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Tuesday, January 10, 2012

King of Beers now the duke?

Budweiser passed another milestone this week; on the way down. The iconic beer brand's 20+ year slide continued, and Coors Light passed it, headed up, moving into the #2 spot in American beer sales according to a story in Advertising Age. Budweiser hit its peak in 1988, selling 50 million barrels (50 million barrels! Of just Budweiser! All U.S. craft brewers' 2011 sales put together should be about 11 million barrels) and then sliding ever since, including a 4.6% slide in 2011...which actually represented a slowing in the rate of plummet. Total 2011 U.S. sales for Budweiser were 17.7 million barrels, an amazing decline since 1988. Of course, Bud Light's rise has pretty much made up for it, and 17.7 million barrels is still more than most of the world's breweries sell altogether...but wow.

What happened? Smarter people than I have guessed at that one. "Light beer!" is the usual answer offered, explaining it as Americans' desire to get into better shape. Well, maybe...only what's up with the boom in steakhouses, and sugary liquors, and...craft beer? As far as that goes, how the hell does "Light beer!" explain the huge growth of Yuengling Lager? Yuengling Lager, a "full-calorie premium" beer, will likely blow through 2 million barrels on its own this year, and is, if anything, accelerating. (Add'n: when I first wrote this, I forgot the other obvious example here: it's not Pabst Light the hipsters and bike messengers are drinking, it's Pabst.) "Light beer"? Bullshit.

Light beer has seen huge growth, but there are other factors here. I think some of the problem is fratricide. There has been cannibalistic action between brands in the A-B house, and Bud and Bud Light are not the only ones. When you have a number of large brands -- Budweiser, Bud Light, Bud Light Lime, Bud Select (several cases a year are still sold), Michelob Ultra, Busch, Busch Light, Natural Light, and so on -- that are this close together in taste and character (okay, granted: Bud Light Lime does taste a bit more different than the others), and require a huge expenditure on marketing merely to create an illusion of difference...success in one camp is more likely to mean failure in another. This is, I believe, a major weakness for the big brewers, and it's just now starting to crack wide open.

Does that explain how Coors Light is growing? Well, no! I'll have to cogitate on that...especially since it's one of the very few mainstream beers that is growing. Is it the blue mountains? Hey, maybe.


sam k said...

Yes, but they only turn blue when they're cold enough to drink! aren't they pink otherwise? not sure. I never buy 'em, either.

How about Michelob, down 20% this year from its previously tenuous position. Could be that it won't even be around as a stand-alone brand much longer.

Oh, the humanity!

Anonymous said...

I think the growth of light beer is due mainly to kids. those under 30 and especially under 25. For some reason they are attracted to "light" beer... having less taste is a good thing. And I've heard many tell me outright it is "all they can afford" which always baffles me. Yuengling lager basically the same price but you buy light which has LESS alcohol? The other thing they tell me is it doesnt fill them up. They drink from 8pm until 2am or longer and how they dont get filled up is beyond me.

I'm also surprised that coors and bud light sell so much. Around these parts it seems to be nothing but miller lite for the kids.

Lew Bryson said...

Anony, your comment makes me think of something Alan Newman, former CEO of Magic Hat, said to me one time when I asked him about his #9 apricot-tinged pale ale having a reputation as a 'chick beer.' He laughed, and said, "Chick beer?! Let me tell you, there aren't enough beer-drinking 'chicks' in New England to go through the amount of #9 we're selling!"

I know plenty of older folks, men and women, who drink nothing but light beer. Light beer is over half of what's sold in the U.S., and it sells well across all ages.

You'll hear that part about taste from a lot of them, too; I've heard light beer drinkers try something as innocuous as a Spaten Lager and say, "Too much flavor." What the hell does that mean? Well, then I stop at a "Mexican" or "Chinese" restaurant outside of a major urban area in the Northeast, and taste some of the bland "hot-n-spicy" meals they serve up, and I realize that ketchup and mayo are about as much flavor as a lot of Americans want to deal with. No slur, just a fact I've run into too many times to be a guess.

As for the cost...I agree. If it was about cost, they'd be drinking Milwaukee's Best, or Natty Light, or Keystone, or Schlitz, right? Mind you, some of them do drink Pabst...which goes back to my original theory.

There are regional preferences on which light beer does best; I would suspect these mostly come down to either job affiliations or the relative effectiveness of the local wholesalers.

Bill said...

It's interesting that Bud Light, Miller Lite, and Coors Light haven't actually been marketed as light beers in years. That's the category they're in, but none of them have mentioned less filling or fewer calories in years. Every so often, Miller tries it, then reverts.

Re: the loss of Bud's share, I think Anonymous is on to something -- if folks are brand loyal, sooner or later they age and drink less and eventually pass away. The marketing for Bud Light, Lite, and Coors Light is definitely aimed to young folks. Budweiser has used an all-ages approach for a number of years -- images of the label and pouring beer over a George Clooney voiceover, etc.

I will miss Michelob if it vanishes!

sam k said...

I've never understood the "less filling" thing. I'm pretty sure that 12 fluid ounces of light beer fills you up exactly the same as 12 fluid ounces of any other beer.

Sam said...

I think Coors Light is still reaping the benefits of increased distribution that came from the JV with Miller.  Before that Coors Light had a tough time getting into accounts in the east, and particularly the North East.  After the JV coors light was pushed into every Miller account...and Miller Lite which was the #2 light suffered and dropped to #3. I think Coors Light is thus still gaining share through "new" exposure in the east and probably through pricing plays against the other premium lights...enough to get its volume above Bud.