There’s no point sugar-coating what everyone in the industry already knows: the overall U.S. beer market had a pretty bad year in 2009. Beer shipments were down two percent in 2009, the worst decline since 1991. To put it in Growth Brands terms, in 2008, there were 38 Growth Brands; in 2009, there were 33. In 2010, there were only 26. You can’t have Growth Brands without growth.
But 26 growth brands still mean that there are ways to develop sales growth, trends to spot and lessons to be learned. A look at what brands are growing—and which ones are not—is a valuable exercise so let’s get to it.
Rock On: Established Growth
As always, the lion’s share of Growth Brands are the Established Growth Brands, defined as brands with sales exceeding three million cases and delivering moderate or substantial growth over the past four years. Sixteen out of the twenty-six brands fall into this category.
Perhaps the most significant brands in this group are Coors Light, Busch Light and Natural Light. Coors Light continued to gain on Budweiser, coming closer to the number-two spot in the U.S. market. It was small growth, onl y 0.6 percent, but at this brand’s level that’s over a million and a half cases, a significant volume increase that puts the brand up to 248,800,000 cases.
Busch Light chugs along as an Established Growth brand for years, and turned in a solid 5.4 percent growth for the year, growing just shy of five million cases. Natural Light, the bigger of A-B InBev’s two bargain brands, grew a bit less in volume, 3.5 million cases, which on its larger base of 131 million cases was only 2.7 percent.
These three brands are significant because of how they are connected. If you look at the top ten beer brands in the U.S. market, only these three—Coors Light, Natural Light and Busch Light—made the Growth Brands list this year. That’s not good news for major brewers and it points to a more fragmented beer market.
Three other sub-premium brands are on the list. Keystone Ice and Keystone Light, at 10.9 percent and 12.4 percent respectively, are making a hit with their decidedly low-key approach to advertising, racking up a combined 7.8 million cases of growth for MillerCoors. Natural Ice grew 5 percent, a neat two million additional case sales for A-B Inbev.
All of these bargain brands handily out-performed the declining sector, of course, and the temptation is to tag this as a result of the bad economic times. That would ignore the steady growth they’ve seen over the past five years, which were hardly all bad economic times. These are solid brands, with their profitability based firmly on volume and velocity.
That said, if the market is fragmenting, brewers and operators would rather see growth in brands with a fatter margin, picking up more money on each sale. Blue Moon continued to deliver that for MillerCoors; even though it fell off the Fast Track, the spicy, citrus-tinged wheat beer still delivered an additional 800,000 cases, which is a growth of 6.2 percent.
New Belgium’s tasty, accessible Fat Tire Amber Ale pedaled its way to 15.9 percent, selling 740,000 additional cases as the brewery continued to open new markets and fans continued to beg for it elsewhere. Widmer Hefeweizen took advantage of A-B InBev’s distribution network and an interest in wheat beers to eke out 0.6 percent growth and keep a four-year string going.
Not being big and corporate doesn’t just work for new, feisty craft brands. It’s working pretty well for some brands that have been around since before Prohibition. Pabst continues its startling comeback, packing on another 4.3 million cases, a 19.8 percent climb. Pabst was recently sold out of its charitable foundation shelter to investor C. Dean Metropoulos, who has a history of rebuilding old brands.
East coast regional Yuengling, fighting with one coast tied behind its back, added 2.6 million cases, an impressive 10.4 percent growth rate. Texas-based Shiner continues to spread their Bock through wider markets, and picked up 181,000 cases doing so, growing 3.9 percent for the year.
What’s behind the retro phenomenon? “In these tough times, people will go back to the retro brands,” said Gary Park, owner of Gary’s Liquors in Chestnut Hill, Mass. “It’s price, but it’s also people who are trading down to an old standby. Like Narragansett, at least here in New England, and the reformulated Schlitz. They’re doing well here, but they’re probably small enough to still be under the radar.”
Imported brands have suffered with the tough times. After years of double-digit growth, imports have taken a hit. There are still four imports in the Established Growth list and they demonstrate some interesting trends. A-B InBev’s Belgian-brewed flagship Stella Artois continued to find growth as the brand moved deeper into A-B’s distribution system, rising 5.2 percent on an increase of about 400,000 cases; welcome profitability from a bigger margin. An additional 500,000 cases, which is a very respectable 10.9 percent growth, put Labatt Blue Light on the Established Growth list after several years of steady, mostly regional growth.
Don’t count out Mexico. Corona and Pacifico may have dropped off the list, but Crown Imports still landed two spots with sister brand Corona Light and lower-priced Modelo Especial, which grew at 4.9 percent and 7.8 percent respectively. Corona Light has been the most consistently successful entrant in the elusive “better margin” light beer sweepstakes. Modelo continues to market primarily to the Latino market, a strategy that’s working well, though it did slip off the Fast Track for the first time in several years.
Young and Hot: Rising Stars
A-B Inbev saw some payoff on their investment in innovation in 2010: out of eight Rising Star brands, five came out of St. Louis. The biggest was Bud Light Lime, which posted 25 percent growth on 7.5 million cases. It’s also got an asterisk next to it: 2008’s numbers were on only eight months of sales; 2009 was the first full year. Next year will tell the story, but that’s the way it is with Rising Stars: burn brightly, or burn out?
Bud Light Golden Wheat, a spiced light wheat, had a pretty good first year at a million cases, and Budweiser American Ale saw 20 percent growth in its second year. The jury’s still out on whether people will take strongly to a beer called Bud that isn’t a light lager, but signs are promising. Landshark Lager continued to swim strongly, having doubled its sales to four million cases in 2009.
The surprise for A-B InBev might have been Bud Select 55. After steady declines for Bud Select despite strong promotional spending, the ultra-light makeover sold well, with five million cases in its first year. Does this indicate that the ultra-light category has legs? That’s a question you might be better off asking the folks at MillerCoors, where MGD 64 punched up an amazing 1,500 percent growth, going from 750,000 cases in 2008 to 12 million in 2009. Any way you slice it, that’s impressive.
The two remaining Rising Stars don’t have much in common. Tecate Light grew 14.2 percent, proving there is still an interest in imported light beers; the brand grew 170,000 cases in 2009. New Belgium’s Mothership Wit grew 22.1 percent on a small base, adding 34,000 cases.
Mothership Wit raises an interesting question: how much activity is going on under the radar? Craft beer grew at 7.2 percent last year, despite the overall beer category declining, yet there are only four craft beers on this list (five if you count Blue Moon). Are crafts selling in channels that are not being counted? Are the brands too diffuse to crack the lower limits of being noticed? The category can’t be overlooked, but it pays off best if you do some research before diving in.
A Most Interesting Beer:
There is still a Mexican import on the Fast Track; in fact, it’s the only brand that made it into this rarefied territory. To get on the Fast Track, a brand needs double-digit growth over four years. Dos Equis hit the Fast Track last year, after slogging up through Established Growth, and it’s still streaking this year, with 19.9 percent growth, a volume increase just shy of two million cases. Give credit where it’s due; the brand’s “Most Interesting Man in the World” ad campaign has been a phenomenon since its 2007 debut.
Hello Again: Comeback Brand
Once again, there is only one comeback brand (last year’s, Pacifico, failed to score enough growth to stay on the list). Sierra Nevada Pale Ale came back strongly after several years of anemic growth and last year’s loss. The established craft brand got cranking in preparation for this year’s 30th anniversary, packing on over 500,000 cases, which is 7.4 percent growth for the solar-powered brand. Some of that may have been a halo effect from the successful launch of their new Torpedo ale, a brand we might see cropping up on the list in a year or two. We’ll see you then, too.
Lew Bryson is the author of three brewery guidebooks, including Pennsylvania Breweries (Third Edition). He writes and consults on beer and spirits from Bucks County, Pa.