ST. LOUIS -- While Gallup Poll statistics indicate that once again, beer is America's beverage of choice, there are signs that domestic beers' traditional hold over the Heartland is loosening in favor of imported beers, and that has American brewers worried, said a Wall Street Journal report.
A similar shift happened years ago on the Coasts, but only in the past five years has it started to take root in the Midwest, home to Anheuser-Busch Cos. of St. Louis and Miller Brewing Co. of Milwaukee, said the report.
Imports still make [image-nocss] up a small fraction of beer sales in the Midwest, but their sales are growing rapidly. In Iowa, only 1.7% of the beer sold in 2000 was imported; by 2004, imports had jumped 65%, to a 2.8% share. In Wisconsin, Miller's home state, imports rose 51% between 2000 and 2004, to a 5.3% share. Missouri saw import consumption climb 21% over that same period, rising to 3.5% of beer sold.
Even in Michigan, where imported cars remain taboo among some consumers, beer imports recently accounted for 16.1% of supermarket sales, according to research firm ACNielsenthe biggest such share of any Midwestern state. By contrast, beer imports account for 14.4% of supermarket sales nationwide.
The internal U.S. markets are continuing to grow at accelerating rates, Bill Hackett, president of Chicago-based Barton Beers, one of the nation's largest distributors of imported beers, including top-selling Corona, told the newspaper.
One reason for the shift is economic, said the report. As beer production consolidated, the breweries that once dotted the Midwest disappeared, taking with them the allegiance of their communities.
Another reason is demographic, the Journal added. As the Hispanic population has surged in the Midwest, Mexican beers such as Corona, Tecate and others have become increasingly popular. Mexican beers account for more than 46% of all beer imported into the United States.
The domestics have responded by forging their own alliances with foreign brewers. Anheuser owns about 50% of Grupo Modelo SA, producer of Corona, and Miller has its own roster of imports through its parent company, SABMiller, including Czech Republic brew Pilsner Urquell and Peroni Nastro Azzurro of Italy. Clearly, we want to compete and win and grow, Michael J. Owens, vice president of marketing for A-B, told the Journal.
Imports accounted for just 11.7% of beer sales in the U.S. in 2004. But the creeping interest in imports is an especially unwelcome trend as the domestic brewing industry comes off a down year in 2005. According to Beer Business Daily, the first five months of this year have been the best five-month volume increase performance in import history. It is getting tougher and tougher to be a domestic brewer, Bear Stearns analyst Carlos Laboy told investors in a note published last week.
The import brands, meanwhile, are stepping up their Midwestern incursion, lured by the region's heavy per-capita beer consumption and loads of colleges full of young drinkers settling into their favorite brands, the report said.
Dutch brewer Heineken NV is enjoying brisk sales in the Midwest of Heineken Premium Light, a new brand that is pressuring the one industry segment that has remained reasonably solid for the domestics: light beers. In the past, said Andy Thomas, president of Heineken USA, Heineken would have introduced the new beer on the coasts first, and brought it to the Midwest later. With Premium Light, which it introduced in the United States a few months ago, Heineken decided to hit all three parts of the country simultaneously. The [Midwest] is coming on like gangbusters for us, Thomas told the paper.
Meanwhile, A-B said separately that data posted on the Gallup Poll's website indicate that once again, beer is America's beverage of choice. Findings from Gallup's annual poll on Americans' alcohol and drinking habits demonstrate adult consumer consumption of wine has decreased, while consumption of beer has increased 5 percentage points since July 2005, said A-B, citing the survey organization. Of those Americans who drink alcohol, 41% most often drink beer. Beer is the largest segment in the alcohol beverage category in both volume and dollar sales, and accounts for nearly 60% of all alcohol beverage servings.
Today's adult consumers have more choices than ever before, said Bob Lachky, executive vice president of global industry development for A-B. Through innovative products, packaging and programs, such as Here's To Beer,' brewers and wholesalers are working hard to remind Americans of beer's role in our culture. It's great to see people are responding.
In February, A-B launched its Here's To Beer campaign during the Super Bowl telecast and the launch of the www.herestobeer.com website. The campaign to elevate the image of beer focuses on three key areas, A-B said: Reminding adult consumers of the social value of beer; romancing the product and the art of brewing; and encouraging consumers to view beer differentlygiving them new ways to enjoy beer including ideas and recipes for pairing with food.
Since its launch, the website has received more than 300,000 hits, said A-B.
Miller is taking a similar approach. Proclaiming Miller Genuine Draft as Beer. Grown Up, Miller is repositioning the brand to woo sophisticated 20-somethings, a segment that's straying from domestic brews in favor of light beer, imports, spirits and wine, said the Associated Press.
From helping launch a fashion designer on the Sundance Channel to partnering with GQ magazine, Miller's second-largest premium brand is being targeted to drinkers who are in their mid-to-late 20s who have grown out of the party scene, might be making more money and now want the better things in life.
And Coors Brewing Co. is also changing the way it talks to consumers about its premium beer, Coors Banquet, said Kabira Hatland, a spokeswperson for the Golden, Colo.-based brewer, a unit of Molson Coors. New ads will focus on how the beer differs from others in the category, highlighting its use of water from the Rocky Mountains, she said. The last ad campaign centered on men going out on the town, she said.
What we are finding in a category like domestic premium beer, is it's important to differentiate yourself from the other beers so that when a consumer sits down at a bar he or she understands why he wants to order your beer compared to other ones, Hatland said.
Gone are the days of chugging beer and sitting in inflatable chairs, at least for Miller Genuine Draft drinkers, said Terry Haley, brand manager of Miller Genuine Draft. The brewery believes beer can appeal to a broader audience. No one sees themselves as the old beer stereotype anymore, Haley said.
Its surveys show the Miller Genuine Draft line appeals to men and women who know how to cook, and want to own homes and entertain friends, not just go out for fun on the town, he said. These drinkers care more about flavor than they do about calories, meaning they won't automatically reach for a light beer, he said. We're pulling out every stop to make sure that we will create reconsideration in consumers' minds quickly and consistently, Haley said.
Ads on the air in 13 major markets feature 20-something men stepping over a red line, crossing into the next stage in their lives, whether it be getting married, buying a home or choosing to eat sirloin steaks rather than chuck roast. The brand even sponsored the Academy Awards this year, a far cry from traditional sports-dominated advertising for beer.
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