, according to beer sales statistics from Nielsen.

Anheuser-Busch, which dominates the channel with 61.4 percent of case volume, saw its share erode as Budweiser declined.

Miller gained 0.2 points of volume and dollar share during the period. Its gain was driven by Miller Chill, which has held its 0.2 share in C-stores.

Miller also got a boost from the Milwaukee’s Best franchise, which gained 0.1 points of case share.

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.

Miller Chill Heats Up Competition Down Under

Competitors roll out lemon- and lime-flavored beers in Australia.

Miller Chill has exceeded sales expectations since its launch last December in Australia.

And the competition has noticed.

Lion Nathan is introducing Barefoot Radler, a lemon-and-lime infused beer. Foster’s Group already has rolled out Carlton Fusion, a beer brewed with lime and salt … not unlike Miller Chill.

From the Sydney Morning Herald:

All the big companies believe drinkers want more choice. Lion is targeting Barefoot Radler at existing beer drinkers who want to add yet another beer to their repertoire and those who prefer wine or spirits. Radler-style beers are particularly popular in Germany, where 300 million litres of the stuff are drunk each year.

Miller Chill is doing well, the story reports:

The marketing director of Pacific Beverages, Andrew Walker, said Miller Chill sales were "well ahead of forecast" even though marketing had been low key, limited to on- and off-premise taste tests to communicate what is an unusual combination. "Consumers are always looking to try something different. They don't want to be stuck in a rut."

Pacific Beverages is a joint venture between Coca-Cola Amatil and SABMiller.

The Sydney Morning Herald story can be seen here.

So Will A-B Pull New Bud Spots?

Marketing chief says it will stick to “virtues.”

Anheuser-Busch’s top marketer made remarks in today’s Wall Street Journal that led Brew Blog to wonder whether the company intended to pull ads that tout Budweiser at the expense of crafts and imports.

Responding through a prepared statement in a story about Miller Lite’s upcoming “Dalmatian II” television spot, David Peacock, A-B’s vice president of marketing, said, “We recognize that in an election year there tends to be a lot of negative advertising, and we feel speaking to the quality and virtues of our brands will differentiate us in a cluttered advertising environment.”

Given this stance, will A-B stick with Bud ads that take shots at crafts and imports?

In one, Rob Riggle talks about how Bud has more taste than a light beer but isn’t as heavy as an import. And in another he suggests dark and cloudy beers can hide imperfections.

Or does A-B not consider these “negative advertising”?

Miller Expanding MGD 64

Broadening Midwest distribution, testing in the West.

Following a successful test, Miller Brewing Company is taking MGD 64 into Midwestern markets starting March 1.

Miller also will be test-marketing the beer in three western markets: San Diego, Sacramento and Arizona.

MGD 64 is a version of Miller Genuine Draft Light with just 64 calories. No beer has a lower calorie count, but it maintains the full taste of the original. MGD 64 will be replacing Miller Genuine Draft Light in the designated markets.

Miller STRs, Revenue Per Barrel Up

Miller Lite STRs up 1.9 percent.

Miller Brewing Company’s sales to retailers and net revenue per barrel increased during the quarter ended December 31, the company’s parent reported on Thursday.

Miller’s third-quarter sales to retailers increased by 1.5 percent during the period, after adjusting for the number of trading days (3.1 percent unadjusted), according to SABMiller.

Miller Lite and worthmore brands drove the increase. Miller Lite STRs (adjusted) increased by 1.9 percent. They are up 2 percent year-to-date.

The worthmore portfolio -- including imports, crafts, Miller Chill and Sparks -- posted strong double-digit growth during the quarter.

Miller’s net revenue per barrel increased by 4.3 percent during the quarter, thanks to strong pricing, strong performance by worthmore brands, and a reduction in promotional activity.

Miller’s STRs (adjusted) for the first three quarters increased by 1.4 percent on an organic basis. Sales to retailers increased by 4.4 percent including Sparks and Steel Reserve.

New Miller Chill Ads Hit TV

Miller Chill is cold-weather refreshment, ads say.

Miller Brewing Company this week started airing new TV advertising to maintain momentum for Miller Chill.

The ad, titled “Ice Cave,” drives the message that Miller Chill is an ideal beer for year-round refreshment. “Sometimes even cold weather needs a refreshing twist,” the ad says.

The 15-second ad will air through the end of March on select network sports programs, cable sports events, cable entertainment programs and other outlets.

The TV advertising is complemented by print and out of home advertising. New point of sale materials play on the winter theme, saying “The Forecast Calls for Chill.”

The new programs are part of Miller’s effort to step up support for the brand, a priority executives laid out last fall during distributor meetings.

Miller Chill currently has about 0.3 percent share in supermarkets, according to beer sales statistics from Nielsen.

In a recent interview with Beer Business Daily, Miller CEO said Miller Chill has slowed during the winter -- something that was expected. He added that he expects Miller Chill to reach share ranging from 0.5 percent to 1 percent.

Brew Blog's coverage of Long's interview can be seen here.

Brew Blog's coverage of Miller Chill's seasonality can be seen here.

Miller CEO Cites Price Leadership

Miller also looking for new craft opportunities, Long tells BBD.

Miller Brewing Company led beer industry pricing in 2007 as it worked to transform its portfolio, Miller CEO Tom Long told Beer Business Daily in a wide-ranging interview.

Long told BBD in an interview Thursday that “the idea of transforming our portfolio has brought such a big swing in our economics.” Citing Nielsen supermarket data for the year 2007 through December 8, Long said:

"Miller Brewing average pricing was up 4%, including Chill, A-B was up 1.9%, and Coors was up 2.5%. When you take Chill out of the equation, Miller [Brewing] is still up 2.8%. So even without Chill, we are still leading pricing and mix up."

The Jacob Leinenkugel Brewing Company, which is owned by Miller, played a role in Miller’s improved performance in the higher end of the beer business. And while Leinie’s will remain Miller’s man craft play, Long said Miller is keeping its eyes open for other opportunities.

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.

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.

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.

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.

Living the High Life in C-Stores

Second-fastest growing brand in the channel.

Miller High Life was the second-fastest growing brand in convenience stores for the four weeks ended November 3, according to beer sales statistics from Nielsen.

Miller High Life, driven by advertising featuring the delivery guy played by Windell Middlebrooks, gained 0.4 points of case share and 0.2 points of dollar share during the period.

It’s the 11th straight month in which Miller High Life gained share. And Miller High Life’s growth was widespread, with 52 percent of all measured markets seeing an increase.

Miller High Life’s performance helped boost Miller Brewing Company’s case share and dollar share by 0.4 points. Miller Chill has a 0.2 share in the channel. Steel Reserve picked up 0.2 points.

Anheuser-Busch saw its case share slip by 0.6 points and its dollar share fall by 0.6 points. That’s despite strong performance by Bud Light, which gained 0.6 points of case share and 0.5 points of dollar share.

Coors Brewing Company gained 0.3 points of case share and 0.3 points of dollar share. Coors Light led the way, adding 0.2 points of case share and dollar share.

Miller STRs Up 1.4 Percent

Miller Lite sales up 2.1 percent on higher prices.

Miller Brewing Company posted a 1.4 percent increase in organic sales to retailers during the six months ended September 30 driven by strong performances from Miller Lite, Miller Chill and worthmore brands.

Domestic net revenue per barrel increased by 3.9 percent due to strong volume and pricing performance by Miller Lite, strong overall portfolio pricing and a migration of the brand portfolio to higher-margin, higher-growth brands.

Miller’s earnings before interest, taxes and amortization (EBITA) increased by 18.5 percent to $300 million, driven primarily by price increases and higher volumes. EBITA includes $16 million due to a retrospective cost adjustment with a can supplier.

Miller’s EBITA margin increased to 10.8% from 9.6%, as unit revenue improvements, favourable mix and the effect of the settlement offset increases in marketing and other costs.

Revenue increased by 6 percent to $2.78 billion.

Miller’s performance was disclosed Thursday in conjunction with SABMiller’s earnings.

"This has been a strong start to the year, demonstrating the strength of our brand portfolio and the health of our businesses,” SABMiller CEO Graham Mackay said in a release. “We have delivered another excellent performance in Europe, and a pleasing return to growth in North America, and our Asian businesses have continued their dramatic momentum with lager volume gains ahead of their respective markets. At the second anniversary of our Bavaria transaction, our volumes have grown strongly in Latin America and our investment plans remain on track."

Miller Lite returned to growth in the period, posting a 2.1 percent increase in sales to retail. At the same time, it increased the average case price by 2.1 percent.

Miller’s worthmore brands also showed strong growth. Peroni Nastro Azzurro’s STRs increased by more than 50 percent. The Leinenkugel’s franchise grew by 27 percent.

Miller Chill, meanwhile, is on track to exceed its first year retail volume target of 400,000 barrels.

Sparks volume grew by 10.8% on a proforma basis during its first full year in the Miller system.

Miller High Life also returned to growth, with STRs up 1.0%, driven in part by the popular delivery guy advertising starring Windell Middlebrooks. Average case prices were up 2.9 percent in supermarkets nationally.

Icehouse STRs were up by 2.0 percent.

Miller Genuine Draft performed in line with full calorie beers, with STRs down 9.3 percent.

Faced by strong competitive pressure from economy beers, the Milwaukee’s Best franchise saw STRs slip 4.0 percent.

Counting new brands, Miller’s STRS increased by 5.9% over the six months (1.4% on an organic basis), while reported domestic shipments increased by 6.7%.

“Miller will continue to increase brand investment to support its current volume momentum,” the company said in a release. “The business will continue to face input cost pressures.”

The SABMiller release can be seen here.

Sparks Recognized As Hot Brand

Named to Ad Age’s Marketing 50.

Advertising Age this week named Sparks as one of 2007’s “Marketing 50.”

It’s an honor the magazine gives to brands that distinguish themselves through innovative marketing and commercial success.

In the case of Sparks, Ad Age pointed out that Miller Brewing Company faced a challenge in marketing a brand that had underground cachet.

Ad Age recognized Miller’s ability and flexibility in crafting a marketing strategy that was right for the brand.

From the story:

"Miller has leaned heavily on brand ambassadors (known as "Sparkitechts"), ads in counterculture magazines and unorthodox sponsorships such as a relationship with national air-guitar champion William Ocean. The upstart brand grew sales 40% in 2006 and is reportedly on pace to sell 4 million cases this year. 'We've tried hard not to Millerize it,' says Randy Ransom, the 45-year-old chief marketing officer. 'We've been doing mass marketing a long time, and this taught us a different way.'"

Ad Age also named Heineken Premium Light to this year's list.

The story can be seen here.

Miller Chill Heads to Australia

Beer to be exported from U.S.

Miller Brewing Company is exporting Miller Chill to Australia, the Wall Street Journal reported today.

The new brand -- a light beer brewed with a hint of lime and salt -- hit the Down Under today.

From the story:

"SABMiller selected Australia as Chill's first international market because of similarities between the Australian and U.S. markets, [Miller spokesman Julian Green] said. SABMiller has about half of a percent of total volume in Australia, according to Mr. Green. The company will import Miller Chill from the U.S., rather than having it brewed in Australia. The average price of a six-pack will be 13 Australian dollars ($11.87)."

Miller Chill, which was launched in test this past spring and went national in the early summer, has surpassed sales targets for the year and has achieved positive cash flow, the story said, citing Miller sources.

Miller Chill has surpassed Heineken Premium Light, Michelob Light and Modelo Especial in dollar share in supermarkets.

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

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 Seasonality

Autumn performance mirrors other worthmore brands.

The seasonality of Miller Chill has been the topic of a lot of talk and writing in recent weeks. But much of that discussion misses an important piece of context.

It’s this: After Labor Day, beer category share in supermarkets shifts from worthmore beers (higher-priced beers such as imports, crafts and Miller Chill) to lower-priced brands. Occasions during this time – think tailgating – skew toward lower-priced segments.

Indeed, Corona Extra has experienced post-Labor Day share declines in supermarkets the past three years, according to beer sales statistics from Nielsen.

So a decline in Miller Chill -- which has surpassed Heineken Premium Light, Michelob Light and Modelo Especial in dollar share in supermarkets -- after Labor Day isn’t all that surprising.

Of course, worthmore beers bounce back -- and their share peaks -- over the winter holidays as shoppers splurge.

So the challenge for Miller Brewing Company is to make sure that it gets its share of that surge, which is the objective of a variety of marketing programs, including a new on-premise push, increased on-premise trial programs and new TV ads with steady support.

Brew Blog covered Miller's plans to step up Miller Chill support here.

Leinenkugel Rolls Out Russian Imperial Stout

Second in “Big Eddy” line.

The Jacob Leinenkugel Brewing Company is rolling out a Russian Imperial Stout as it continues to learn more about big beers.

Big Eddy Russian Imperial Stout, the second in the Big Eddy series, hits select markets in Michigan and Wisconsin within the week. In Wisconsin it will be available on draft at select accounts and in 4-pack bottles in the off-premise. It will be available only in the off-premise in Michigan.

The “Big Eddy” moniker is derived from the name of the spring that feeds the Leinie brewery in Chippewa Falls, Wis. Beginning in late February, Leinenkugel’s tested its first big ale, Big Eddy Imperial IPA.

Brendan Noonan, brand manager for Leinenkugel’s, said the 140-year-old brewer (which is owned by Miller Brewing Company) says while the “big beer” area (think brews such as double IPAs, Russian imperial stouts and barley wines) is relatively small, it’s an area of growing interest among craft beer enthusiasts.

“Some people are looking for something a little more special,” he says. “We do feel this is a growing part of the market.”

Dick Leinenkugel, vice president of marketing for Leinenkugel’s, said Big Eddy fits in with the brewer’s tradition of experimentation and of offering consumers a varied array of beers. Indeed, Leinenkugel has said, “What defines craft is having a variety of interesting styles of beer.”

“We’ve always enjoyed a spirit of innovation at Leinenkugel’s, whether it be combining apples and cinnamon in beer to come up with Leinenkugel’s Apple Spice, or being the first to launch a shandy into the United States,” he says. “We stay in touch with our markets and our consumers and noted the increasingly popularity of “big beers” especially with the aficionado drinker.”

Wisconsin markets slated for Big Eddy Russian Imperial Stout include Madison and Milwaukee. In Michigan the targeted markets are Detroit and Grand Rapids.

Big Eddy Imperial IPA ranked in the 99th percentile of double IPAs on ratebeer.com. To the see reviews, go here.

Big Packs Boosting Bud Light, Coors Light

30- and 36-packs gaining share in supers.

Anheuser-Busch and Coors Brewing Company have been placing increased focus on large packages to help drive their flagship light brands in supermarkets, according to beer sales statistics from Nielsen.

According to Nielsen, 30- and 36-pack cans have recorded a 1.8 share point increase in total Bud Light volume over the year-earlier period.

Meanwhile, Coors appears to have placed more promotional focus on 36-pack cans, as evidenced by increased feature, display and discount support.

This is part of a long-running trend. The 30/36 pack cans account for 19.6 percent of Coors Light’s volume in supermarkets today; in November 2004 they accounted for 15.7 percent. For Bud Light, big packs represent 15.9 percent of volume now, compared to 12.5 percent in November 2004.

The shift has been less dramatic with Miller Lite: 9.8 percent now versus 8.6 percent in November 2004.

Big boxes can help drive volume. But they also generally have lower average case prices, so their growth can “pull down” brand-level prices.

Miller, Coors Gain Share in C-stores

A-B decline continues.

Miller Brewing Company and Coors Brewing Company gained volume and dollar share in convenience stores during the four weeks ended October 6, according to beer sales statistics from Nielsen.

Miller gained 0.3 points of case share in supermarkets, thanks to Miller Chill, which carved out a 0.3 point share, and Miller High Life, which added 0.3 points.

Miller’s dollar share also increased by 0.4 points, driven primarily by Miller Chill and Miller High Life.

Coors saw its case share increase by a half point as Coors Light added 0.4 points and the Keystone franchise picked up 0.1 points. Blue Moon was flat.

Coors’ dollar share increased by 0.5 points.

Anheuser-Busch, meanwhile, continued to lose share in the channel.

A-B’s case share slipped by a half-point. Budweiser lost a full point of share. The Bud franchise lost 0.7 points, as a gain by Bud Light (up 0.2 points) wasn’t enough to offset declines by Bud and Bud Select. This marks the 20th time in the past 21 months in which the Bud family has suffered a year-over-year volume share decline.

Meanwhile, A-B lost 0.8 points of dollar share. The Bud franchise saw dollar share slip by 0.9 points as even Bud Light ceded ground, losing a tenth of a point.

A silver lining for A-B: Comps get easier as the year comes to an end.

Miller Stepping Up Chill Support

New ads, packaging on tap.

MILWAUKEE -- Miller Brewing Company is stepping up marketing support for Miller Chill with new ads, programs and packaging to maintain momentum for the brand, company executives said last Thursday here at a distributor meeting.

Miller Chief Marketing Officer Randy Ransom laid out five components for Miller Chill marketing over the next six months to drive awareness and trial and maintain its solid base. They are:

1. New advertising that builds on the theme “Chill is in the air.”
2. A steady national media plan.
3. An on-premise plan to push sampling.
4. Holiday off-premise promotional programs and cross-promotions.
5. New packaging including a 22-ounce, single serve bottle. This will be followed in February with an aluminum bottle targeted for “the right accounts.”

Tom Cardella, Miller’s executive vice president of sales and distribution, called on distributors to maintain support for Miller Chill. Competitors are sure to come, he said.

“We were the first ones out of the gate with a differentiated product that makes us all a lot of money,” he said. “A-B sees that now and wants a piece of the action.”

New Look for Miller Lite

Trying to build on brand momentum.

MILWAUKEE -- Miller Lite is getting a new visual identity as Miller Brewing Company tries to build on momentum behind its flagship brand.

The new primary and secondary packaging, as well as new advertising, were unveiled at Miller's regional meetings earlier this week.

The new, stand-apart look for Miller Lite is intended to give the beer a modern, differentiated look as Miller continues its effort to establish Miller Lite as the “ultimate light beer,” Miller Chief Marketing Officer Randy Ransom said at Thursday's meeting in Milwaukee.

Before showing the new packaging, Ransom highlighted some Miller Lite stats: Volume was up 2.1 percent from April through September; on premise volume grew by 3.3 percent in July and August; and Miller Lite’s average price has increased 2.1 percent since April compared with only 1.5 percent for Bud Light.

But Miller knows “we still have a great deal of work ahead and none of us are resting on any laurels,” he said.

The new logo emphasizes the blue background and simplifies and elongates the swirl. The simplified swirl (the “all natural pilsner” icon is dropped) extends beyond the dimensions of the packaging (glass, bottle or can) to provide strong visual branding at retail.

Secondary packaging is getting updated with a cleaner look as well. Two panels of secondary packaging feature a glass pour and two show a single bottle or can.

The packaging shows “a brand that is very serious about separating itself from the competition,” Ransom said. “The look is very disruptive and challenges the status quo of typical beer aesthetics and the perceived ‘sameness’ we are seeing within the beer category.”

The new packaging comes to market in the spring.

Ransom highlighted the current ad campaign for Miller Lite, which includes “More Taste League” work tied to football; new “blue and whites” that sharply drive points about Miller Lite’s attributes ; new humorous “World Beer Cup” spots that drive the “4-Time World Beer Cup Winner” credentials; and new Hispanic work.

He also pointed out how Miller Lite is positioning itself as the alternative to Bud Light with new work from BBH. The “Trucker” spot, which started airing recently, shows a Bud Light truck stuck behind a Miller Lite truck. He also previewed a humorous spot called “Dalmation.”

Commenting on the Miller Lite work, Jim Doney, president of Chicago Beverage Systems said: "That hard right turn we took on Lite six months ago was definitely the way to go."

Miller CEO: We’re “determined to build off momentum”

“Sharper, bolder, faster.”

MILWAUKEE -- Tom Long, President and CEO of Miller Brewing Company, on Thursday told distributors the brewer won’t get distracted in wake of the recently announced joint venture with Coors Brewing Company.

“We are determined to build off the momentum that (Miller and our distributors) established together and create additional momentum that will carry right into the formation of the new company,” Long said at a