Beer Business Unplugged

Over the decades I must have sat through maybe a hundred “marketing” meetings on either the vendor or wholesaler side. I’ve seen these in all categories, domestics, imports, crafts and even PAB’s. In almost every case, during the “brand strategy” segments (always early in the meeting), they would present the targeted demographics for the particular brand. It always seemed to be LDA to 34, or with imports/crafts, 26 to 39, professional, income $75K+ and it seemed that the marketing department changed about every two to three years. This always brought in new people, a change in agencies, and of course, a new direction for the brand. The results, as expected, were somewhat mixed, then the cycle started over again.

Much has been written lately about the softness of the premium lights (Coors Light the exception) and we all know about Budweiser and Miller. The big growth numbers are in crafts, PAB’s, Mexican imports, Stella, ciders, and some very high cost specialties. This constitutes only about 20% of the US volume, but seems to dominate all the discussion and interest in the industry! Especially with wholesalers.

That being said, then just why are the domestics struggling? Look at the new Heineken commercials as they are obviously targeted at a much younger generation. I hope they get it, as I don’t, but then again, I’m not the targeted demographic! Then the question becomes, is Heineken purposely forgetting or overlooking their core business of those over 50? It appears to be so, doesn’t it?

A force to consider are the Boomers.  As of today, Boomers are 77 million strong and they “buy things” because they have the disposable income to do so. In fact, in the last 12 months, 47% of all consumer goods and services were purchased by people 50 and older, to the tune of $2.7 trillion! The 50+ population are only going to increase as the Boomers finish moving into that demographic.

With very few exceptions only a few beer companies have marketing campaign targeted specifically toward the Boomers. Coors Banquet is an example, which has had a consistent message for the last several years. The strategy is working, as the brand is now growing after struggling for the past several years. Think about it, have you ever attended a marketing meeting where the brand strategy is targeted at the 50+ up, high income/retired demographics? I haven’t. Then is the question, is it easier to market to a much younger demographic? It must be, or could the question be, is it easier for a 35-year-old marketing executive to market to a younger group then an older group?

My contemporaries do not drink crafts, fruit beers, PAB’s, ciders, or European imports. They drink domestic lights and some Mexican imports. That’s it. Maybe it’s more of the domestic marketing experts taking the Boomers for granted knowing that they will always be there and their challenge (as they see it) is to get the younger drinker? Maybe it’s the nature of the American marketing industry to glorify youth and beauty over age and experience. If that’s the case, then the 77+ million boomers truly are the forgotten generation…..

—

After college in the early 70’s I took a job in Austin as a route salesman for Falstaff beer. At that time, Schlitz was #1 followed by the regionals, Pearl and Lone Star, with Falstaff and Budweiser not far behind. Heavy weights of today, Miller and Shiner, weren’t much back then and of course, crafts didn’t exist and Coors wasn’t in Austin yet. As far as brands were concerned, there were just Schlitz, Budweiser, Lone Star, Pearl, Falstaff, Miller and Shiner… no brand extensions and limited packages. In other words, the beer business was simple.

Late that summer, Miller tested a new beer, Miller Lite, which was priced .10 cents higher (that’s right, only a dime higher) and all the beer guys figured who would buy a beer with less alcohol that cost more? Well, everything changed from that point going forward.

By 1976, Coors had expanded into S. Texas and I was running one of the Coors houses in San Antonio. Coors had decided to test their new light “Coors Light” in San Antonio against Miller Lite which, by now, was established and beginning to grow behind their great ad campaign. The first Coors Light can was buff in color, similar to that of the current banquet package, with the word “Light” in red script. The package was lost in the cooler and the introduction wasn’t going well so after about six months, Coors changed to the silver can and red lettering. The rest is history.

Fast forward to the early 80’s. I was the owner of a large Schlitz operation in S. Texas near Mexico. I had just purchased the Pearl operation in McAllen, and we acquired a number of imported brands which put me in the position of the dominate distributor in imports. Our largest selling Mexican brand was Carta Blanca (true), but I had another beer that came in a brown bottle with a neck label in the colors of the Mexican flag. I couldn’t sell a layer, much less a pallet of the beer, but we kept at it. The next year the bottle was changed to a clear 12 ounce “long neck” in a 20 bottle loose case. It took off, and within two years our annual volume was now around 40,000 cases, obviously it was Corona.

Now add in Budweiser Light (the original name which also didn’t make it) around the same time and you have three new brands, one that was “refreshed,” all in that same decade, and all four in the top five selling brands in the US. Understand that all four needed to have name and/or package changes to survive.

Today what is growing are the PABs;  line extensions, such as BL platinum; flavored beers and fruit beers from Europe. Now does anyone out there think that any of these products will be as big as, say a Coors or Bud Light? I, however, was one of those salesman in Austin that said Miller Lite would never sell! It doesn’t matter what I think, or what you think, it’s what the consumer thinks. So, is it an elephant in the kitchen or just a mouse?