Nov 142017

At last month’s annual NBWA convention, the topic of conversation was what ails the beer industry.  The issue was addressed by wholesaler and multiple panel discussions, in addition to on-stage discussions led by the leaders of ABI and Heineken.  For the most part, both leaders listed virtually the same reasons for the industry woes: “share of throat losses” to wine and spirits consumers, along with the loss of an entire generation which prefers wine and spirits over beer.  Of course, there is the cannabis intrusion as well.  More on that in upcoming posts.

The losses in overall beer volume in the last 10 years is eye awaking as the industry struggles to determine the cause.  So the question is: what can the beer industry do to turn the tides on such great volume losses?

Why is it that some beers are continuing to not only do well, but are accelerating their growth rate?  We all know them, Michelob Ultra, Modelo, Corona, and even Yuenglng.  One major component is that these four have consistent messaging, and the effectiveness of their marketing in relaying the message to the consumer is unsurpassed.

Recent scan data also has shown, not only what is happening, but what can happen with adjustments in pricing.  In IRI multi-outlet + convenience, Founders All Day IPA is up +49% and is now the number two best-selling IPA.  All Days growth comes from the 15-pack pricing which is priced closer to the 12-packs.  Recent data has also shown pricing on All Day dipped 2%, or less than $28 per case.  The average price is down 3%, or closer to 87 cents a case.  This puts the brand in the price range of Michelob Ultra!

Is acquiring volume in the industry really that simple, or is it that All Day is revealing itself as a truly strong brand?  Recent pricing adjustments to brands in the popular segment have also shown major increases in sales of Keystone Light, in addition to a jump in share-of-segment.  There are four economy brands now in the top ten growth brands in the recent scan data: Keystone Light, Rolling Rock, Hamm’s and Bud Ice.  Anyone see a trend here?

Time and time again when we see a brand that prices its products to ensure the consumer sees the value, the brand virtually flies off the shelf.  Of course the brand’s message echoes its branding in the same way.   Over the years, by far two of the very best at price positioning and value are the Modelo brands and Yuenglng.  You can add Ultra to that list, too.

The beer industry does not want to be like the mattress or auto industry. Can you ever recall a time when a mattress or a car was not on sale?  Just watch a football game, as it seems that every other commercial is a car with incentives.

These pages have addressed this same issue numerous times, always focusing on the same solution.  For the sake of the industry, let’s hope that we are not still addressing this topic five years from now.  Is anyone in New York and Chicago listening?

A good decision is based on knowledge, not on numbers.


 Posted by at 6:00 am

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