There have been changes a brewing in the beer business over the last decade and much of the conventional wisdom of the twentieth century no longer holds sway. As consumer brand and taste preferences have shifted and brewers and importers have attempted, with varying degrees of success, to deliver what an ever-demanding public seems to want. Currently trend-watchers are using three words when describing the most dynamic aspects of the brewing business: lights, imports and malternatives.
Total beer consumption has risen only slightly from year to year, but incremental growth can add up to big increases in a market as vast as that of American beer consumption. In 2001, for example, total beer volume increased less than half of one percentage point. But since the starting point was a market of 2.76 billion 2.25 gallon cases, that fraction of a percent was equal to more than eight million additional cases sold and consumed. And although all the data isn’t tabulated yet, if 2001 mirrored earlier years, about 2 million of those additional cases will have been consumed on-premise in bars and restaurants. It’s important to remember however, that looking at the totality of beer consumption is only the beginning. The real story is among the various brands and categories of beer.
As far as categories go, the most significant and unstoppable trend in the beer business is the continued momentum of light beer. Since the creation and marketing of the first light brands in the mid 1970s consumers have increasingly been attracted to these brews for their smooth, mild taste and lower calories. According to Adams Handbook Advance 2002, last year four of the top five domestic brands and six of the top ten domestic beers were light beers and all, with the exception of Miller Lite, showed volume increases in 2001.
LEADING IMPORTED BEERS
1. Corona Extra
2. Heineken Lager
3. Labatt Blue
5. Guinness Stout
6. Foster’s Lager
Beck’s North America
8. Amstel Light
9. Bass Ale
10. Modelo Especial
As if to prove the old adage about the big getting bigger, the biggest volume growth of any beer brand was realized by Bud Light, which managed to boost total consumption by more than 35 million cases (+8%) and finished the year at its highest point ever, an astounding 478 million cases. The continued meteoric rise of this brand finally brought about a changing of the guard at the head of the list of leading beer brands. Last year, Budweiser, the self-proclaimed and universally-recognized, King of Beers saw its number one slot usurped by its younger sibling as it slipped to second place. Bud Light, recognized as an Adams Business Media Growth Brand with a five year annual compound growth rate of 11% and an 8% increase in 2001 to 478,000 2.25 gallon cases. And while Budweiser has seen its volume decline considerably in recent years (501,500 cases in 1996 to 465,000 cases in 2001), the Budweiser family, fueled by Bud Light (284,500 cases in 1996 to 478,000 cases last year), has realized a net gain of 157 million cases in the last five years.
And as mentioned earlier, aside from the continued slide of Miller Lite, growth has been a multi-year phenomenon for the major light beer brands with Coors Light (+1.1%), Natural Light (+1.8%), Busch Light (+3.4%) and Michelob Light (+2.6%) all boosting volume last year as well as joining Bud Light among Adams 2002 Growth Brands (A complete listing and analysis of the Adams Growth Brand Awards wil be published in the next issue of Cheers.)
LEADING DOMESTIC BEERS
1. Bud Light
3. Coors Light
4. Miller Lite
5. Natural Light
7. Busch Light
8. Miller Gen. Draft
9. Miller High Life
10. Michelob Light
The second part of the beer trend mantra is imports and growth here has been almost universal. The import category as awhole enjoyed voume increase of 8.6% last year to 301 million cases. (Domestic beer on the other hand suffered a collective decline of 0.6%.)
Ten years ago imports with 109 million cases commanded only slightly more than 4% of the U.S. beer market, a share that had been for all practical purposes unchanged in decades. By the end of last year the total number of cases had climbed to 301 million and imported brands claimed a combined 10.9% of all beer consumption. As on-premise operators are well aware the most spectacular growth has been that of Corona Extra which has skyrocketed in the past decade (from 12 million cases in 1991 to 85 million in 2001). Growth has also been strong for other Mexican imports for a number of reasons including a growth in the population of Mexican-Americans and other Latino communities and the continued popularity of Mexican food and Mexican-themed restaurants. Tecate (+9.1%), Modelo Especial (+26.8%), Corona Light (+26.5%), Dos Equis (+10%), Pacifico (+18.4%) and Negra Modelo (+22.7%) all reporting strong growth last year, although on volumes considerably smaller than Corona’s.
And it’s not just Mexican imports. Heineken, for decades the import leader and now the number two foreign brand has gained 11 million cases in the last three years and more than 32 million cases in the last decade.
In fact in 2001 its harder to find an import that didn’t have a big year. Among the 25 largest import brands, only five reported declines in volume, and three of those were from Molson, a once strong brand family that has struggled in recent years.
Unfortunately, if light beer and imported beer enjoyed a collective volume increase of 54.8 million cases, but total beer consumption increased by only 8 million cases, there must have been some significant losses in other categories.
CONSUMPTION OF BEER BY CATEGORY
Superpremium & Micro/Specialty
Over the last decade consumers have increasingly gravitated to domestic light beers and a wide range of imports as this table (right) shows. In fact both categories began have been building momentum for considerably longer. Twenty years ago light beer could claim less than 14% of the market and imports less than 3%. Premium brands on the other hand accounted for more than half of all beer consumption then and only 20% now. The tremendous volume increases achieved by light and imported brands have come at the expense of beers in virtually every other category.
There’s also been a doubling in size of the Superpremium & Micro/Specialty category and the emergence of a viable new product–ice beer–in the last 10 years as total annual consumption has increased by more than 140 million cases.
SOURCE: ADAMS BEER HANDBOOK, ADAMS HANDBOOK ADVANCE
The decline of Budweiser (-2.3% or 11 million cases to 465 million cases) was mentioned earlier but that was only part of the more than 26 million cases lost in the premium beer category. Declines among popular beers (-5.1% or 16.7 million cases), not really much of a factor in the on-premise market, also contributed to the slowing of total beer growth.
Besides light beer and imports, the only beer category with any kind of growth last year was the Superpremium & Micro/Specialty category which encompasses craft beers, regional powerhouses and microbrews. This wide-ranging group of beers collectively boasted a 4.3% volume increase last year to a total of 150 million cases, an all-time high.
CATEGORY DEFINITIONS Perhaps the hottest new products in the beer business are those that aren’t really beer at all. For years brewers have attempted to come up with malt beverages (think, Zima or Miller’s experiment with Clear Beer) for adults who, raised on the taste of soft drinks and fruit juices, are not always receptive to the flavor profile of most beers. The desire to produce beer-like products (single-serve, ready-to-drink containers with a moderate alcohol content) for non-beer drinkers has become the sorcerer’s stone of modern beer marketers. And every few years a product comes along that helps keep moving the momentum forward. That’s certainly been part of the success of the malt-based hard lemonade products such as Two Dog’s, Mike’s Hard Lemonade and Doc Otis.
The latest “big thing” to arrive in the malternative arena is undoubtedly Smirnoff Ice. Bearing the brand of the biggest selling vodka in the U.S. market, this beverage iconoclast is boasting a volume of 20.9 million 2.25 gallon cases in its first full year on the market, which would make it the bigger than all but 20 of the largest domestic and imported beer brands.
Other new entries in this burgeoning category also blur the line between spirits and beer brands. Hoping to capitalize on the continued popularity and stylish image of Skyy Vodka, Miller Brewing and Skyy Spirits are introducing Skyy Blue. Described as a complex blend of citrus flavors and natural ingredients which include natural flavorings containing Skyy Vodka, the new product contains five percent alcohol by volume, roughly the same as other malt beverage. To further drive home the connection to Skyy, the new product will mirror Skyy’s signature cobalt blue bottle, although distribution will be through the Miller distributor network.
Another new entry blurring the category lines is Bacardi Silver, which is the result of an alliance between Bacardi USA and Anheuser-Busch. Bacardi Silver is clear malt beverage made with the flavors of Bacardi Rum and citrus and is being produced, marketed and distributed exclusively by Anheuser-Busch. The new product will be available in retail outlets where Anheuser-Busch products are sold, the company said, including supermarkets, convenience stores, clubs, bars and restaurants. A marketing budget of “nearly $60 million,” the company says, is supporting the launch, including national TV, print, radio outdoor and internet advertising as well as a selection of sales promotion items and in-store merchandising materials.
What all of these products seem to have in common is package size (12-oz. in six- and twelve-packs) alcohol content (generally 5% alcohol by volume) and promises of huge marketing support as they make their debuts in the marketplace .