Beverages

A Toast to Taste

Beer continues to lose ground to wine, spirits

NEW YORK -- Flavor continues to drive beverage-alcohol sales, and interestingly, flavor is driving males toward beer and females away from it. So says a study on How 20-Somethings Drink, released this month by Deutsche Bank Securities Inc., New York. While the goal of the study is to help predict the success of beverage-alcohol companies' stocks, the results further support evidence that the 20-something generation overall continues to move away from beer when imbibing.

Survey results reinforced the female preference for flavor, with particular emphasis [image-nocss] on spirits, said the report. New findings show close to half of women don't intend to return to the beer category, a strong sentiment and not one easily overcome by marketing tactics. It's clear that flavor plays a crucial role in winning the young female demographic.

One the other side of the coin, however, the report predicts positive results for Boston Beer Co., the brewer of Sam Adams beer, based on its strong focus on flavor.San Adams' "emphasis on flavor and stepping up marketing puts it in a good spot this summer, the report stated. Expect volumes to out-perform the beer industry [on average].

According to the Distilled Spirits Council, from 2001 through 2004 the beer category's share of the U.S. beverage-alcohol market declined from 55.8% to 53.2%. The Deutsche study shows that trend continuing. In April 2005, the number of 20-somethings who preferred wine rose 1.7% (to 17%) at the expense of the beer category, which dropped 1.1% (to 46.9%) vs. the previous month. Meanwhile, spirits remained flat, dropping 0.6% (to 36.1%), according to the report.

On the off-premise side of the industry, however, beer has retained, and even grown, its share for drinkers between the ages of 21 and 30. When asked, What do you drink before you go out? 50.6% of all respondents said beer.

This trend shows that the pre-party' may be beer's best development opportunity, the report noted. Beer drinkers drink beer, but so do spirit and wine drinkers before heading to the bar. Those who chose to pre-game with beer increased 5% over the prior month. This increase could be the result of a step-up in media spend as the major brewers increase their presence in our living rooms and consequently in our minds when weighing out our pre-game options.

The best marketing tool to gain favor among this generation is free sampling; 57% of respondents think free sampling would be most effective in building brand loyalty, according to the study, [and] 19% have switched brands because of that tactic.

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