A look at the 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.”
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. (Read a fundamental study on beers here)
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.
A prediction: 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.
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)
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.
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)
No 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 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.
It 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.
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.
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.
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.
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.
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.
What we haven’t mentioned 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 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.)
We 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.” 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.
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.”