MILWAUKEE --Just as the war over light beers has reached a fever pitch, Miller Brewing Co. has decided to open a new front in the economy beer segment, said the Associated Press.
Miller and other brewers have lost market share in the low-price category to market leader Anheuser-Busch Cos. Inc., which accounted for 53% of the category in 2004, up from 48% in 1999, Miller said. That amounts to $500 million in lost profits over five years, Miller saysmoney that could be spent fueling further growth in Miller Lite, which saw 10.5% growth in 2004, the fastest-growing [image-nocss] mainstream brand in the United States.
"If we have some success in this area, it's going to provide the fuel to invest in the brands that have a higher margin associated with them, whether it's Miller Lite, Genuine Draft or other brands," said Miller spokesperson Pete Marino.
The brewer has already started to push ahead with its plan. Last August, Miller revamped the logo on Milwaukee's Best and in July it plans to run humorous TV spots for Milwaukee's Best Light saying "a man should act like a man and a light beer should taste like a beer." It will be the first time it will actively promote the low-price brand on TV in nearly a decade.
Miller also said it is reviving its Girl in the Moonan image that has been on bottles of its former flagship beer High Life since 1907in advertisements, replacing the "High Life Man. A series of ads focusing on beer-drinking moments over the last 100 years will feature the Girl as a narrator, with the slender "Tall Blonde" clear glass bottle to appear prominently.
"Our goals are one, connect to consumers emotionally, and two, really try to elevate the brand," said Tom McLoughlin, the High Life brand director.
The campaigns are part of a turnaround effort by South African Breweries plc, which became SAB Miller plc when it bought Miller in July 2002 as sales of Miller Lite were in steady decline.
Analysts said the strategy on low-price beers was shrewd because it focused on a category that most brewers had neglected in recent years in favor of higher-margin craft beers and imports. "Over a third of their volume is in subpremiums," said Beer Marketer's Insights Inc. editor Benj Steinman. "Now that they've got Miller Lite going in the right direction again, it's become increasingly important to Miller to not give up so much of that subpremium business," he said.
It would also help fight rising beer prices, which has encouraged consumers to switch to drinking wine and spirits, said Bump Williams, the executive vice president of the global beer, wine and spirits division of Information Resources Inc. "Beer prices have risen faster than the rate of inflation, but the same can't be said of wine and spirits," he said. "The whole emphasis right now from the big three brewers is to lower price points at retail to stop the beer shopper from leaving the category."
But distributors and retailers may be slow to follow suit. While brewers benefit from increasing volume, distributors would rather ship high-margin beers such as Corona, which can retail for double the price of an economy brand. A 12-pack of Corona Extra bottles last week sold for $11.99 at a downtown Milwaukee supermarket, while 12 cans of Milwaukee's Best sold for $5.49 and Busch Light sold for $5.79.
Retailers are also uneasy about how much cooler space to devote to beer, especially if it's lower priced, said Mark H. Rodman, the president of Beverage Distribution Consultants, Swampscott, Mass. "I can't see convenience stores [who are] talking about reducing the amount of space allocated to beer suddenly fill it up on a low-margin item," he said.
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.