BEER MARKET STUDY
Beer market study
“…because so few are practicing the art of branding correctly, there is opportunity.”
Beer market study: domestic and imported beer market segments
Before we dig into the actual beer market study, consider this. 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 is built on Americana. “I’ll have a Bud” is as much a part of the American vernacular as “Bless you.” (Read a blog on the InBev purchase of SABMiller here.) This beer market study will look at that prediction. It will also pose a new prediction or two about the future of the beer market as a whole.
We thought Budweiser would dip but it wouldn’t be enormous because the rest of the field – most notably, Miller and Coors – would fail to take advantage.
What we got right, what we got wrong
That was right and slightly off. We have a prediction to consider as we look at the domestic beer industry. We’ll be concentrating on the major brands: Budweiser, Miller and Coors.
However, Coors Light took advantage, recently passing Bud as the nation’s second-best selling beer behind Bud Light. Bud Light still dominates with double the market share of Coors Light.
Budweiser will come back
A 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. But, 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 2.4% in 2016, while beer has stayed stagnant. Beer is still dominates, with 47% of the alcohol sales to the 35.9% of spirits. But beer once held nearly 60% of the market, so the trend is alarming. Spirits and wine are getting more aggressive in their marketing. There are now TV spots for Yellow Tail wine and 1800 Tequila. 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. (SABMiller of London owns Miller and Molson owns Coors.)
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 is cause for alarm. So much of what Budweiser means to consumers is about being a hard-core American. Budweiser’s imagery often reflects that. Coors will no doubt say it made strides through its “Cold Counts” campaign. But, 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. It created 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. Even if Bud Light’s newest ad in January 2017 just about buds.
For the parent brand, Budweiser, it’s now been nine 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 grown 12.5% in sales in 2016 to 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.
Stella becomes meaningful to those who believe in drinking the right beer correctly. Most importantly, they 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.
Why Stella is different than Budweiser
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 a recent Super Bowl when Budweiser focused on heritage. It hit the 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. 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)
Continuing this beer market study, know this. 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 anything you’d see from Bud Light. (Coors isn’t much better, but at least it has a claimed value. Whether it’s believable or truly differentiating is another question.) 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.
Copying the market leader never works
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 now attempting something different. Trying to build on its own equity (it thinks) be telling audiences to “Hold True.” But do the drinkers of other beers believe Miller Lite is authentic, and therefore would switch?
This is especially problematic for Miller as this approach never really worked in the first place for those other than Bud Light. 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 is one of the most interesting brands of this beer market study. The “cold” campaign of Coors Light 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. The top four beer brands in the US – and seven 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.
What does cold mean?
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 finding a way to be more relevant. For the most part, Coors Light ads are identifiable as being from Coors Light when it holds the “cold” position.
Budweiser’s own Natural and Busch Light are among the next three beers in market share (after Michelob Light). 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.
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.
This 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. Its 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. When that happens, brands all start to run together in the minds of consumers.
The brands with the most meaning step out of the usual beer comfort zone. Whether its a US domestic or an import, Corona, Stella Artois, Guinness and, to a lesser extent, Heineken.
Beer market study summary
This is how the beer situation stands: Budweiser is still far and away the market leader (both nationally and globally). However, 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 in this beer market study is the elephant in the room: Craft beers. The category itself is rising, with with market share for the category at 12.3% as these “serious” beer drinkers consider the big American lagers a waste of time.
Craft beers, however, don’t steal market share from each other
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.)
We have done research and brand projects for clients in the beer industry, including for some of the leading craft beers. 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. This is why they often drink the local beer or something different than what they have been drinking.
Craft beer drinkers and loyalty
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.
The beer brands aren’t working hard enough
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 takeaway from this beer market study it is this— Brand as it is used now doesn’t move market share. The art of brand as it reflects whom the customer aspires to be is practiced by few. Only Corona, Stella, Guinness and a handful of craft beers use brand in this way.. Budweiser, as a parent brand, is 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. The beer is basically carrying empty luggage. It can still fill it up, but time is wasting. To us its own old ad language, it’s time for Miller to “man up.”