17 Sep 2013 US: Why big beer is going flat
The industry’s biggest players, Anheuser-Busch InBev and SABMiller, whose mega-brands have dominated America’s tap handles and supermarket shelves for decades, are being battered by a new wave of competition from inside and outside the beer market and starting to lose their grip.
On one side, newly aggressive liquor brands are stealing share, especially among the coveted young-adult demographic. As a result, beer has seen its piece of the total alcohol market fall to 48.8% last year from 56% of sales in 1999, according to the Distilled Spirits Council of the US.
On another, craft brews, once a trendy badge for beer geeks, are now mainstream options for Joe Sixpack, a development that has contributed to eight of the top 10 US beer brands losing share at stores in the 52 weeks ending Aug 11, according to IRI. It tracks convenience stores, supermarkets, drugstores, mass-market retailers and select club stores.
Among the losers are No 1 Bud Light, whose sales fell 0.7% in the period to $5.9 billion, and No 4 Miller Lite, down 2.5% to $1.9 billion. Though light beers began declining about five years ago, their descent has accelerated this year, noted Benj Steinman, president of trade publication Beer Marketer’s Insights. “And that really matters,” he said.
That’s because light beers account for well over half of the volume at both A-B InBev and MillerCoors, Steinman said. Together the two brewers control nearly 97% of the light-beer market, equaling some $7.8 billion in store sales from January through mid-July, according to IRI.
The situation is grim, but not irreversible. The two big brewers still control 74% of beer-shipment volume in the US by Beer Marketer’s Insights’ calculations. And with their massive scale and marketing machines, the companies have experienced early success with new brands meant to take on liquor and smaller craft beers.
But before the beer industry can regain its buzz, it’s important to understand the six-pack of hurdles it has in front of it….
Big brands are also resorting to packaging as a major marketing tool. Coors Light is pushing a “double-vented wide-mouth can” that the brewer says produces a smoother pour. Miller Lite, which launched in 1975 as the first successful mainstream light beer, will be repackaged in its original can design from Jan 1 to March 15, harkening back to its glory days as the beer that “tastes great” and is “less filling.”
There’s growing reason to believe that the best advertising in the world may not heal the light-beer category. Only 30% of drinkers describe such beers as “tasting great,” down from 33% in June 2012, according to a recent survey by ConsumerEdge Insights’ Beverage DemandTracker, a periodic survey of U.S. adults who consume alcohol at least once a week.
Consumers who once reflexively ordered beers by brand are now scanning menus organized by taste profiles and alcohol content. Consider the Yard House chain, whose website presents beer options under headers such as “malty,” “dark” and “bitter.” How can mainstream light beers possibly compete?…