MillerCoors LLC and Anheuser-Busch InBev NV (ABI), after years of focusing on craft ales, ciders and imports, are paying more attention to the working man’s drink of choice: cheap beer. The two brewers, which account for three-quarters of the U.S. beer industry, will boost marketing this year for economy brands such as Keystone Light and Busch Light.
During the televised Nascar race on March 2, MillerCoors will begin airing the first national advertising for Keystone Light since 2011. A similar campaign for Miller High Life, which calls itself the “champagne of beers,” starts in April. AB InBev will expand its marketing for Busch to year-round and has introduced a fuller flavored version called Busch Signature Copper Lager.
“Regular guys like to drink beer, there’s no doubt about it,” MillerCoors Chief Marketing Officer Andy England said in an interview. “We’ve struggled with those brands a little bit.”
As persistent unemployment after the recession left blue-collar workers with less money for beer, brewers shifted resources to higher-margin brands such as MillerCoors’s Blue Moon and Leuven, Belgium-based AB InBev’s Bud Light Lime. As the economy rebounds, companies are racing to win with a crowd that is among the most loyal and thirsty of beer drinkers.
Photographer: Ben Torres/Bloomberg
The average economy-beer drinker spent about $252 last year on brews and made 18 trips...Read More
Below-premium beer sales volume fell about 3.5 percent last year, a decline that accelerated to 4.8 percent in December, according to Nielsen. Sales of above premium beers, including crafts, imports and high-end domestics, grew 11 percent last year.
Beer Market
The retreat in economy beer was important because the segment, at about $6 billion annually, accounts for a fifth of the $31 billion U.S. beer market, according to Nielsen. By volume, the segment makes up a quarter of the market.
“It’s big,” Andrea Riberi, Nielsen’s senior vice president for alcoholic beverages research, said of the economy-beer segment. “They purchase more often, they spend more and they are the most loyal.”
The average economy-beer drinker spent about $252 last year on brews and made 18 trips to the store, more than any other beer drinker. That compares with $169 and 11 trips for the average craft drinker.
The Keystone ad by MillerCoors, a joint venture of Denver-based Molson Coors Brewing Co. (TAP) and London-based SABMiller Plc (SAB), opens with a man in a plaid shirt reeling in a fish and catching it with his bare hand as the voiceover says, “There’s smooth.” A second guy in a plaid shirt does the same with a bigger fish. “There’s really smooth,” the voice says.
Triple-Filtered
A third man, with a beard, baseball cap and fishing vest, snaps his line out of the water and catches a massive fish already mounted on a plaque. “Then there’s triple-filtered smooth,” the voice continues. One of the buddies asks what bait he used. The man holds up a worm mounted on a plaque.
AB InBev recently reached its highest market share ever for the segment after a two-year turnaround, said Edison Yu, the company’s vice president for value brands. A new marketing campaign for Busch will celebrate “everyday” heroes, he said in an e-mailed statement.
Molson Coors rose 0.1 percent to $56.97 at 9:50 a.m. in New York. SABMiller rose 0.7 percent to 2,911 pence in London, while AB InBev was little changed at 75.81 euros in Brussels.
Economy beers sell for about $15 a case, compared with $20 a case for premium offerings such as Bud Light and Coors Light, according to IRI, a Chicago-based researcher. Super-premium brands like Michelob Ultra sell for about $25 a case.
Bought Less
Economy-beer buyers, who skew toward older men with lower-than-average incomes, were pounded when housing and job markets crashed, Riberi said. Those drinkers didn’t necessarily switch to other beverages. They simply bought less, she said.
The decreased demand prompted brewers to shift away from more expensive national advertising campaigns to more regional, online and in-store marketing.
“It was our belief that we could take those dollars elsewhere and better utilize them,” MillerCoors’s England said. “While we have made some good moves, we believe this segment has suffered from not being supported.”
U.S. beer consumption will be little changed this year after sales volume declines in four of the past five years, according to a Feb. 26 report by Moody’s Investors Service Inc. The drops were spurred by high unemployment, a move to more flavorful cocktails by baby boomers and young drinkers alike, and higher prices for value beers to help profit margins, the firm said.
Craft Drinkers
Cheap-beer loyalists aren’t the only customers MillerCoors wants to reach. Craft-beer drinkers also frequently purchase economy brands to supplement their favorite brands, according to Nielsen.
“There are certain times that you want to demonstrate that you are a sharp kind of guy who likes to drink an import,” England said. “And there are other times when maybe you have a 24-pack in the fridge and you like to drink a couple of them when you get home at night and watch the Daily Show.”
MillerCoors declined to say how much it will spend to market economy beers this year compared with last year, citing competitive concerns. The national campaign will include radio and social media as well as in-store marketing and promotions. England said he expects the emphasis to show retailers that the segment is important again so they will provide more shelf space.
“We’re poised to see better trends in the coming year,‘‘ Riberi said. ‘‘As the economy continues to improve and there’s some news in the category, we’re hoping that this segment really comes back.’’
http://www.bloomberg.com/news/2014-02-28/millercoors-joins-ab-inbev-trying-to-regain-joe-six-pack.html
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