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Sunday, March 25, 2012

When Sales Decline, It's Miller Time

It's quite comical to watch as the beer conglomerates struggle to address what's happening to their brands. As a whole, category (macro) beer has seen flat growth for the last two years. Some brand segments within that grouping have experienced free fall for the last several years.

I don't necessarily like to quote myself, but it's appropriate to do so in this case. Back in September, I wrote a post that looked at the collapse of the popular brands in recent years. The numbers are fairly shocking, if not all that surprising. Find them here

Pure marketing genius
What's essentially happened is this: the big guys are being squeezed out of the premium market. Budweiser sales dropped 30 percent between 2006 and 2010. Miller Genuine Draft lost 51 percent. Michelob lost 72 percent. You get the idea.These segments are in virtual free fall.

Why has this happened? Well, craft beer has seen double digit growth in each of the last four years. Craft still represents only about five percent of the market, but it is growing quickly and driving consumers away from beers that were once considered premium. People who once reached for Michelob are now reaching for something a lot better. And I don't mean a PBR.

The one brand segment that's done well for the conglomerates is light beer. Yep. Light beer has proven to be fairly resistant to the invasion of craft brands. You hate to guess, but that may have something to do with the fact that craft beers actually do have some taste. And substance. Light beer has neither and some people like it that way, it seems.

There's also the fact that the giant beer companies spend about a billion dollars a year on advertising light segments. You see their names associated with professional sports and you see a lot of TV ads. They essentially con consumers into believing their product is tasty, refreshing and just as exciting as mud wresting. Money changes everything!

Nonetheless, some brands simply aren't competing well even in the light beer market. MillerCoors just announced that Miller Lite, the first nationally distributed, low calorie beer when it was introduced in 1975, saw declining sales in each quarter of 2011. It also said the segment has underperformed for several years. That's bad revenue news for MillerCoors.

How will they respond? In a terrific stroke of genius, MillerCoors will reintroduce the old "It's Miller Time" tagline that was attached to Miller High Life in the 1970s and to Miller Lite from 1997 to 2002. You'll be seeing this recycled approach used in Miller Lite TV ads and probably on new retail packaging in coming months. I can't wait.

That's not all. MillerCoors is also addressing the revenue issue in other ways. First, they are charging more for the beer they are selling, thus recouping some lost profit. That's pure genius. Second, the company is pushing its beer in emerging countries like China...the operative theory being the people there won't know any better.

Thank goodness for smart marketing.

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