THE PRINCE OF BEVERAGES
By Greg W. Prince
@@img1 “You just don’t drink a vodka gimlet after mowing the lawn-unless you’ve got a problem.”
That line got a big laugh at The Beverage Forum when it was delivered by Bob Lachky, a top Anheuser-Busch executive who was on a panel discussing the redefining of the beer business. The context helps explain it.
One reason beer is thinking about redefining itself is because market forces will otherwise do it for the people who make their living brewing it, distributing it and selling it. In the last year-and-a-half, you might say the redefinition has kicked into high gear. Wine and spirit sales have both risen, historically so. Those are two beverage categories that a decade ago seemed doomed to perpetual shrinkage. I don’t know how many times the purveyor of an upscale liquor or fancy bottle of red/bottle of white would tell me, “the consumer is drinking less, but drinking better.” The point was the consumer was drinking less.
Beverages abhor a vacuum because no drink is consumed in one. If somebody’s drinking something, it generally means somebody’s not drinking something else.
So if wine and spirits are on the rise, it means something else is on the decline.something else, often enough, that is made of the finest malt, hops and barley.
It’s not a perfect parallel, but beer can feel carbonated soft drinks’ pain.
Neither one of them is used to feeling pressure from the “other” beverages in its respective realm. CSDs were bubbling into the billions before anybody took a bottle of water as a serious proposition. Beer’s relation to its alcohol brethren doesn’t follow the same tale of Old Guard/New Age, but it’s been a long time since a shot of whiskey competed with its beer chaser in terms of volume.
Beer is big. Suds are substantial. But is it, like the mighty soft drink, in danger of having its hugeness chipped away by previously Lilliputian liquids?
At the Forum, the beermen on the panel didn’t seem to think so, despite the numbers moderator Brian Sudano of Beverage Marketing Corporation laid out. In 2003, he said, spirits volume grew 3.8 percent, wine’s increased 4.9 percent. Beer was off by 0.3 percent. Taken alone, each segment’s progress would be interesting. Enmeshed, they’re fascinating.
“Beverage alcohol,” Sudano said, “is now one market.” Beer, wine and spirits, whether beer likes it or not, are all going for the same share of esophagus. Indeed, A-B has promised to ramp up its efforts in on-premise accounts, bars and restaurants where the cocktail culture is leaving beer mugs disturbingly dusty.
The take-home trade may be another matter, which would explain why Lachky brought up the lawn mower litmus test. Perhaps wine’s health halo and spirits’
flavored fun and frolic is grabbing a piece of beer’s action. But beer is still beer. “We’re going to stress the functional benefits of the product,” Lachky said, “taste, refreshment, drinkability” and-this is new-carbs.
The one seemingly unalloyed beer success story of 2003 was Michelob Ultra, which started at nothing and became a Top Ten brand on the strength of all the carbohydrates it didn’t have. That wasn’t a vacuum-created idea, given the Atkins Fever gripping certain sectors of the population, but even Michelob Ultra couldn’t be toasted in a vacuum. Drink more Michelob Ultra, drink less of something else.
In beerdom, that means less Bud Light for simple reasons of mathematics. 1) With beer not growing and wine and spirits surging, something had to give; 2) There’s more Bud Light sold than any other brand of beer, so there was more Bud Light to lose volume than any other brand of beer.
Somebody recognized this Pythago-beer-an Theorem and rushed to take advantage. It was SABMiller, parent of Miller Brewing, America’s second-largest brewer behind Anheuser-Busch. If carbs were an issue, the SABsters figured, let’s get the word out that Miller Lite has fewer carbs than the other light beers of standing, most notably Bud Light. With Mich Ultra getting the very diet-conscious beer drinker and Miller Lite-previously mired in a two-decade slump-ladling some foam off the top among the very beer-conscious beer drinker, it meant Bud Light would suffer (suffer a relative term for a brand that’s been on a non-stop volume-increase binge its whole life; let’s say it slowed down).
Anheuser-Busch didn’t get to be a 50-share brewer by standing still. First, it repositioned Bud Light a tad to push across the idea that, shoot, all light beers are low in carbs, so drink Bud Light like you always have. Second, in the face of SABMiller’s cocky “President of Beers” commercials, in which A-B proclaiming itself “King” is amusingly suggested to be something short of the American way, the Monarch of Malt has struck back. Radio and newspaper ads imply there’s something not quite right about Miller and its parent company, South African Breweries. Bud is the King of Beers, Miller Lite “the queen of carbs,” according to A-B. Natch, Miller has filed suit about “false and misleading statements” from its biggest rival.
In other words, a good old-fashioned hissing match is underway. And that’s fun, I suppose. It was fun in the 1980s when Pepsi and Coke went at it. It’s a better deal for No. 2 because No. 2 is the underdog, needs attention and has less to lose than No. 1 (to be fair, No. 473 needs attention way more than Nos.
1 or 2 do, but the underdog concept is all relative here).
The questions that spring to mind are will it sell more beer for Miller? Will it sell more beer for A-B? For anybody? Does the not altogether good-natured back-and-forth between the two industry leaders really matter to a splintered consumer world that, despite 70 percent of beer volume going to A-B and Miller combined, has other options? Wasn’t that the reason beer needed to talk about redefining itself?
Isn’t that the reason the people who market beverages need to do more than talk?
Greg W. Prince (email@example.com) has covered the beverage business as a reporter and editor for more than 15 years.