Aug 272019

Here are the powerful brands that sit at the very top of the list:

RankBrandBrand Value ($B)1-Yr Value ChangeIndustry

For many years “branding” has been the buzz word in the beer industry.   No doubt the branding of a brewery or a beer brand is the key to success. With the number of breweries in operation, in addition to the tens of thousands of brands and SKUs currently available, a beer product has only one chance to establish its branding.  The question for the beer industry is how does a company establish effective branding for itself or its brands? Just a simple package change or name change can create a monster. When Corona shifted from a simple brown bottle to a clear longneck bottle, it changed the industry.

Michelob has had success with two key packaging items. One of these success stories is Michelob Ultra’s thin, tall can which emphasizes their branding of low carb/low calorie. Ultra’s branding reflects that of Coors Banquet Beer from the 1960s , identified as America’s Fine Light beer. That Coors product came in a taller, yet thin can, similar to Ultra’s. Even today, many suppliers are attempting to market their products by using a similar style can, often referred to as the “Ultra style” can. Another product of Michelob which, at this point, causes one to wonder why AB has not reintroduced it into the market, is the famous tear-drop bottle. With the success of Michelob Ultra, what would happen if that tear-drop bottle were to be re-introduced into the market with a generation of drinkers who have never seen that bottle style?

The branding of seltzers, the current hot segment, is an interesting case study. Once the liquid is created the seltzer marketing experts build the branding around the key elements of the liquid. Similar to Ultra’s low carbs and calories, but with the addition of fruit flavor(s). The breweries are packaging the seltzer in a similar tall, thin Ultra-like-can, further emphasizing that the product is a light liquid. 

Branding a product that is created to play catch-up with an already existing hot segment could be difficult, at best. White Claw and Truly dominate the seltzer segment, but there is a great deal of competition in the seltzer market. How do these new products become viable against those already dominating the segment? Is that viability accomplished through branding? Some competitors see that a higher ABV, combined with the additional flavoring will help their branding and separate their liquid in the crowded market. Other competitors are going the opposite direction with much lower ABVs for their seltzers.

More importantly for the beer industry, however, are the struggles both AB and MC are experiencing with their current branding of Bud, Bud Light, Coors Light, and Miller Lite. The struggles of these two super-giants to update their brands has yet to be effective, Coors Light notwithstanding.

Once a successful brand starts to slide, just like creating branding for a new product, the beer industry has experienced the difficulty of re-branding. The surge of new products will continue for years to come, thus making the art of branding even more important.

Just ask all the former Schlitz executives or wholesalers!

Branding is a deliberate differentiation. 

 Posted by at 6:00 am
Aug 132019

Over the years many books have been written about the beer industry.  The majority of which have dealt with the industry’s history by focusing on brands, breweries, individuals, and historic cities including  Chicago, Milwaukee, St. Louis, and Cincinnati. One such historical piece was written by Maureen Ogle, Ambitious Brew.  Other books have centered on brands and importers from a more personal perspective, including Bitter Brew, by William Knoedelseder, which told the story of the rise and fall of AB. The Beer Monopoly, written by Ina Verstl and Ernst Faltermeier delineated the history of Interbrew’s transformation into InBev and the subsequent takeover of AB and the evolution of AB-InBev. All these books dealt with historic events which have shaped the beer industry and made it what it is today.

But why are there no books written on the history of beer distributors? Outside the NBWA, which represents the middle tier, not much has been written or acknowledgement given to beer distributors. One can glean the number of employees, tax dollars, community involvement, and other key metrics that wholesalers contribute to America through the NBWA site. 

The industry has been built on the backbone of beer distributors since the repeal of prohibition. There is very little, however, on the wholesalers’ history.  The consolidation of the middle tier means much of this valuable part of the beer industry has lost something. . Wholesalers, as with breweries and brands, are losing a segment of their history. 

GLI, a successful distributor created in 1982 with the purchase of the second largest Schlitz distributor in San Antonio, just announced it was selling out to Glazer’s Beer and Beverage. GLI survived all these years without MC or AB in their house. Another longtime wholesaler in Chicago, Skokie Valley, owned by the same family for four generations, sold out last year. Skokie Valley, like GLI, did not have MC or AB brands. They survived with Modelo, Old Style and other high-end crafts and NA’s. GLI, became successful through the distribution of Shiner, Dox Equis, Boston Beers, and other high-end crafts, but the distributor was also was one of Pabst largest distributors with Lone Star. Both these distributors, along with others still around like Skokie Valley and GLI, were successful growing their business, but have at some point decided the time was right to move on.

Each time one of these distributors sells out, the industry loses a little piece of itself. These companies were family-owned and their employees were part of their family. One could say it was the “little guys” against the “big guys.”  Such a culture is not evident in today’s mega wholesalers. Someday a book will be written about the importance and history of beer distributors. It is the least the industry can do to remember how it once was.

He who refuses to learn deserves extinction. 

 Posted by at 6:00 am
Aug 062019

The term “disruptor” or “disruption” is the current go-to expression for many industries that want to use the vernacular to describe new products or key employees. One might even consider the word “disruptor” the business model de jour!  The key question is: how does this label, “disruptor” apply to the beer industry? From a distance one might think the industry is nothing but disruptions, while in reality, it is just the opposite.

When thinking of major product launches that created a new segment, one would certainly think of the impact the light beer introductions had in the 1970s.   Driven by the boomer generation, the introduction of lights to the market would be considered a disruptor to the status quo. In just a few years, light beers became the largest selling segment in the industry as beer drinkers left regular beers in droves. The rise of Corona, and what Modelo accomplished, could also be considered a disruptor.  And of course, the growth of crafts has definitely disrupted the industry.  What might be the biggest disruptor in years is the seltzer segment.  Seltzers could be the latest example of a disruptor in the beer industry.  Or is it too early to make such a declaration?

Both companies and individuals can be considered disruptors.  When Philip Morris bought Miller Brewing, and brought the concept of marketing to the industry, Philip Morris was a disruptor. Russell Cleary of G. Heileman had what might be considered a disruptor model by acquiring a number of breweries and assigning brands to different distributors in the same market. This business model of pitting distributor against distributor was disruptive, but the distributors ended this by changing their state franchise laws and eliminating the brewery practice. Was Paul Kalmanovitz a disruptor as he acquired many regional and national breweries and brands? Probably not. Perhaps one would think that Jim Koch of Boston Beers is a disruptor? If not, Koch’s influence on the industry has helped create the craft or better-beer segment.

In recent years, the beer industry has been faced with what could be the greatest disruptor in its history, cannabis. As the cannabis industry expands, it will have an effect on beer sales and the distribution to the consumer will be a disruptor. What is an unknown is just how much of a disruption cannabis will be. Only time will tell.

Either way, when one looks at the beer industry one could either say the industry has been in a disrupted state for decades based on the changes in brands/segments. Or one could say that the beer business is not a disruptive industry due to the structure, laws, and state franchise protections. Simply put, the structure of the industry, in itself, is the disruptor. If that is the case, we will not know for decades to come.  

This is the age of disruption.

 Posted by at 6:00 am