Beverage brands: Don’t get cocky

Beverage brands shouldn’t gloat about the decline of beer sales

So, the beer industry is seeing a drop in sales for the third straight year, and beverage brands from other sectors of the market are rejoicing.

Well, don’t get too cocky.

According to a CNN report (through a IWSR Drinks Market Analysis), beer volume in the US has plunged 2.4% over the last five years, including a 1.5% decline in the last year. And it’s not just the big domestic beers (Budweiser, Miller & Coors) suffering, as they saw a 4.6% yearly decline. It’s also the once-rising craft beers with a .4% drop and consolidation with the big beer companies.

Beverage brands

Beer sales are dropping

In beer’s place are the beverage brands in spiked seltzer, canned wine, pre-made cocktails and premium liquor. What a strange world we live in.

Certainly, more people than ever are drinking bottled water, as we discussed last week. But the rise of those other beverage brands suggests people still like their alcohol.

Who’s emerging?

Therefore, we’ve seen the emergence of some interesting beverage brands. There’s White Claw, the nation’s top-selling spiked seltzer brand enjoying 20% growth. There’s Precept Wine and its House Wine canned wine brand, sparking a 74% sales jump for the canned wine category.

Sales of pre-made cocktails (like Haus) rose 17% over the last year, while liquors leaped 6%, led by a 13% growth in tequila.

That’s a helluva lot of growth for those alternative beverage brands not considered in the alcohol mainstream just a few years ago. And while numbers aren’t definitive that they are directly taking beer’s market share, you can infer that beer (while still immensely popular) is seeing more competition from other beverage categories.

What’s causing that change? And what should the new upstarts consider?

Let’s take a quick look at beer. The Big Three have long dominated the market and furthered their stranglehold when they introduced light beers in the mid-70s. They still lead the market, but the craft beer industry has made inroads over the last decade into their market share.

So what did the big boys do about it? They simply bought those craft beers. Even highly successful New Belgium Brewing (a former client of ours) and its lead beer, Fat Tire, recently sold to Lion Little World Beverages, the beer division of Kirin.

New Belgium isn’t alone. The large beers are simply buying craft beers up so they can still control the beer market.

Beverage brands could learn from craft beers

That’s leading to a few things. For one, any brand preference those craft beers held are waning. Which isn’t a surprise. The craft beer drinker has been taught by those brands to always look for what’s new, which is why there are so many variations from one brewery that come and go.

And there’s so many craft beer brands that consumers can never keep track of them. While the craft beer category was growing, there were more and more beverage brands entering the category so they started cannibalizing each other. Brands came and went so fast that few established any brand cred.

Now, craft beers are joining the establishment, practically eliminating the anti-establishment atmosphere that attracted many drinkers to craft beers in the first place.

With the spike in sales among those alternative beverage brands (White Claw, Babe Wine, etc.), don’t be surprised if something similar happens. The categories will grow, more players will join up and the cannibalization will officially begin.

Then they’ll get bought up, many will disappear into the ether and execs will wonder what the hell happened*.

*It’s already happening, actually. InBev, which owns Budweiser, has two spiked seltzer brands, and bought Babe Wine over the summer.

Bad messaging will doom many brands

So what should they do now? For one, those beverage brands must understand why the change is happening and how they can capitalize on it long term. That means conducting projectable brand research that goes beyond simple usage and attitudes, and digs deep into the beliefs that power the market’s choices.

Right now, many of those brands sound just like craft beers, which leaves them vulnerable to drinkers eventually moving onto the next thing.

White Claw, for instance, pounces on the idea of being, well, a healthy drink, saying it’s “Made Pure” (a registered phrase). It spouts its low calorie count and carb percentage.

Precept Wine’s House Wine says it’s “bringing magnificent wine into your home at a magnificent price.” Haus cocktails says it’s made with all-natural ingredients, thus raising “a glass to something better.”

Here’s the problem with the messaging from those beverage brands. The rest of their competitors will (and are) using the same, exact messaging. Which teaches drinkers to simply try something new, while remaining very un-brand loyal.

What beverage brands should do

And there’s problems with the messaging. Mainly, they are all about the beverage brand. Nothing about the drinker. No self-identification. Which is how you create preference.

It’d be like if Nike promoted the reasons why its shoes are best (arches, sole cushion, etc.) instead of the more emotionally motivating power of “Just Do It.”

That theme is about the user, not the shoe. It’s an emotional call that says, “Just ignore all the talk, and get things done. Because you are a winner.”

The beverage brands currently enjoying all this success are not doing that. And that means someone else will take their market share because there will be too many players in an overextended category. And drinkers will move on because they’ll realize that all the brands are the same.

They’ve bought into a category. Not into any brands with a compelling and differentiating message.

What does that sound like? It sounds like the craft beer category.

So, the beverage brands in spiked seltzer, canned wine, pre-made cocktails and premium liquor will feed on each other with similar messaging. Most will die out. Others will succeed temporarily until they are forced to sell.

And InBev will win again. Now is the time to do it another way.

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