27 Jan 2014 US: As brewing giants push craft beer, Bud and Miller suffer
Goose Island is the new Bud. So are Shock Top and ZiegenBock. And Leinenkugel’s and Blue Moon, for that matter, could be called the new Coors or Miller.
Those brands are all owned by the world’s biggest brewers, which are aggressively rolling out products designed to appeal to fans of craft beer. But they’re not putting the microbrewers who started the movement out of business.
Instead, the new labels are taking sales from already-troubled mass-market brands owned by the industry giants peddling these crafty brews. Analysts say that may actually be a boon for their owners as margins can be “considerably higher” for craft beers, according to researcher Canadean.
“I don’t really drink Bud Light anymore,” said Tait Foster, a 27-year-old who works at a foreign policy research group in New York. Instead, he’s started sampling a wider range of brews such as Goose Island and Blue Moon. “Bud Light, Coors and all those others are like beer-flavoured water.”
Sales of craft beers grew 16 percent in volume over the past year versus a 1.7 percent decline for the biggest US beer brands, according to researcher Symphony IRI Group. Sales of Bud Light were off by 1.3 percent and Miller Lite slid 4.4 percent.
That’s prompted multinationals like Anheuser-Busch InBevand MillerCoors, with about 75 percent of the US market between them, to introduce their own craft-like brews — many of which make little or no mention of their corporate parentage.
AB InBev paid $38.8 million for Goose Island in 2011, five years after it signed a distribution deal with the Chicago brewer. And in 2006 it created Shock Top, a Belgian-style wheat ale, to take on Blue Moon, the biggest of the craft-like labels owned by industry leaders. The Goose Island brands soared 69 percent last year, AB InBev said, citing Symphony IRI data, while Shock Top beers jumped 14 percent.
MillerCoors, co-owned by SABMiller and Molson Coors Brewing, in 2010 set up a unit called Tenth & Blake to focus on Blue Moon and other niche brews as well as premium imports such as Pilsner Urquell from the Czech Republic and Cusquena from Peru. Today, it has more than a dozen brands, including two hard ciders.
“We looked at where the growth sectors were, and craft was exploding,” said Tom Cardella, president of Tenth & Blake. “When you look at the marketing of craft, it requires a different approach.”
As the popularity of these beers cuts into sales of the biggest brands, it’s fostering a new crop of mid-sized labels, according to Trevor Stirling, an analyst at Sanford C Bernstein. Moreover, craft brews are wooing drinkers back from wine and spirits. While craft beer currently has only about 6 percent of the market, that share could more than triple in the next five years, Canadean predicts.
“There’s a new generation choosing a much broader repertoire of drinks,” Stirling said. “It’s virtually inevitable that the larger brands will lose market share to craft.”
That’s not to say that the big brands are going to give up on their mass market brews anytime soon. With about 21 percent of the beer market by volume, Bud Light alone is about triple the size of the entire craft sector, Symphony IRI data show.