Feb 122019
 

These pages have often referenced the historic struggles experienced by the Jos. Schlitz Brewing Co. In its efforts to remain not only relevant and to enhance the stock prices, a corporate decision was made around 40 years ago to quicken the brewing fermentation process.  The unfortunate result negatively altered both the taste and clarity of the liquid.  Frank Sellinger, the new President of Schlitz who had come from AB, and was a brew master by education, quickly changed the formula back to its original recipe.  He subsequently delivered that message to the public.

Frank’s initial message to ensure the public of the beer quality, unfortunately, did not affect the negative sales trends. Consequently, Schlitz went after Budweiser and Miller by conducting televised taste tests.  These ads did not attack the quality of Budweiser or Miller they did, however, focus on the taste of Schlitz verses the taste of Bud and Miller.  History has shown the ineffectiveness of these commercials.

It was not long after the Schlitz ads ran that Coors Brewing Co., in an effort to get more traction with their eastern expansion, ran newspaper ads citing fusil oil as a by-product of the brewing process of both Schlitz and Budweiser.  August Busch III called Pete Coors in an attempt to have these ads pulled for the sake of the industry.  Pete complied and ended that campaign.

In recent years, the industry has seen ads declaring products with fewer calories and fewer carbs than competitors.  With the advent of the seltzers, where their labels/ads promote low ABV, carbs, calories, and in some products, no carbonation, the highlight attributes of their products are self-promotion and do not lambast the competition.

AB’s much-discussed Super Bowl ads highlighted both Coors Light’s and Miller Lite’s use of corn oil in the brewing process. While AB claims it does not use corn oil in its brewing process, controversy has none-the-less started anew in the industry.  MC has fired back by taking the high road and not attacking AB but instead explaining how corn oil is used and which AB brands use the oil.

The controversial ads had other responses: Boston Beers distanced itself by tweeting, “No corn syrup AND no rice. #barley#hops#water#yeast.”  Adam Collins, vice president of communications and community affairs for MC, reflects what some in the industry believe: “The Bud Light ad says more about their market position than it does about any @MillerCoors products.” Collins added, “When was the last time ABI used their Super Bowl ad to attack a competing brand?  Miller Lite has been gaining share for 17 straight quarters and someone’s feeling the heat!”

If it was ABI’s intent to drive the social media mentions, they succeeded.  By half time AB social-mention spikes were close to 47K.  The follow-up continues thus leading one to believe at least from that aspect, that ABI must be pleased.

It could be possible that unless ABI’s trends change to the positive, we could see additional ads with similar messaging. The fall out could extend well past ABI and MC.  Craft brands that cut corners on their ingredients will have to address their consumer’s questions, “What’s in your beers?”

Advertising does not create a product advantage.  It can only convey it.

 

 

 

 

 Posted by at 7:00 am
Feb 052019
 

It was January 16, 1919, just over 100 years ago, that the 18th Amendment was ratified.  Prohibition began 100 years ago.  Then on December 5, 1933, the 21st amendment repealed the 18th amendment and Prohibition ended. Or did it really?

Sure, the 21st amendment made it legal to buy and consume alcoholic beverages, but now that 100 years have come and gone, did prohibition really end?  When the 18th amendment passed in 1919, there were approximately 669 breweries operating in the U.S.  By the end of 2017, that same number had increased to 6,266 (8,863 TTB permitted). Some estimate that there could be almost 7,000 operating breweries by the end of 2018.  Granted the current number includes a myriad of different types of breweries, but either way, growth has been incredible when one considers that in 1978 there were only 89 breweries, according to the BA!

With the repeal of the 18th amendment, we saw the creation of the three-tier-system. The purpose of which was to ensure there would be no tied houses between breweries and retailers. And for the most part, the three-tier-system has worked. Now, however, with the advent of brewery-based on-site taprooms; and where legal, brewery-off-site taprooms exist, we have a blurring of the tied-house issue.

While the number of breweries has exploded in recent years, the number of wholesalers has decreased from 4,595 in 1980 to less than 3,000 today.  The number of breweries continues to grow while the number of wholesalers continues to retract.

The growth of the breweries can be traced to certain states that, from the end of prohibition, did not create laws which prohibited the start-up of small or craft breweries.  The majority of these states were on the east or west coasts.  Even with laws favorable to crafts, however, these states still limited consumers’ access to buying beer.

Las Vegas could be considered the only city that truly eliminated prohibition.  If a consumer wants a beer in Las Vegas, that beer is available 24/7.  One can even walk down the Vegas strip at any time of the day or night with an alcoholic beverage in hand and not be in violation of the law.  If Vegas can deal with this environment, other states should also be able to follow the same laws.

All states today restrict, in some form or fashion, the time and day of the week an establishment can open and/or sell alcoholic beverages.  In Texas, there is a movement to allow liquor sales on Sunday, a situation which has been unlawful in the past. As with many states, this change in the Texas law is ultimately about increasing revenue to the state more than ensuring the consumer has the freedom to purchase alcohol when desired.

The United States is changing rapidly, just note the spread of legalized cannabis across the country.  Pundits believe that we will legalize cannabis within the next three to four years!  If that is the case, why cannot prohibition in all forms end?

Prohibition has made nothing but trouble.

 

 

 

 

 Posted by at 7:00 am