Aug 152017
 

While the belief is that the beers driving the retro craze are brands that have already died, the reality is, those beers have truly never died, depending on one’s definition of what dead means.  A couple of national brands, Pabst and Coors, have experienced growth for years, while Miller High Life is showing some signs of returning.  Recently, some regionals have managed to come back to life again, including: Rainer, Lone Star, and even Hamm’s.  On the other hand, other beers have yet to see any real life in their comeback.

Coors and Miller High Life simply turned the clock back by using the core themes that made each brand viable years ago.  Coors is again using the Rocky Mountain theme, while Miller is rerunning its classic theme: If you’ve got the time, we’ve got the beer.  Both brands seem to have hit a positive nerve with the consumer.  Pabst, on the other hand, has tapped into the anti-establishment crowd with young drinkers as an alternative to corporate brands.

The other brands, all tap into their regional roots, but also lean back to previously successful marketing and pricing strategies that make sense in today’s environment.

In 1993, Coors Brewing decided to roll out a clear liquid they named “malternative” beer. This was perceived as the solution to consumers who did not like traditional beers.  At the same time, other CPG companies were experimenting with clear liquids, including Crystal Pepsi and Miller, the later of who tried a liquid called Clear Beer.  Neither product proved to be successful.

In 1994, Coors reportedly spent over $38 million marketing against Zima, a figure equal to, or perhaps more than was spent on marketing for its own Coors Light! While it has been estimated that over 70% of America’s regular beer drinkers sampled Zima, most of those consumers were not repeat purchasers.  That year, Coors sold over 1 million bbl. of Zima.

1994 marked the highest sales for Zima, as the brand quickly found that their demographics skewed young female, with males being adverse to the product.  College kids mixed Schnapps with Zima, making the liquid into a cocktail.  David Letterman even picked up on Zima and added it to his top-ten-list of things to chastise in his humorous remarks.

In an effort to attract males, in 1995, Coors introduced Zima Gold, a higher ABV liquid with a bourbon-and-coke flavor.  Zima Gold lasted only a few months.  By 2000, Coors reformulated the brand once again. This time the product tasted similar to Sprite and the brand was advertised as a thirst quencher for the summer.  Interestingly, this reformulated brand sold 600K bbl.

Two more reformulations were attempted, the first in 2004, by once again increasing the ABV to 5.9% and naming the brand Zima XXX with flavors such as Hard Punch and Hard Orange.  This market, however, was now being dominated by Smirnoff Ice.

Three years later, Coors reversed itself and went back to marketing to females.  Zima was reformulated again with lower ABV, fewer calories and several fruity flavors.  Some think the brand might have made it, however, label changes in Utah, along with higher taxes in California, ended any chance Zima could survive.  Zima was officially laid to rest in 2008.

Once again, however, Coors has resurrected Zima, although for a limited time.  Classified as a seasonal beer, with its iconic bottle and a new formula, Zima seems to have found some legs.  If Zima survives this time, it will be the only product that was resurrected from the dead and lived.  The industry will soon know if Coors will decide to continue with the production and sales of Zima.

Perhaps Coors sees a demographic no one else does: millennials and their Rose wine.  Given the condition of the industry today, no one would be surprised.

Reincarnation occurs because we decide we haven’t learned enough lessons….

 

 

 Posted by at 6:00 am
Aug 082017
 

Mike’s Hard Lemonade was founded in 1999 and headquartered in Lakewood Colorado.  At the time, it was a Canadian company and the liquid was spirit-based, however, due to U.S. restrictions, Mike’s was malt-based when they opened the U.S. market.  It was a very unique product for the time with edgy marketing and the brand quickly took off.

While Mike’s was unique and different, which helped get consumer attention, it was Mike’s culture, at that time that was helping to drive sales.  The western half of the U.S. was led by Paul Harvey.  Paul was in his mid 40s and was highly respected by both wholesalers and employees.

Mike’s team in Texas had a state sales manager in addition to six to seven other sales people.  Their numbers rocked.  During this time period Paul, who, after a business dinner in Denver, was conducting meetings with a wholesaler, failed to show up the next morning for a planned meeting.  After many attempts to contact him, the hotel manager found Paul’s body in bed. Paul had passed away during the night as a result of a massive heart attack.

Paul’s passing began a series of changes that culturally altered Mike’s for years.  Paul’s replacement was a wine salesman from Gallo who brought Gallo’s programs and attitude with him.  People started to leave and were not replaced, and sales began to slow.  By now, other breweries had developed RTDs to compete and made inroads into the category.  But the culture at Mike’s was now toxic.  There were other leadership changes that continued to damage sales and their culture until Mike’s eventually hit the bottom.

A recent story on Mike’s written in Beer Business Daily, focused on comments from their current CEO, who took over in 2012.  He gave great insights regarding the challenges a leader has to overcome after years of negative growth.  By focusing on employees, and creating a positive culture, Mike’s has made a great turnaround.

Slowly, and over the years, Mike’s has experienced double digit growth.  Trimming the SKU number down in their portfolio, while increasing their marketing spend by 75%, added to the fact that management was treating employees positively, showed the industry that beer companies can be successful with the right formula.  It is not that complicated.

Mike’s is one company that shows what can happen by making a change in the positive direction.  Mike’s is a positive example in the beer industry that has, of late, seen so many companies move in a negative direction.

The right leadership says it all.  For example, Bill Hackett’s longtime tenure at Crown made that product a monster in the beer segment, whereas Gambrinus gone the opposite direction.  In fact, Gambrinus could be considered the poster child for negative culture.  Simply talk to any ex-Gambrinus employee, especially the ones from the Modelo era, and you will learn of the less than positive culture of that company.

Many top people from AB, Miller, Coors or others, joined Gambrinus thinking they could handle that way of life, only to be searching for another place of employment within six months.  Other companies including Labatt USA or New Belgium, in their early years, had such cultures which fostered positive growth and positive attitudes. But that has since changed.

Mike’s current leadership has once again been an industry example that a company can be highly successful by just creating an environment that puts people first, not egos.

The manager accepts the status quo, the leader challenges it…

 

 

 Posted by at 6:00 am
Aug 012017
 

Hire sales people who are really smart problem solvers, but lack courage, hunger, and competitiveness, and your company will go out of business” – Ben Horowitz.

Hand held devices, IPads, laptops, cell phones, and computers are all tools of the trade for any beer sales person in today’s market.  There is not a major distributor in the U.S. today that does not provide, or have, the tools of the trade, including state-of-the-art warehousing and logistics, all using the most sophisticated software available.  This evolution of the role of the sales person in today’s beer environment has been nothing but dramatic.

Consider that before the electronic revolution in the time of driver sales, each route maintained a route book.  This route book contained every detail the salesman needed, including the address, buyer’s name, manager, phone number, hours of operation, times of delivery and even what door to use.  The book contained the account sales history and enabled the recording, by the route driver, of each visit and the inventory left from the last visit.  Sales were recorded and displays with pricing were also noted.

The driver knew everything he or she needed to know about each account.  The immediate beer supervisor had access to the same information.  In fact, if he driver was out on vacation, it was easy for the supervisor or swing driver to pick up the book and follow the pages which were delineated by day by stop.  The supervisor and salesman usually met every morning to review any goals or targets.  The process was very simple.

Of course, this was the time when beer wholesalers had limited SKUs and only one or two breweries.  The driver had enough time to actually sell, deliver merchandise, rotate, and even clean signs in addition to driving the truck.

The question arises that with wholesalers today representing hundreds of SKUs from numerous breweries, are salespeople as effective as they were when driver-sales was the norm?  When a wholesaler adds three or four new breweries over a year’s time, are these new brands a bolt on to a pad, or does the wholesaler investment spend and add to their sales team.

There have been times when a wholesaler would take on a new brewery while informing the brewery that the wholesaler will deliver the beer, however, the brewery would  have to provide the sales support.  That brewery could be stuck with no other option other to not go into that market.

Plus, there is the financial consideration. While leading Warsteiner, if a certain state or region grew to 5,000+ HL, we started looking into adding a regional sales manager, and once that area hit 7,000+HL, the trigger was pulled on a hire.  In addition, Warsteiner targeted potential markets where people might be added in the future.

We know that the overall industry STRs are not very good this year and while we can speculate, one reason for this might be the expectations and effectiveness of today’s sales person.  Are they really selling or are they just maintaining their business?  Is it fair to hold them to the same standards as the driver salesmen?  There is no easy answer.

Sales may lead to advertising as much as advertising leads to sales.

 

 

 

 Posted by at 6:00 am
Jul 252017
 

Regardless of what report one reads today concerning beer shipments or sales of beer to retailers, the numbers all reflect negative trends.  Until last week’s reports, which showed some improvement in STRs, the negative numbers continue to accelerate.  Such a downward pattern has not been since the days of the Schlitz decline, with major brands like Miller Lite, Coors Light, Bud Light and Budweiser presenting large decreases in sales.  In fact, Bud and Bud Light are close to double digit negative numbers.

Not surprisingly, these negative trends have caused pundits to throw darts at the reasons causing said losses.  The most commonly reasons sighted include: ineffective beer advertising, when compared to ads for the spirit vendors; aggressive pricing and the number of SKUs; all of which have negatively impacted and have had consequential results in today’s beer industry.

Much of the blame in last week’s report was directed at insufficient beer ads, aptly noting that the ads proved ineffective in moving the needle in a positive direction.  One article pointed out the number of ad agencies Miller Lite had retained over the past years.  Looking at the number agencies listed, it would appear that Miller’s marketing department changed agencies as frequently as most people change their shirts.  None of which have improved Lite’s trends.

All the responsibility, however, does not fall on the shoulders of the brewers. The middle tier could play a much bigger role in these negative trends than initially thought.  Consider the AB wholesaler who has a draft-handle market share of 70%+.  The wholesaler prices all their craft beers at the same PTR with no programing.  Any new handle must come from competition.

An incentive program does not count if a new handle comes from an in-house brand.  On the surface, this seems logical, but in reality, does it?  Such a wholesaler, who engages this type of business model, only hurts the brands they represent.  If a brewer’s strategy is to employ certain tactics, and their wholesaler refuses to execute such tactics because they do not desire to have issues with other in-house vendors, who really wins? A brand cannot get any traction to build consumer demand or sampling.  In fact, it could be viewed as the wholesaler providing brands that do not match the consumers’ desires or, in other words, telling the consumer what to drink, when in fact they should be listening to the consumer. It is a double edged sword.

Going forward, what will the wholesalers do if their major domestic brands continue to hemorrhage as they have for years?  At what point do wholesalers determine enough is enough and begin to support their in-house brands as their suppliers have positioned them?

While there are many wholesalers that do aggressively pursue any and all programs their vendors have, there are an equal number of wholesalers who do not.  Those that do follow such programs should not criticize their major suppliers, as they too, are part of the overall industries’ problems.  The middle tier is equally as deep in this mess.

When you blame others, you give up the power to change.

 

 

 Posted by at 6:00 am
Jul 182017
 

Much has been written about ABI, MC, Heineken, Constellation Brands and others brands, regarding their recent purchases of craft breweries.  This model of large companies purchasing smaller craft breweries was once very rare, but now it almost seems one craft brewer is purchased monthly.  One of the main concerns is the amount of money, or multiples, being paid for these, mostly regional, breweries.  With the recent slowdown in craft sales, there seems to have been some reduction, or slow down, in the purchase of craft breweries.

It will take years to determine if, or how many, of these acquisitions will turn out to be solid business decisions. One only needs to go back several decades to see the consequences of a purchase that went south.

Gambrinus, based in San Antonio, was created in the mid-1980s for the purpose of importing Modelo brands into the eastern half of the U.S.  Not long after Gambrinus was established, the company purchased Spoetzl Brewing, or Shiner, which was about 24 hours from closing its doors.  It was rumored that Gambrinus paid around $1 million for the brewery and subsequently allocated an additional $1million in working capital.  The rest is history.

This acquisition by Gambrinus is arguably the beer industry’s most successful procurement of a craft beer. Shiner is one of the largest craft selling beers in the U.S.  As successful as the Shiner deal was for Gambrinus, it might also hold the distinction of being one of, if not the worst, acquisition in the late 1990s.

In 1998, Gambrinus paid in the neighborhood of $69 million for Pete’s, a contract brewed beer that was, at the time, the second largest selling craft in the U.S.  The beer was already in its early declining stages, and by 2011 was discontinued.

From an investment view, Gambrinus made a stock purchase for Pete’s, the craft having had a pile of cash in the bank which helped offset the purchase price.  Secondly, Pete’s, at that time, owned a state-of-the-art software system which Gambrinus needed.  Acquiring the cash and the software, along with being able to sell the brand for about 13 years, provided a return on the investment and, of course, Pete’s Wicked Ale could always come back as a retro brand in the future.  Gambrinus could tout to having made the best, and worst, acquisitions ever made in the industry.

Constellation Brands, which paid around $1 billion for Ballast Point, recently announced an $87 million non-cash impairment charge.  Ballast Point, not unlike Lagunitas, Revolver, Karbach, Goose Island and others, benefited by moving their distribution into either the red or gold networks, expanding their footprint, and leveraging extensive resources to rapidly grow their beers.  In the second quarter of this year, Ballast Point dragged Constellations’ depletions trends by 50 base-points.  This is ‘beer-speak’ for ugly!

The Ballast Point beers are at the highest price point in the industry, and now that the brand has gone national, the consumer may look at these price points and simply walk away.  If the sales trends continue, repositioning Ballast Point will be an option, but with Constellation behind the brand, Ballast Point is a long way from the next Pete’s.

Stupidity combined with arrogance, and a huge ego, will get you a long way…

Beer Fooder;  And than, there is the Stroh purchase of Schlitz driven by this infamous ad.

 

 

 

 Posted by at 6:00 am
Jul 112017
 

.This post begins the sixth year of Beer Business Unplugged and as usual, I will comment on past posts and the industry in general.  This year’s posts did produce one blog in particular which resulted in an off-the-chart read. The one post that brought in the most responses was, ironically, November 8th’s post, We Live in a World of Denial, and We Don’t Know What the Truth is Anymore.

What is interesting about that post is not that it was the most read blog of the year, but the comparison of the volume lost and sold by ABI/MC and Schlitz, respectively.  Up to that point, the volume lost by ABI and MC, was equivalent to the volume Schlitz had sold at its peak. And still, ABI and MC continued to lose volume with these two breweries soon having lost twice as much volume as Schlitz sold during its best selling years. Schlitz, at its peak, sold 15 million bbls. which were then lost over approximately 20 years.  In 2017, we will see that ABI’s and MC’s total loss of volume will be 27 million bbl. of beer.  And ABI and MC lost that volume in only 10 years!

I always enjoy receiving and reading the responses, as most come directly to me.  Those responses that do not come to me are posted to the blog on which the comment which made.  The number of subscribers, all in the beer industry, continues to increase, now well in the thousands. This year, the blog surpassed 100,000 reads and continues to grow.  I never expect results like this.  Thank you all!

 

What seems like a broken record, never before has the beer industry seen such an uncertain future regarding its direction.  The recent merger of ABI and SABMiller, the return of MolsonCoors, craft beers slow down, the rise of brewery taprooms, the growth of spirits, the on-going legislative fights between craft brewers and wholesalers, Constellation, its growth and changing of its longtime leadership, all of these and other topics continue to create this division.

As always, I will continue to write weekly throughout the year.  Going forward I will cover industry topics based upon your continued interests.  Thank you for all your kind comments and feedback.  They are fun and informative.  And now, year six begins……

 Posted by at 6:00 am
Jul 042017
 

It is appropriate that on Independence Day, July 4th, the beer industry is reviewing the Brewers Association’s recent announcement of their new craft beer logo (see the attachment). This logo is certifying that the craft brewer’s beer you are drinking meets the BA’s definition of an independent craft brewer.

The BA’s current definition, which has been somewhat fluid over the recent years due to the number of acquisitions, focuses on three key areas: small, independent and traditional.  A small craft brewer is defined as any brewery with annual production of less than six million barrels.  This definition seems to be self-serving.  If 25 percent of the craft brewery is owned/controlled (or the equivalent economic interest), by an alcohol industry member, that, in and of itself, is not considered a craft brewer. In such a case, the brewery would be defined as an independent brewer.  Finally, the term traditional is defined as a brewer whose majority beverage alcohol volume, in beers, derives its flavor from traditional or innovative brewing ingredients and their fermentation. Flavored malt beverages (FMBs) are not considered beers.

The Brewers Association continues its definition outlining seven concepts of a true craft brewer, however, these concepts are all tied to the above three categorical definitions.  A brewer can adopt the craft beer logo if they meet these requirements and sign a licensed agreement with the BA.

The question should be does the current Brewers Association’s definition really define what a craft brewer is, or better yet, should be?  If one asked a craft beer consumer, what their definition of a true craft brewer is, does anyone think it would be the current BA definition?

Quality should be the BA’s core value in determining a true craft beer, not the three terms described above. Certain standards must be met to define what a craft beer is to the consumer. Start with the water, where does it come from, how is it treated?  Does the brewer reclaim the water and is it purified?  Where does the equipment originate?  Is it quality equipment?  Then the issue of the brewing process arises.   How does the brewer sterilize their kegs or packages? What products are used for the sterilization?  You get the idea.

But perhaps the most important element might be does the brewery or plant have a lab?  And if so, how is the lab equipped? What process is used by the craft brewer? And most importantly, does the brewery employ qualified lab techs, micro biologists, or quality assurance professionals?  Are all packages and kegs marked with code dating?

Obviously, there are multiple topics delineating how to create a quality product, and those topics should also be included, or at least considered, in the quality assurance process.  You can include the Brewer Association’s main values, but without a more definitive definition, the BA’s definition might be considered hollow.

Certifying brewers as true crafts should be the primary goal of the Brewers Association, yet, for the consumer, the current definition is lacking in real value.  Let us hope that someday the BA will they get it right. To define what a craft beer is to the consumer,

Well done is better than well said…

Happy 4th of July!

Beer Fodder celebrating the 4th: www.youtube.com/embed/uoABty_ zE00?rel=0[youtube.com]

 

 

 Posted by at 6:00 am
Jun 272017
 

Well now, that did not take long, did it?  On May 9th, this post wrote about the future of the beer industry in conjunction with the major retailer, Amazon.  Now, less than two months later, the industry is on alert as Amazon has announced its purchase of Whole Foods for an incredible $13.7 billion dollars!  In the May 9th blog, the questions were:   How would Amazon secure a foot hold on the alcoholic side of the retail business.  And if Amazon was successful, when would the acquisition occur?  Those two questions have been answered, so we are now aware of at the least the first step of the equation.

As expected, industry pundits have pontificated about their views of the future once Amazon jumped into the mix.  Nobody really knows for sure how Amazon will approach our industry, but one has to believe craft brewers are jumping for joy with the news.  Whole Foods specializes in crafts and imports, they do not sell domestics, so perhaps the ABI and MC might not be concerned.  That being said, a couple of possibilities seem feasible.

First, the craft industry’s on going issues with the middle tier distribution system, and their inability to access markets and the resulting lack of focus on said markets.  We know that. I hear that concern every day.  With Amazon taking over Whole Foods, the possibility of a craft brewer self-distributing and eliminating the wholesaler entirely is now more attractive in states where legal, quality discounts come into play.  Pallet drops to Whole Foods, at prices no other retailer can obtain (e.g., Costco), will enhance the craft brewer’s ability to gain sampling, volume and consumers, thus eliminating the wholesaler.

If, in fact, this model becomes a sizable part of the retail business, which it could over time, the self-distributing craft may focus solely on this model that enables elimination of the middle-tier for off premise volume.  Again, where legal, the craft brewer could appoint a wholesaler for only on-premise distribution, and keep the off-premise in house!  Perhaps, where legal, craft brewers could crave out Whole Foods as a “house account.” A wholesaler could even benefit as Whole Foods and Amazon become the primary means of driving a craft brands’ consumer demand.

In a more traditional model, the wholesaler and vendor have to revisit their contracts.  A number of contracts address a wholesaler selling beer to a retailer, they know will ship their beer out of the wholesalers assigned footprint.  How will that be addressed?

A second model possibility would include when an importer, for example, owned by a European brewer could make a statewide agreement with Whole Foods using Amazon and ship their product directly to their warehouse.  The wholesaler of record could receive a $1.00 per case commission for simply allowing the paper to hit their dock.  No warehousing, no delivery costs and no commissions paid.  Do you not think a wholesaler might find this model attractive? And even if they did not use this model, the wholesaler’s competitor might use this method, thus giving way to further pressure to adopt said model.

No doubt, it will be awhile before it becomes clear how Amazon will operate.  As stated on May 9th, however, Amazon will figure it out. It is only a matter of when….not if.  We just did not realize Amazon would act so quickly.

Compromise works well in this world when you have shared goals.

 Posted by at 6:00 am
Jun 202017
 

Several years ago this post ran a story on the inception of the Wholesale Beer Distributors of Texas.  While playing golf one afternoon 30 years ago, I ran into the first Pearl Beer distributor for that market. This gentleman had started his distributorship immediately following the end of the prohibition period.

This man told me the story of how, during 1932 to 1938, he lost money with his distributorship despite living in the Pearl warehouse.  In 1938, he, along with a number of other beer wholesalers, raised $60K and lobbied the legislators in Austin which resulted in the passing of a cash law.  Up until this point, beer was sold on consignment.  A wholesaler would drop off a case and come back the next day to collect, only to discover the bar had closed and the beer was gone, along with the owner.  Once the cash law went into effect, this Pearl distributor said he made $1,000 the following year.

This story is very interesting in that it shows what can happen when special interest groups have the money with which to lobby.  It is called buying influence.  This time, the distributors ensured that they would be paid, taxes would be collected and bills paid.  Obviously, this was win/win for the industry.

Fast forward 80 years.  The watchdog group, Texans for Public Justice, found that, between 2013 and 2016, state legislatures received more than $11 million in campaign funding from alcohol industry players. And, according to the Texas Tribune, more than three-fourth of the funding came from the beer wholesalers.  Silver Eagle President and CEO, John Nau, gave $2.4 million while serving as Texas Governor Greg Abbott’s campaign treasurer.  During that four-year time period, Abbott received $1.4 million from the beer wholesalers.  Texas Lt. Gov. Dan Patrick and House Speaker Joe Strauss received the second most money, $688,000 and $508,000, respectively.

This information was just published, because a bill is awaiting Abbott’s signature that requires breweries who sell more than 225, 000 bbls. annually, to buy their beer from a wholesaler for consumption on premise at the breweries taproom.  The bill goes into effect on June 18th unless it is vetoed by Abbott.  Furthermore, the bill grandfathers several breweries (Karbach Brewing, Revolver Brewing, and Independence Brewing) who were recently purchased by ABI, MC, and Lagunitas. Each of these breweries will be able to expand to new facilities.

On the other hand, Colorado based Oskar Blues Brewing, which recently built a $6.5 million brewery in Austin last June, is not included among the grandfathered breweries, and will have to purchase beer for their tap room from a distributor!  The Texas Craft Brewers Guild is lobbying Abbott to veto the bill and has petitioned against HB 3287.

By the time you read this, the industry will know how this bill has shaken out, but given the amount of campaign funding the beer wholesalers have donated over the last four years, many would be surprised with a veto.  All craft brewers have known for years what their challenges are in state legislatures.  Craft brewers have, for years also attempted to get laws changed which lean in crafts’ favor, especially against beer wholesalers.

Crafts in Texas are less than 10% of the total business, but if, and when, the day comes that their market share exceeds 20%, you can bet their political influence will equal or exceed that of the influence of the beer wholesalers.  Until that day, it will continue to be an uphill battle for crafts.

If it doesn’t matter who wins or loses, then why do they keep score?

Editors note, the bill became law but was not signed by the Governor.

 

 

 

 

 Posted by at 6:00 am
Jun 132017
 

lets have a beerWas anyone really surprised with the recent NFL announcement that spirits can be advertised, with certain restrictions, on their games?  A better question might be; why did it take so long for the NFL to come to this conclusion?

The obvious answer to why the NFL has now decided to allow the advertising of spirts during their games is because the NFL will be receiving much needed revenue to offset its declining viewership.  Once again, with this announcement, many industry publications have jumped in with a myriad of comments and thoughts.  Most believe the decision is negative for the beer industry, however, some believe it might be a positive in that it could be a wakeup call for brewers!

A general consensus exists in the ad industry that spirit advertising, as compared to advertising for beer, is much more effective at getting the message across to the consumer.  No doubt that the spirit ads are more compelling and speak to the consumer, highlighting the key attributes of the product.  Beer, for the most part, does not address such attributes.

Is ineffective advertising the real problem within the beer industry, or is it something else altogether?  The numbers are eye awaking!  Since 2008, MC and ABI have lost over 27 million bbls. in sales!  That is astounding!  Translate that number to market share and MC and ABI have gone from 75% share of the US beer market in 2008, to 66% market share in 2017.  With the current trends continuing, their market share for MC and ABI will be less by the end of the year, with no end in sight.

The industry knows that there are main stream products that are doing well: Ultra, Modelo Especial, Coors, and Stella.  Their advertising is highly acclaimed based on these brands’ sales trends, and for these brands, the sales trends are very good.  Buy why?

Could it be the simple fact that Coors Light, Miller Lite, Bud Light, and Budweiser, along with numerous other brands, are no longer seen by the consumer, regardless of the quality or quantity of the advertising messages, as brands that are in favor.  In other words, could these brands be passé?

As indicated by the number, domestic light beer consumers are moving to hot brands like Ultra, Corona Light, and Tecate Light.  These brands are viewed as favorable to the consumer.  They are hot, the others are not.

Brewery executives only have their resumes at risk.   Wholesalers, on the other hand, have a great deal of skin in the game, including their own families’ well-being, in addition to that of their employees and their families. If the wholesaler has a diverse portfolio, including Constellation and/or Heineken, they will well situated, if not, then there is most likely much concern in that house.

Someday these brands will bottom out and could languish for years, eventually coming to life again, similar to the scenario experienced by Pabst, Lone Star or Rainer.  A retro redo.  If that is true, then there is no form of, or amount of advertising content that will positively affect any of these brands, if the consumers continue to reject them.

Spirits being advertised on NFL games will not materially affect beer sales.  The issues with the beer industries are internal, not external.  Status quo is Latin for “the mess we are in.”

 Posted by at 6:00 am