Beer Marketing and Differentiation

Beer Marketing — Growing Beer Market Share

Introduction

Beer marketingThe following glance at beer marketing will give you a quick peak into how Stealing Share operates and finds solutions. Of course, no branding project would be complete without market research and all too often beer marketing lacks valuable research. This is just a cursory analysis. But it suggests a brand position that beer brands could use to steal share based on our own experience and expertise in branding beers. If your brand needs to steal share, feel free to email us or call us.

Commercials

Keeping the advertising in mind for all of beer marketing is important because to be successful in stealing market share your brand needs to be both different and better. So try to keep in mind all the beer ads you’ve ever seen (COORS, Budweiser, Michelob, Miller, MGD, Corona, Beck’s, Heineken, Red Stripe, Bud Light, Sam Adams, Amstel Light and Coors Light — for example). (You can view many of the category commercials here in our beer market study). Take a look before going on with this article.

It’s important to start by briefly describing the personality, position and promise of each of the brands. Here is a short example of just a few US domestic brands.

Brand Personality Position Promise
Budweiser Confident. Hip. King of beers “I get it.”
Miller Lite Hip. Youthful. Beer for friends It’s the experience.
Coors Lite Hip (a bit sophomoric) Cold. From the Rockies. Everyman Beer.
MGD Cool. Aloof. Genuine Seize the day.
Miller High Life Knowable The High Life Everything in perspective.
Coors Real Legendary Be an original.
Michelob Cool. Knowing. Tastes Imported Taste

 

Possible Meanings

Beer Marketing Positions
There are many possible positions. The goal is to find the one with the highest emotional intensity.

We considered the positions that a beer brand could take based on the advertising when mapping out the beer landscape with the goal to create meaningful beer marketing messages. Of course that assumes that the advertisers know what they are trying to convey – and THAT is a frightening assumption. Remember, for a brand position to have any meaning there must be an opposite position that a brand could chose for any of the positions to have true meaning to the customer. For example, “Best” is not a brand position because no one would claim “worst.” “Best” simply isn’t believable to the customer. But someone may claim the “intimate” position because a competitor could claim “casual.” That would be believable because it’s positioned against another’s positioning. Below are some possible positions a beer could choose:

Rules of Positioning

The following rules are helpful when selecting a beer marketing position to steal share in your market.

  1. Thrust:
    The positioning must demonstrate an active competitive advantage. This advantage answers the question of “why should I care” from the perspective of the consumer.
  2. Beer Marketing
    Strategy has rules

    Gravity:
    The positioning must have a powerful relevance to the target audience and their interest and receptiveness must be peaked.

  3. Definition:
    The positioning must be distinctive. It must set the brand apart from the competition.
  4. Density:
    The positioning must be single minded. It must have clarity and simplicity and must illuminate the target’s main precept.
  5. Synthesis:
    The positioning must be fused together in an emotional bond with the target audience. It must grab them in the gut.
  6. Integrity:
    The positioning must be believable. If the message raises suspicion – even if it is true – barriers are raised.
  7. Precision:
    The positioning must speak to the target that is best positioned to influence consumption or to consume that product or service.
  8. Convergence:
    The positioning must convey the same positioning message in all of the ways in which the consumer has of touching the brand.
  9. Momentum:
    The present positioning must build upon (but never mimic) the equity (if any) of past communications to leverage any residual positioning equity.
  10. Acceleration:
    The positioning must keep pace with the changing markets to evolve constantly making itself increasingly effective each day.

Beer Marketing and the Current Market

Next, we map out graphically how the major beer brands see themselves to check if there’s a position ready for the taking. This is an important exercise in developing beer marketing messages and beer brand positions.

Beer Marketing
Today the market is divided mostly by origin and price point.

Beer Marketing
Most microbrews define themselves by their origins or styles

Beer Marketing
To be fair, all the beers brands could be positioned one on top of the other as there is little differentiation

Beer Marketing Summary

All the major domestic beers are, by and large, competing for the same audience with vastly similar messaging. The market skews towards masculine-bawdy. Where are the beer marketing differences? How are they being delivered?

Quality, distinctive taste and better beer belongs to the imports and the micro-brews with some spillover into the specialty mass brews of Killians, Red Dog Blue Moon and the like.

Therefore, to claim a position as the superior tasting beer is in violation of rule 7 (integrity). It simply is not believable.

Like most mature markets, the beer marketing messages need to trade off personality and brand image rather than product benefit. After all, no one prefers a beer that they do not like. Taste or even a promise of better taste is not an effective lever to take market share.

Inside-out and Outside-in

Let’s dig deeper to accurately find positions that have the most meaning to customers and provide a market opportunity. Think about beer marketing from an inside-out perspective (how the beer brand presents itself) and an outside-in prospect perspective (how the customer feels about the brand).

Beer Marketing Implications

The most successful and powerful beer advertising of the past 10 years has toyed with this position. Bud’s anthemic “This Bud’s for you” and the original “Miller Time” campaign from years back found home in this quadrant. In today’s market, the closest player to this position is Corona, which has been one of the strongest and fastest growing beers in the import market.

Behavior Modeling Analysis

beerpres_b42_355To ensure that this beer marketing position has true and important meaning to the audience, we thought through the process (what it is customers think beer does), purpose (what the result of that process is) and the precept (what are the fundamental beliefs of the audiences that leads them to think that is the process). That brings us to the ruling precepts that are the most basic and critical precepts that motivate this audience. As you can see, a brand that fits into the sophisticated/intimate/confident position will appeal to this market ? and steal market share.

From our Behavior Modeling (Read more about it here) analysis we came up with the following precepts that support our market audit.

The Beer Marketing Prime Position

X beer is an authentic great tasting American beer for those of us that don’t need to follow the crowd.

Beer Opportunity.001

“This is the confident beer for those of us who know exactly where we stand. Some things in the world simply need no explanations. Good judgment has great rewards. Discriminating and smart enough to avoid trends and ads. Nourishes the spirit without pretense.”

Craft beer. Is More Always better? Ask AB InBev.

AB InBev's answer to craft beerIt looks like Anheuser-Busch InBev (AB InBev) has successfully taken over SABMiller in the biggest beer deal ever. As a brand guy, it is not my place to talk about the many tastes and styles of craft beer but rather to reflect on this merger/acquisition in terms of the bigger brand message. In so many ways, this feels counterintuitive.

The fastest growing segment in the beer market is craft beer. While sales of beer stalwarts like Budweiser and Bud Light have remained flat, the seeming unending number of craft and micro breweries are taking share away from the mega brands that have dominated beer sales for so long.

SAB Miller is not craft beerCraft Beer may be increasing. But…

The beer category is not in the best of health. The sale of beer (not craft beer) has remained relatively flat over the last half a dozen years. Unlike the beer heyday of the 80s, 90s and early 2,000s, when beer ales were escalating, the category is now trying to figure out how to get more alcohol drinkers into the category.
Moose Drool is craft beerFor many an entrepreneur, that riddle seemed to be solved by opening a craft brewery, giving the craft beer a clever name and then producing a dozen styles of craft beer all aimed at enticing an increasingly discerning beer drinker into the fold. However, things have not worked out quite as planned.

While the category of craft beer seems to be leaning toward BETTER beers (in the US, you can lump imports into this group of craft beer as well), the growth has not come from new drinkers but instead through the cannibalization of American lager drinkers (Coors, Bud, Miller and the like). For a while, it seemed that all you needed was an arresting label, a claim to authenticity and a smart alecky brand name and you were all set. The battle was not over having a better tasting beer but rather over the fight for distribution and shelf space. If there was ever an example of if you build it, they will come, it was the craft beer market.

Craft beer did not go according to plan

Guinness is not a craft beerThings did not work out as the craft breweries had hoped, however. They soon discovered that the craft beer market was fickle, to understate the obvious.

Introductory sales and the winning of industry taste awards does not seem to be the engine of long term growth that it once seemed to promise. The reason for this can be found in the brand anthropology of the craft beer drinker. They have almost no brand loyalty.

They covet whatever is new on the shelf. This could be a new brand, a new style, a new point of origin or a new flavor (the latest craze is dry hopped IPA styles that pack such a floral wallop that drinking more than one makes you feel as though you have just swallowed a florist shop). In the industry jargon, these over-hopped IPAs are known as BIG Beers. So named because they satiate the crave for the style very quickly. And, just like prunes, two may be too much.

Fat Tire is a craft beerThis is the rub. The micro-drinker’s brand can be summed up in a word— NEW. They crave it and they will put aside their personal craft beer taste favorite for the excitement of a new brew or brand. Trial does not make a convert in this marketspace that way it does in packaged goods for example. You might get your brew into the rotation of brands but few seem to dominate that rotation. The result? A fragmented market where success comes by being 1,000 miles wide and ¼ of an inch deep. Every new arrival eats everyone else’s lunch.

A world of mergers and acquisitions in craft beer.

Becks is not a craft beerWhat I find so interesting in this mega-merger is the loss of brand equity. One of the selling points, a pivotal one for micro-brews, is the origin and the resulting authenticity it brings to the craft beer itself. So being a Belgium beer or a Boston Beer or a Portland beer has some allure… at least for a short time. But the merger of huge players and their constant gobbling up of micros is the antithesis of authentic. When InBev buys Beck’s, it is no longer looked at with authenticity. It’s not unique or rare. It’s run of the mill and everyday.

The problem is that no one has a REAL brand strategy. Without one, the answer is simply to buy up the competition. Funny that. Soon everyone will figure out that even Corona is no longer Mexican. It might be made there, but authenticity is more than just where the factory site (notice, I did not say brewery) is located.

(Read our Market Study of the beer industry including craft beer here)

(Read another broad look at the beer category here)

(Read my earlier blog on Budweiser here)

Taco Bell beer coming to Chicago

Taco Bell just opened its first Cantina concept in Chicago this week in which beer, wine, sangria and shots to go with its Twisted Freezes are served in addition to the traditional Taco Bell fare.

This looks right.
This looks right.

For a brand that gave the world the 4th Meal (that meal at 1 am after a night of drinking), this seems like a pretty solid fit for its brand. Much more than say, the biscuit taco.

From a business perspective, it is easy to see why Taco Bell beer has arrived, as alcohol is extremely profitable. From a brand perspective, Taco Bell beer works because, unlike some of its competitors that market the notion of family, Taco Bell has never done that. Rather it presents itself as edgy and young adult. (Hence the previously mentioned 4th Meal.)

Its brand gives Taco Bell permission to sell alcohol. The McDonald’s brand, for example, does not have permission to sell it. Subway doesn’t either.

How Taco Bell beer fits.

While I know that Taco Bell has seen success with its foray into the breakfast meal part, it always seemed a little off brand. Taco Bell is about the late night meal part, right? Adding alcohol seems to me to be right on the Taco Bell’s brand and actually fits better with its existing menu than most of its competitors. For a company that serves Doritos Locos Tacos and Nachos, beer seems to fit in quite nicely.

I doubt that this will be a widespread thing and certainly not available through the famous 1 am drive-thru line, but I think that this move further cements the young adult fast food brand that Taco Bell is trying to own and being fiercely single-minded is good for any brand.

Value Propositions In Restaurant Chain B2B Autos and Retail Markets – and Everybody Else

Introduction to Market differentiation

By Tom Dougherty

Brand marketing is in a crisis, and the lack of movement within many markets – from retail to B2B to restaurant chains, and many others – proves it. There seems to be little to no market differentiation.

Markets are stagnating with few target audiences switching their preferences because few brands have a compelling enough value proposition to create a new preference. Some blame maturing markets and complain that all brand-marketing stories have been told.

Not true.

Market differentiation for beer seems to be only about style
Click to see a beer study

The reason for dead markets is that brands have gotten lazy with the value proposition and have, in the end, defined their brands by what it means to even play in the category – what we call “table stakes.”

In this study, we will look at a handful of industries and the results are shocking. Most, if not all, of the players in each market all deliver the same value proposition, usually focused on price, technology and service.

From the perspective of the target audience, those propositions are meaningless and, therefore, audiences tune them out. Those propositions are simply definitions of the market itself. You must have competitive prices, up-to-date technology and excellent service to even exist in those markets.

Therefore, they do not create preference.

Because of that, target audiences are left choosing brands based, not on any value proposition, but on “it’s the way I’ve always done it.” There is no preference.

What is most scandalous is that this is true with just about every category. We have looked at other industries – such as packaged goods, banking, airlines and beverages – and the situation is almost always the same, possibly even worse. Even if a brand markets a value proposition that’s different than the competition – such as Coors and “cold beer” – it is something that target audiences already believe its current brand of choice offers. Audiences only switch for values it believes it does not already have. (For Coors to work, audiences would have to believe its current preferred choice is “warm.)

Stealing market share is an art form practiced by the very few (Apple, Nike, Harley-Davidson), which means great opportunity exists for those who realize their most valuable value proposition is in the emotional self-reflection of the target audience. The most effective value proposition, as we shall see, is in the customer, not in the product or company itself.

Therefore, consider these examples as representatives of just about any category, including your own.

Quick Service Restaurants

The marketing world has been abuzz over Domino’s Pizza’s new attempt to be relevant (and overcome an increasingly bad value perception) by hitting the issue head on: We have often had a bad pizza, but we’re going to change.

While the honesty is a fresh approach and has some potential, there are problems. The most obvious hurdle is that Domino’s must now back up the promise of better taste and ingredients or it will look laughable. (Its recent campaign around purchasers sending in pictures to confirm the improvement is an attempt at that.)

Dominos pizza is different but not betterBut Domino’s has a larger problem: No one switches pizza providers based on the idea of taste. For Domino’s essential message – “Our pizza now tastes good” – to work, audiences would have to currently believe their current pizza of choice tastes terrible. (It’d be the equivalent of someone saying, “This pizza I’ve been eating for years sucks. Let’s order another.”) No one believes that or they wouldn’t have preferred it in the first place.

The mind-boggling thing is that Domino’s “taste” brand isn’t so different from what the rest of the category is doing: All base their marketing on the appearance of taste (and price). A direct competitor, for example, is Papa John’s, whose brand theme line is “Better ingredients. Better Pizza.”

But the “taste” ware isn’t even what is driving the pizza category at all. It’s all about price and the top brands have gotten themselves in a rut they can’t get out of. The winner is going to be the one with the deepest pockets to price out the market, meaning margins and profits are going to shrink.

Basically, the conundrum of price has painted the pizza brands in a corner because they have taught audiences to choose on price and couponing. None of the major pizza chains have been able to create a brand consumers can prefer. So it becomes a game with no end because when it comes to chains, audiences already believe they are the “good enough” option (which is why “better taste” falls on deaf ears) and cheap.

This is the most perfect example of why the value propositions of brands are failing. Having cheap pizza is a table stake among the large providers, and consumers don’t see a marketable difference between the brands, especially when the pizzas have the same exact price.

Because consumers see ads in a snapshot – that is, they only take one message away from it – the takeaway is that both sell a $10 pizza. So what audiences do is choose based on seemingly silly things: Convenience (who can get it to my door quicker), coupons or what the kids want. The basic belief shared by audiences is the major chains provide cheap pizza because the chains taught them that.

Considering all that, it’s no wonder that the majority of the market share, more than 51%, is made up of independents. That just means all those marketing dollars spent by the four leaders are largely wasted because, despite how many times we see their advertising on TV, most pizza eaters don’t prefer them.

Those independent brands have great opportunity because they aren’t trapped in the same padded room of cheap price and “good enough” taste. Smaller chains like Mellow Mushroom are stealing share because it can provide a brand, and an experience, that isn’t shackled by the target audience’s beliefs.

Therefore, the first step in stealing market share lies there, as exemplified by a billboard currently showing in Denver.

Market differentiation by local pizza shops

This, of course, positions Anthony’s directly against Domino’s, so there’s a strategic bent, and the attitude is as well. But it also demonstrates that this pizza retailer is not trapped by the value of proposition of price – if Papa John’s pizza is so much better, why can’t it charge a higher price? – and can claim a better pizza because it’s not lumped in with the “good enough” brands.

For the major retailers, this is a problem many of the largest soda brands are trying to emerge from. While Pepsi and Coke used to have extreme loyalty, it has softened over the years because the industry taught consumers to buy on price. Therefore, the choice has depended on “what’s on sale?”

This is true for the entire fast-food (or Quick Service Restaurant) industry. In nearly every QSR brand we examined, price or taste was the value proposition.

Make no mistake. A QSR sandwich shop, such as Quiznos, is competing with the Pizza Huts, Taco Bells and McDonald’s of the world, as well as any other food choice in the market (including cooking at home). To become preferred, it has to be more than price. It has to be the self-reflection of who consumers are when they choose you.

As it stands now, the self-reflection of the target audience in the QSR market is that they are cheap and will eat anything. The value propositions are the same: Price and taste.

The value propositions have failed. (Read more on the QSR Market here)

B2B Brands

There are times when the value-proposition-as-table-stake isn’t just about a product benefit or the definitions of what it means to be in the category. Sometimes, the meanings of the brands themselves become the table stakes.

Take three of the most powerful B2B brands in the world, in which they have overlapping markets and, as it turns out, highly expensive marketing: IBM, Cisco and Alcatel-Lucent.

Take a look at their brand positions:

IBM – “Smarter Planet”
Cisco – “Human Network”

CiscoYou could jumble the words in those theme lines up and each would emerge with the same brand they had before. In a nutshell, all are talking about connectivity and, in the case of IBM and Cisco, they are attempting to make it more human. (But not going all the way like, let’s say, Apple does.) There are spots about meeting your doctor who across the world, an elementary classroom communicating with peers in China, collecting data from an infant’s body.

At one point, this may have been a meaningful brand position as technology seemed to be cold, hard to understand and dangerous. But because everybody now claims it and the world is much more accepting of the benefits of technology, a human connection is a value proposition that means nothing. Despite the high production values, it becomes as much of an ignored message as insurance companies saying, “We’ll protect you.”

At least Cisco and IBM are trying. Most of its competition, such as Juniper Networks and Lucent, simply focus on technology, which is as much of a table stake in this category as taste and price among pizza chains.

When it’s simply about the technology or the things most B2B brands sell – product benefits, price, technology, etc. – you are simply selling category benefits. When that happens, only preference for the category emerges.

B2B markets are also dependent on sales teams, which is why many believe brand marketing is not important. They believe B2B preference is the result of a rational argument.

However, it is actually more important than in consumer markets because, otherwise, B2B companies are left to win based on how well they respond to RFPs and the personal acumen of the salesperson. In those cases, companies then have to recreate the “brand” on a daily basis, with next to no equity built up over time.

It has been our experience that those on the ground for B2B clients are hungry for a brand because it gives the salesperson a story to tell without continually fighting over whether your socket will fit into theirs better than others. It’s an exhausting, losing game that ends up making B2B companies flounder.

Meanwhile, a different and better value proposition that’s related to the brand can create market leadership and change the category itself, positioning the brand as the expert. That makes the sales arguments more believable and the brand itself becomes what IBM used to be, the default choice and the result of the sales cliché, “You won’t be blamed if you choose IBM.”

Market differentiation is what make go-to-meeting successfulConsider Citrix, which has eaten much of the market share of IBM and Cisco because its GoToMeeting brand eliminated much of the need for the videoconferencing the two giants are currently promoting.

Currently, GoToMeeting and its sub-brands, such as GoToWebinar, hold 90% market share of the remote access market. Citrix customers now include all of the Fortune 100 companies and 99% of the Fortune Global 500.

It did this by suggesting a brand that reflected the brand face of the professional businessperson: On the go, ready and quick with information, no time for bulky technology, cutting down on expenses, just looking for “easy.” Its name – GoToMeeting – suggests that, as does its tagline of “Work with anyone, anywhere.”

The value proposition is “success,” because you, as the businessperson, have no limits holding you back. The value proposition is not “human connection,” but something more personal and meaningful.

That’s a value proposition that works (Read more on the B2B Segment here).

The Auto Industry

We mentioned earlier that the auto industry is among the worst when it comes to marketing the same tone and attitude, aspects that become part of the value proposition as well as price and technology because they are intended to make an emotional connection. A tone and attitude that is part of the self-reflection is the most meaningful value proposition.

BMW Branding Strategy is all about Market differentiation
The BMW Logo hints at its early aviation business

The auto industry, however, has become one of the most insular industries in the U.S. and represents a trap many companies and brands have fallen into. They believe that to market their industry you have to be experts in that industry rather than experts in marketing or branding. They believe that marketing automobiles is different than anything else. (An automaker executive actually said those exact words to us.)

This is the result. Spots that are expensive, extremely visual with dramatic music and voiceovers by professional actors (Liev Schreiber for Infinity, Jon Hamm for Mercedes). Yet, if you didn’t see the logo at the end, you wouldn’t be able to tell the difference.

Even with the same tones, they also hold the same value propositions. They are about technology – one in intuitively understanding the driver, the other in being environmentally aware – but it’s still about technology.

Combined with the same tone, it enters the realm of cliché. You just need a masculine, professional voiceover while showing a car driving down the road and, like magic, you have the result of “auto marketing is different.”

Technology has become a table stake thoroughly over-used in the auto industry, as though that says something about the consumer. (It just says something about the car.) We’ve already seen two that deliver that message, but blend this one from Acura and you see the quagmire the auto industry is in.

One of the problems with using technology as a value proposition is that few of the auto brands embed it into the brand itself. That is, any value proposition has to be related to the brand itself. Otherwise, it’s just another marketing message that does not move the needle.

The tone and attitude so commonly used by the auto industry came from the idea that the auto is part of your lifestyle. We do buy cars that are a reflection of who we want to be – which is why middle-age men buy so many sports cars, for example, or moms buy vans and SUVs – but the “lifestyle” angle has become a value proposition cliché, even when the tone is slightly different, because it is not tied into the brand.

The value propositions marketed in the auto industry have become a blend of the same tone, attitude and messaging (technology, lifestyle) that it’s no wonder that, often, the best – and smartest – choice from the point of view of the consumer is not to buy at all. Without a more meaningful value proposition, that’s the brand face audiences are wearing.

Value propositions fail again. Read more on the auto industry here

Retailers

There are many industries that have found themselves lost in the value proposition dilemma. So many are lost in it that it’s no surprise the retail industry is down. You could even place the retail in among the worst, right down there with banks.

Market differentiation is not Sears anymore
Two broken brands don’t make a whole

Remember that in order for a value proposition to work, it must answer a need in the market. If those who you are trying to persuade already have what you are marketing, yours is among the messages that are being filtered out.

In the case of retailers, they are obsessed with marketing price as the value proposition. So much so that audiences believe everybody has competitive prices and, as often as any, just pick the retailer closest to their house (or work), and even which side of the street the retailer is located. They already believe they have low prices because the entire retail industry has told them so.

We took a look at the top 10 retailers in the U.S. and you can see why the value propositions have led to no preference in the market. The market leader is Wal-Mart, which is based on its theme line of “Save Money. Live Better.” If anyone owns “price,” it’s Wal-Mart.

Yet, Target, the No. 3 retailer in the US (behind Wal-Mart and Kroger) markets “Expect More. Pay Less.”

In terms of messaging, there’s no difference. They all basically say, “We have what you need and at a low price is the same message over and over.”

Let’s consider the rest of the top retailers. The No. 4 retailer is Walgreens, which has recently attempted to build its brand around nostalgia for the recent past. Its theme line says, “There’s a better way.” But what is that way?

The question Walgreens needs to ask itself is if a yearning for a past, perfect world is what consumers are looking for – especially from Walgreens. And, even if it is, is it related to the Walgreens brand?

No. 5. Home Depot. “More saving. More doing.”

Costco succeeds inMarket differentiationNo. 6 is Costco, which is certainly about cost.

No. 7 is CVS, which is not only about price, but its “mom” image isn’t that far away from what Walgreens is doing. Which is why preference between these two fierce competitors is based on location.

No. 8 is Lowe’s. Its “Let’s Build Something Together” is right there with Home Depot’s “More doing” and both value propositions are about service.

No. 9. Sears. “Life. Well spent.”

No. 10. Best Buy. “Buyer be happy.”

We could go on. Having competitive prices with good service is the definition of a retailer. If you don’t have them, you are not a retailer. Again, from the point of view of the consumer, the value propositions are all the same and are definitions of what it means to even be in the market.

Even when there are value propositions tied into the brand face of the consumer, they are either not related to the brand (which is as much about operations as marketing), not important or retreads.

Retailers, as much as anyone, need to think harder about what its value proposition is.

And the answer to that is brand. (We have an a deep look at the retail category here) 

The Right Way

If you’ve read our other studies, blogs and/or articles, you know that we have often talked about the few brands that work as well as demonstrating how we also conduct brand.

balance in Market differentiationOne of the reasons why there are “pet” brands for us is that so few practice brand in a way that’s truly persuasive and presents a value proposition that is related to that brand.

We have studied other markets – consumer goods, airlines and beer – and often the same conclusions are reached. The lack of meaningful value propositions is the single biggest reason why so many companies and brands are at a standstill, and market share is so rarely stolen.

Apple is one brand that gets it right. Even when it is marketing a new product, like the iPad, it says exactly who the customer is.

The point is that whether you are a restaurant chain, a B2B business, an automaker, a retailer or anything else, the value proposition is the brand face of the target audience you want to reach.

Otherwise, you are left with marketing price, convenience and technology, just like everybody else around you. The result is that you become a gerbil running in place within a spinning wheel. Don’t let that become your value proposition.

 

Beer Market Study

Beer market study: domestic and imported beer market segments

By Tom Dougherty

When Belgium-based InBev bought Budweiser in 2008, we posed the question: Will it make a difference to American beer drinkers? After all, the Budweiser brand was built on Americana and “I’ll have a Bud” is as much a part of the American vernacular as “Bless you.” (Read my blog on the InBev purchase of SABMiller here)

When creating a beer market study it is important to find out who speaks to the emotional values that influence choice
The beer category is an emotional choice

Our thought was that Budweiser would see a dip but it wouldn’t be enormous because the rest of the field – most notably, Miller and Coors – would fail to take advantage.

We were right and slightly off, and have a prediction to consider as we look at the domestic beer industry, concentrating on the major brands: Budweiser, Miller and Coors.

Where we right: Budweiser did drop a few points in market share, falling under the “monopoly” threshold of 50%, down to 48-49% depending on the source.

Where we were slightly off: Coors Light took advantage, recently passing Bud as the nation’s second-best selling beer behind Bud Light, which still dominates with around 20% market share – almost twice as much as Coors Light.

budweiser Beer market studyA prediction for this beer market study: Budweiser will make a comeback. Overall, it still holds more than twice the market share of its nearest competitor, Miller, and there’s something about InBev’s history that suggests it can reverse the trend.

Of course, there are other issues. The industry as a whole is losing share to wine and spirits. Sales of spirits rose 4% in 2011, while beer lost 1.3%. Beer is still dominates, with 49.2% of the alcohol sales to the 33.6% of spirits, but the other categories are getting more aggressive in their marketing. There are now TV spots for Yellow Tail wine and 1800 Tequila with Michael Imperioli. Advertising is no longer the sole domain of beer among alcohol marketers.(Read about beer marketing and differentiation here)

Then there’s Miller and Coors. Below we’ll take a look at the major brands and these two are certainly aiming for Budweiser by joining forces in the US market as MillerCoors. (Miller is owned SABMiller of London and Coors is owned by Molson.)

Still, if a new trend will emerge, it’s that Budweiser will remain the King of Beers. (Read about the important market research that predicts behaviors)

Budweiser

No beer market study can ignore Budweiser. The purchase of Budweiser by InBev was cause for alarm because so much of what Budweiser meant to consumers was about being a hard-core American and Budweiser’s imagery often reflected that. Although Coors will no doubt say it made strides through its “Keeping the Cold” campaign, we believe the introduction of InBev to the U.S. made Bud’s brand loyalty a little weaker for a time.

Years ago, and occasionally still, Budweiser was in full-on “dumb guy” mode with its advertising, creating spots around dofus twentysomethings in search of a great beer, often to comical effect. That ploy was already getting old by 2008 because the competition went about copying it.

Bud Light hasn’t changed that approach all that much, but it – as we’ll see later – it just means all similar ads feel like they are for Bud Light.

What’s interesting, however, is that Budweiser is the master of having fighter brands, those intended to face exact competitors. The recent Super Bowl ads introduced Bud Light Premium, bottled in a blue bottle and introduced as young, hip and (here’s the differentiator) smart.

For the parent brand, Budweiser, it’s now been four years since the purchase, so consumers who were even aware of it before have long forgotten it. Therefore, the time is right for InBev to shepherd Budweiser into a new, more meaningful era.

InBev

Like many companies, InBev has its share of wins and losses. But one of its most successful is Stella Artois, which has overcome a slump of a few years ago to grow 13.3% in sales to retailers recently and become one of the most perfect brands in the business.

Let’s list the reasons for Stella’s brand strength. It has an identifiable brand equity marker in the shape of the glass. Some of the most effective billboards have shown just the Stella beer in the Stella glass. Nothing more needs to be said.

Pouring the better and cutting off the head with a knife creates the idea of an important process – and Stella becomes meaningful to those who believe in drinking the right beer correctly and, most importantly, believe in that the idea of taking care is important. (In effect, it’s saying that other beers are not important and careless. Like fast food.) The brand face, who the audience sees themselves as being when they use the brand, is elegance.

Within a company as large as InBev, with operations in more than 30 countries, the same folks guiding the Stella brand are not the same ones guiding Budweiser.

But there was an interesting take during the recent Super Bowl when Budweiser focused on heritage – which hits its InBev dilemma (both the positive and the negative) head on.

Budweiser is still far and away the market leader – both in the US and globally – and it can change the direction of its falling sales by tapping into what has made it one of the most powerful brands over recent decades. Its Bud Light is still going strong and it will continue to stay on top until the competition does something different and more meaningful.

Speaking of which…

Miller (or should we say Miller/Coors)

Beer market study miller/coorsNo one has copied the Bud Light tone more than Miller, and failed to increase its market share in the process. A few years ago, almost every beer ad centered around “dumb guy.” There were, in a way, much like what we shown earlier in the Bud Light dog ad. Most of them center around some sort of party or bar with great-looking girls and guys willing to do anything for Brand X beer in some sort of Judd Apatow-Seth Rogan-Jackass fashion.

Bud Light has owned that position but the major competitors just copied it, thinking, “If it works for Bud Light, it’ll work for us.”

It doesn’t work that way, however.

When you copy the market leader, the consumer simply defaults to the market leader. For example, we’ve done studies in which we show a series of ads – inserting a “dumb guy” beer ad in the mix – then later ask, “Who was the beer ad for?” Invariably, the answer is Budweiser whether it was or not.

Today, as a few beer brands are moving away from that thinking, Miller is stuck– trying to be entertainment instead of creating preference – and finding itself losing market share.

This, as we’ve all seen, is simply one in a series of ads that have been playing non-stop during sporting events. (If you’re an NFL fan, you’ve seen them all. Hundreds of times.) But they are a waste of money for anybody but Bud Light – although, even then, Bud Light should re-think it.

This is especially problematic for Miller as this approach never really worked in the first place for those other than Bud Light and being touted as the most coveted beer – the underlying message in all of them – is not effective. Current beer drinkers already believe their beer is good. Why else are they drinking it?

Miller, among all the major beer brands, is the most in need of a brand overhaul. It obviously lacks having a unique and meaningful brand position. If it doesn’t take those important and difficult steps to relevancy, it will continue to lose market share.

Coors

Coors represents one of the more interesting developments in the beer market as Coors Light – and its “cold” campaign – has overtaken Budweiser as the nation’s second-most popular beer. There are sure to be congratulations within the MolsonCoors complex, but they should hold off the celebrating.

Beer market study coors banquet beerIt was only a matter of time until a light beer passed the long-standing Budweiser. Four of the top five beer brands in the US – and six of the top 10 – are light beers and the ascension of Coors Light mostly reflected the current taste of beer drinkers. What we see here is a trend, not a brand-creating preference.

Still. It’s a fair question. Of all the light beers, why Coors? For one thing, the nearest challenger is Miller Lite and, as we’ve seen, it is stuck in a meaningless “dumb guy” mode and needs to get out of it. For the most part, Coors Light ads are identifiable as being from Coors Light when it is not treading to close to “dumb guy.”

Budweiser’s own Natural and Busch Light are among the next three beers in market share but Bud uses them as fighter brands to keep others – such as Miller High Life – from growing.

The “cold” campaign may tap into the way drinkers want their beer, but the problem is that it is a table stake, what you need to have to even play in the game. You can make any beer cold – although having a can that tells you it’s cold is a nice innovation (that the rest of the industry will soon copy). It isn’t positioned against anything. No one would claim “warm” beer, so “cold” doesn’t present a true choice.

 

“Cold” does feed into the image of Coors being from Colorado, but it does not reflect who the consumer wants to be when they drink Coors. It’s just about the can of beer. (As you can see, Coors sidles up to “dumb guy” every now and then.)

Instead, the rise of Coors Light is most directly attributed to a market drinking more light beer and the rest of the competition still in branding flux.

Corona

It should be noted here, however, that there are exceptions to that lack of brand focus among light beers. Corona Extra is the real mover in this market space because Corona has a definite brand – “Find Your Beach” – that looks and feels different than anyone else in the market.

Corona has long been the best-branded beer in the US, even as an import, and its commitment to consistency is to be celebrated.

Imports (Non-U.S. beers)

Like the beers in the US, those in the rest of the world are basically staying pat in terms of market leadership in their respective countries. For example, while you might think Foster’s is the most popular beer in Australia, it’s not. Victoria Bitter holds that honor and, what might be most shocking to US consumers, is that Victoria Bitter has been that country’s most popular beer for more than two decades.

The reason for the stability is because, like in the US, the brand promises, messages and tone are not that different than what is in the US. Most themes are dominated by male bonding (Canada’s Labatt Blue, UK’s Carling, Czech Republic’s Gambrinus and Belgium’s Jupiler) along with racy tones (Brazil’s Skol), high lifestyle (Japan’s Asahi Super Dry) and even “cold” (Victoria Bitter).

The status quo remains because all across the world, beers are aping each other – which leads to stagnation in the market. Therefore, long-time market leaders stay there while the competition slips trying to climb up the ladder.

Labatt

Take for example, this Labatt Blue ad – it is no different in terms of tone and message than any ad in the US or elsewhere.

Labatt’s familiar tone and message might be a result of being owned by InBev, which also now owns Budweiser. But InBev also owns Stella Artois. Still, the beer industry is becoming more and more incestuous. Molson, which also owns Coors, also owns Carling, while Victoria Bitter is actually owned by Fosters.

With that cross-pollination, it’s no wonder themes are repeated. For example, Budweiser, Miller and Coors have sports-specific ads. So do the ones in Europe, such as this one from Belgium’s Jupiler.

Jupiler

 

For those of you who can’t read German, the theme line here is: “Men Know Why.” That isn’t so far from Carling’s “You know who your mates are.”

Carling (not an import)

There’s a simple reason for this, of course. Men are always the main target audience for beers, and sports is a direct way to connect to that “maleness” beer brands often think are so important.

Gambrinus

The problem, as in the US, is that nearly every beer takes that strategy and basically does the same thing with it. The tactic by itself is fine. It’s just like everything else in beer marketing. The brands all start to run together in the minds of consumers.

It’s no wonder then that the brands with the most meaning step out of the usual beer comfort zone, whether a US domestic or an import, Corona, Stella Artois, Guinness and, to a lesser extent, Heineken.

Guinness

Beer market study summary

This is how the beer situation stands: Budweiser is still far and away the market leader (both nationally and globally), but it has lost some market share after being bought by InBev. Coors Light has made inroads and Miller continues to flounder, while spirits are taking market share away from the beer category itself.

inBev in the Beer market study
inBev is the largest brewer in the world

What we haven’t mentioned in this beer market study is the elephant in the room: Craft beers. The category itself is rising, with sales increasing more than 12% in 2011 as these “serious” beer drinkers consider the big American lagers a waste of time.

Despite the increase, craft beers still account for less than 8% of the total U.S. market although experts predict that number will increase in the coming years.

There are several reasons for this increase. The number of breweries has grown and the increased distribution of craft beers to bars across the nation has helped lift the category as a whole. Each time a new brewery pops up, craft beers have more opportunity to sell their beer. Distribution, once the main barrier to adoption for craft beers, is increasing.

There are also more craft beers (more than we can mention in this beer market study) out there than ever, which means the category is increasing market share but the individual players are not. Basically, they are relying on distribution and, to some extent, the appeal of their packaging and name to gain acceptance. (There is, for example, a beer called Moose Drool. And it’s not bad.)

Beer market studyWe have done research and brand projects for clients in the beer industry, including for some of the leading craft beers, and the brand face of the typical craft beer drinker is “new and different.” We know of what we speak in this beer market study. That is, the usual craft beer drinker wants to try something new and different, which is why they often drink the local beer or something different than what they have been drinking.

The problem for craft beers: Their drinkers are rarely brand loyal, unlike those who drink Bud, Coors or Miller. The craft beer drinker is loyal to craft beers, not to one individually.

Because of that, individual craft beers rarely steal market share from others for an extended period. The same is true for the big three, although for different reasons. It’s not from Bud Light that Coors Light is getting its increased market share. It’s from the middle crowd, such as Fosters or Michelob, beers that are dying and not light beers.

For such a mature and competitive category, the beer industry does little positioning against each other. Instead, they tend to copy each other. Miller Lite copies Bud Light. Some even remember that Heineken went the “cold” route a few years ago.

That means the increases and decreases in the market tend to be for reasons other than brand. Light beer is the dominant trend. Distribution is increasing for craft beers (as well as many imports). There’s more choice. Spirits and wine are increasing.

If you only take away one thing from this beer market study it should be this—The art of brand as it reflects whom the customer aspires to be is practiced by few: Corona, Stella, Guinness and a handful of craft beers. Budweiser, as a parent brand, has often been the standard bearer of this art by playing its market leadership (read: heritage) beautifully.

But it’s a new world in which beer faces more competitors and increased challenges from spirits and wine. The good news is that, because so few are practicing the art of branding correctly, there is opportunity. In fact, the one in the most trouble, Miller Lite, has the greatest opportunity because it is basically carrying empty luggage. It can still fill it up, but time is wasting. To us its own ad language, it’s time for Miller to “man up.”

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