Beer sales falling flat as wine, other beverages grow in popularity

Sunday, August 06, 2006

By Len Boselovic
Pittsburgh Post-Gazette

"SOPHISTICATED BEER DRINKER."

If the above phrase leaves an oxymoronic aftertaste on your palate, you
have an idea of what beer makers are up against.

U.S. beer shipments last year were flatter than a stale ale, falling
0.1 percent according to the Beer Institute. The industry group says
shipments to the U.S. market -- which accounted for about 86 percent of
overall business -- declined 2.2 percent to 178.8 million barrels. The
drop was offset by a 7.2 percent increase in imports and an 8 percent
increase in exports.

Shipments fell in 30 states including Pennsylvania, where they declined
less than 1 percent to 8.6 million barrels.

Meanwhile, the Wine Institute reports wine consumption grew 5.2 percent
in 2005 while the Distilled Spirits Council says sales rose 2.9 percent
based on the volume of alcohol sold.

Marketing experts say the disparity indicates the degree to which wine
and distilled spirits producers have capitalized on changing consumer
tastes. Drinkers are more sophisticated, willing to try something new,
and looking for different beverages that are appropriate for different
occasions.

More importantly, they don't want to be seen drinking the same thing as
everybody else.

Brewers, long criticized for advertising that targeted the lowest
common denominator, are finally realizing that a crucial market is more
sophisticated than their baby boomer parents.

"This twentysomething is so different from anything we've seen before,"
says Judy Ramberg of Iconoculture, a consumer research consulting firm.
"They don't want to be seen as a guzzler, a dumb guy, six-pack drinker.
They want to be seen as a connoisseur."

The beer industry created those perceptions with high-priced
advertising: Old Milwaukee's Swedish Bikini Team, Miller Lite's
"Catfight" ad featuring two scantily clad women trying to resolve the
"tastes great, less filing" debate, and Coors Light's bikini twins.

"When you drink a lot of wine, you're refined. When you drink a lot of
beer, you're just a beer drinker," says Michael R. Solomon, an Auburn
University professor whose specialty is consumer behavior.

Perception is only part of the problem. While major brands such as
Budweiser, Miller Lite and Coors Light still dominate the market, all
the growth is coming from craft brewers and imports. That reflects what
Mr. Solomon calls "some sort of boredom with the major brands."
Drinkers want something unique, something that makes them stand out.

"Domestic beer occupies this territory of being ordinary, every day,"
says Jim Forrest, vice president of Synovate, a market research firm.
"It's hard to get incremental growth when you're perceived to be
ordinary and every day."

Mr. Forrest says wine and distilled spirits producers have done a good
job of fashioning strategies around occasions to consume their
products. Craft and import beer producers have done the same, he says.


The importance of appealing to more discriminating, higher-brow tastes
is evident in the distilled spirits industry. While overall sales grew
8 percent last year, sales of premium products grew at a double-digit
clip, says David Ozgo, chief economist for the Distilled Spirits
Council. Consumers view a $30 or $40 bottle of vodka as an affordable
luxury and "tend to want to drink better," he says.

Brewers are catching on. To tap demand for specialty brews,
Anheuser-Busch introduced Beach Bum Blonde Ale this summer, the fourth
in its lineup of seasonal beers. "Beach" and "blonde" may conjure
images of previous advertising, but the marketing literature takes the
high road, highlighting the ale's "rich golden color, pleasant hop
aroma and slightly spicy and malty taste."

The industry hopes to capitalize on more discriminating palates through
its Here's To Beer campaign, an initiative spearheaded largely by
Anheuser-Busch. Advertising features Spike Lee and other famous people
describing who they'd like to share a beer with.

"You want to romance the product. The young consumer wants a variety of
experiences with their drink," says Kevin Sproule, general manager of
Fuhrer Eagle Sales and Service, the South Side wholesaler of
Anheuser-Busch products.

The St. Louis brewer has stakes in two craft brewers -- Redhook Ale
Brewery of Seattle and Portland, Ore.-based Widmer Brothers Brewing.
More recently, it paid $82 million for the Rolling Rock brands, beers
that are marketed nationally but retain a cult following because of
Rolling Rock's green bottle.

Ms. Ramberg says Anheuser-Busch realizes it has to grow by increasing
its portfolio of specialty products, not by getting more people to
drink its flagship brands. The danger is that the specialty brands will
lose some of their appeal if drinkers realize who's making them.

"If beer drinkers find out they're involved in some of these craft
beers, they'll lose all of their cachet," says Ms. Ramberg, a Heineken
drinker.

Mr. Forrest disagrees, arguing many drinkers don't connect the dots. He
says many people in the industry don't realize Blue Moon Belgian White
is made by Molson Coors, the world's fifth-largest brewer. Protests
from diehard Rolling Rock aficionados notwithstanding, the iconic brew
should give Anheuser-Busch a buzz.

"From a consumer standpoint, as long as they stay true to what that
brand represents ... they'll still have the following," Mr. Forrest
says.

There are some signs the industry's new approach is paying off. Nearly
half of the 250 bartenders and bar managers surveyed recently by
Synovate are forecasting domestic beer sales will top 2005 results,
while only one out of 25 forecast a flat to light year for beer.

"Bartenders may be reacting to the domestic beer industry's renewed
focus to appeal to a wider range of consumers and their innovative
strategies to make beer consumption more palatable," Mr. Forrest says.


------------------------------------------------------------------------

(Len Boselovic can be reached at or
412-263-1941. )

"tomkanpa" > wrote in message
ups.com...

> Beer sales falling flat as wine, other beverages grow in popularity

The article would have been more effective - and accurate - if it had
focused more on what's happening within beer sales. Beer sales may be flat
overall, but there are significant shifts occurring within the segment that
don't fit with the article's premise that beer = unsophisticated. Craft beer
and quality imports are gaining market share while mainstream beer is losing
or flat. That would confirm the article's contention that drinkers are
becoming more sophisticated. It errs hugely by lumping all beer together.

-Steve

Steve Jackson wrote:
> "tomkanpa" > wrote in message
> ups.com...
>
>> Beer sales falling flat as wine, other beverages grow in popularity
>
> The article would have been more effective - and accurate - if it had
> focused more on what's happening within beer sales. Beer sales may be flat
> overall, but there are significant shifts occurring within the segment that
> don't fit with the article's premise that beer = unsophisticated. Craft beer
> and quality imports are gaining market share while mainstream beer is losing
> or flat. That would confirm the article's contention that drinkers are
> becoming more sophisticated. It errs hugely by lumping all beer together.

The comparison of beer to wine and spirits is off because the writer didn't
elaborate on the causes of the rise of sales of wine and spirits. Wine is going
through a major change as the US and Australia become the major producers. They
grow grapes in areas with better weather and more sunny days than Europe and
mid-level producers have a larger supply of good quality varietal juice for
blends. As a result, where you once either bought a French varietal for $25 per
bottle or a blend (like Gallo chablis) for $5 per bottle, you can now buy a good
merlot or chardonnay for less than $10 per bottle. As for spirits, going to a
liquor store is like going to a bar with 50 beer taps. A huge market has
developed for flavored vodka, gin, and rum, as well as liqueurs and pre-mixed
drinks.

Compared to this, the major brewers have been sitting in place, relying on their
flagship products and old strategies. I don't expect them to stop being the big
three, but I don't see how they can reverse their losses in the beverage trade
without big changes.

Tom W

"Tom Wolper" > wrote in message
news:1JKBg.10971$Qu4.2993@trnddc04...
> Steve Jackson wrote:
>> "tomkanpa" > wrote in message
>> ups.com...
>>
>>> Beer sales falling flat as wine, other beverages grow in popularity
>>
>> The article would have been more effective - and accurate - if it had
>> focused more on what's happening within beer sales. Beer sales may be
>> flat overall, but there are significant shifts occurring within the
>> segment that don't fit with the article's premise that beer =
>> unsophisticated. Craft beer and quality imports are gaining market share
>> while mainstream beer is losing or flat. That would confirm the article's
>> contention that drinkers are becoming more sophisticated. It errs hugely
>> by lumping all beer together.
>
> The comparison of beer to wine and spirits is off because the writer
> didn't elaborate on the causes of the rise of sales of wine and spirits.
> Wine is going through a major change as the US and Australia become the
> major producers. They grow grapes in areas with better weather and more
> sunny days than Europe and mid-level producers have a larger supply of
> good quality varietal juice for blends. As a result, where you once either
> bought a French varietal for $25 per bottle or a blend (like Gallo
> chablis) for $5 per bottle, you can now buy a good merlot or chardonnay
> for less than $10 per bottle. As for spirits, going to a liquor store is
> like going to a bar with 50 beer taps. A huge market has developed for
> flavored vodka, gin, and rum, as well as liqueurs and pre-mixed drinks.
>
> Compared to this, the major brewers have been sitting in place, relying on
> their flagship products and old strategies. I don't expect them to stop
> being the big three, but I don't see how they can reverse their losses in
> the beverage trade without big changes.
>
> Tom W
>
A-B has been experimenting quite a bit of late so they aren't exactly
sitting in place. ;^)

I'd certainly like to see SAB Miller and Coors/Molson get off their duffs...



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Bill Becker wrote:

> A-B has been experimenting quite a bit of late so they aren't exactly
> sitting in place. ;^)
>
> I'd certainly like to see SAB Miller and Coors/Molson get off their duffs...

I know A-B's making an effort, but I haven't seen any new product, so I assume
it's not that serious yet.

Tom W

"Tom Wolper" > wrote in message
news:A2PBg.17029$gU4.1814@trnddc07...
> Bill Becker wrote:
>
>> A-B has been experimenting quite a bit of late so they aren't exactly
>> sitting in place. ;^)
>>
>> I'd certainly like to see SAB Miller and Coors/Molson get off their
>> duffs...
>
> I know A-B's making an effort, but I haven't seen any new product, so I
> assume it's not that serious yet.
>
> Tom W
>

They've put out a few seasonals like(currently) Beach Bum, Jack's Pumpkin
Spice, Winter Bourbon Cask Ale and a few others. That's wayyyy thinking
outside of the box for them. :^)




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"Bill Becker" > wrote in message
...

> A-B has been experimenting quite a bit of late so they aren't exactly
> sitting in place. ;^)

A-B has been messing with stuff for at least a decade, and I'm not just
counting crap like ice beer. Michelob amber bock has to be getting close to
10 years old now, and there have been many other attempts over the years.
The big problem with A-B's efforts is that they have tried too much to chase
after fleeting trends, rather than finding exploitable niches.

> I'd certainly like to see SAB Miller and Coors/Molson get off their
> duffs...

Coors already has, and they've had some reasonable success. It's faded
sharply in recent years, but they did have a pretty good run with Killian's
Red which, while far from a spectacular beer, was significantly different
than their standard offerings. And Blue Moon Belgian White seems to still be
clipping along just fine, and isn't a bad beer.

Then again, those beers hit the market a dozen years ago or better, and
there hasn't been much new since then.

-Steve

"Bill Becker" > wrote in message
...
> I'd certainly like to see SAB Miller and Coors/Molson get off their
> duffs...

Would that "duff" be Henry K. Duff's Private Reserve?

>>>>> I'd certainly like to see SAB Miller and Coors/Molson get off their
>>>>> duffs...

Miller certainly did. They bought Celis in Austin, TX. :0o

Douglas W Hoyt wrote:

>>>>>>I'd certainly like to see SAB Miller and Coors/Molson get off their
>>>>>>duffs...
>
> Miller certainly did. They bought Celis in Austin, TX. :0o

Miller then proceeded to run Celis into the ground, while Pierre Celis
went back to Belgium, had Celis White brewed there, and has since
introduced some other beers, including the splendid Grottenbier.

Since then, Miller sold off the former Celis brand to Michigan Brewing,
who revived the brand. Miller is (as noted above) now part of the
international SABMiller brewing combine, with major operations in
the USA, South Africa, and portions of Europe, including Pilsner
Urquell in the Czech Republic.
--
dgs

dgs > wrote:
: Douglas W Hoyt wrote:
:
:>>>>>>I'd certainly like to see SAB Miller and Coors/Molson get off their
:>>>>>>duffs...
:>
:> Miller certainly did. They bought Celis in Austin, TX. :0o
:
: Miller then proceeded to run Celis into the ground, while Pierre Celis
: went back to Belgium, had Celis White brewed there, and has since
: introduced some other beers, including the splendid Grottenbier.
:

I seem to recall that their announced intention, at the time, was to let
Pierre maintain complete control of the brewing process while they
(Miller) would improve the distribution. In order to do this they had
to withdraw the product from current distribution for x amount of time
(was it 6 months, a year?). It sounded weird to me at the time.
Needless to say it disappeared from the shelves nefer to return again
except for local distribution around Austin, TX.

That was around '95 IIRC.


--
Bill
AT DOT
reply to bbenzel adelphia net

Douglas W Hoyt > wrote:
>>>>>> I'd certainly like to see SAB Miller and Coors/Molson get off their
>>>>>> duffs...
>
>Miller certainly did. They bought Celis in Austin, TX. :0o

Ouch!

I was pleased last weekend to drink a Celis (Michigan)
Grand Cru from my Celis (Austin) Grand Cru glass. It seemed
a bit grainier, not quite as smooth, and a tad lighter
(body and color) than the original version, but still GOOD.
--
Joel Plutchak "Sometimes I think we're alone in the universe, and
plutchak@[...] sometimes I think we're not. In either case the idea
is quite staggering." - Arthur C. Clarke

"vincent p. norris" > wrote in message
...
> >I'd certainly like to see SAB Miller and Coors/Molson get off their
> >duffs...
>
> I'd be delighted to see them go belly-up!
>
> vince norris
>
I'm sure A-B is in agreement.



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>I'd certainly like to see SAB Miller and Coors/Molson get off their duffs...

I'd be delighted to see them go belly-up!

vince norris

>> >I'd certainly like to see SAB Miller and Coors/Molson get off their
>> >duffs...
>>
>> I'd be delighted to see them go belly-up!
>>
>> vince norris
>>
>I'm sure A-B is in agreement.

A-B was included in spirit, if not explicitly.

vince norris

In article >, dgs >
wrote:

> Miller then proceeded to run Celis into the ground, while Pierre Celis
> went back to Belgium, had Celis White brewed there, and has since
> introduced some other beers, including the splendid Grottenbier.

And don't forget that Pierre is now *back* in Austin, working with Real
Ale (okay, that's Blanco, about 30 miles from Austin, but close enough),
and we should have Celis designed and brewed beers on our shelves here
shortly. When that happens, I'll be glad to arrange some trades to tide
y'all over 'til Real Ale is ready to move up to wider distribution.
(Might be a while; they've just quadrupled their capacity and have
already maxed out trying to keep their current accounts happy.)

dave