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Thursday, January 16, 2014

Big Beer Launches Subpremium Defense for '14

There's an old adage in big beer, which goes something like this: Whenever things aren't going the way you want, simply shift direction and start spending on something different. If it goes against what you were doing last year or for the past few years, never mind. It's all good.

For anyone interested in stupefying beer industry stories, I recommend Silver Bullets: A Soldiers Story of How Coors Bombed in the Beer Wars (Robert Burgess, 1993) and Beer Blast: The Inside Story of the Brewing Industry's Bizarre Battles for Your Money (Philip Van Munching, 1997). Gut busters. 

In case you haven't heard, big beer is shifting its attention back in the direction of low end products this year. Yep. After several years of working diligently to compete with craft brands for the hearts and livers of beer drinkers, Anheuser-Busch and MillerCoors both plan to push subpremium brands heavily in 2014. 

Don't worry if you're a fan of Bud Light Platinum, Redd's Apple Ale, Blue Moon or another one of big beer's superpremium brews. They'll still be out there and they'll still be supported. But industry big shots just realized they haven't been paying enough attention to blue collar consumers, described by MillerCoors CEO Tom Long as "the most loyal drinkers of beer." 

Tom has a point. Media spending to keep Americans guzzling shitty beer took a dive in 2012, to about $7 million. It exceeded $22 million in 2011. All the while, AB and MillerCoors were busy spending large money chasing higher end customers...and increasing prices on subpremium brands. Great marketing plan in a down economy, huh?

Now they realize the error. The subpremium segment is in decline and will probably continue on that path. But it still accounts for roughly 18 percent of beer dollar sales, according to SymphonyIRI. That's a substantial chunk of the beer market to ignore. Big beer doesn't make as much profit on subpremium brands, but they make up for that in volume. 

By largely ignoring the subpremium segment while raising prices, MillerCoors and AB alienated many longtime economy drinkers. Some of these folks drifted into the arms of Pabst, Old Milwaukee and other regionally and locally targeted brands. Ye gods!

In response to the risk, AB and MillerCoors are rolling out new packaging, updated ad campaigns and promotions for 2014. It's the usual suspects...Natural Light, Keystone Light, Busch and Miller High Life. That last one seems a little out of place, but it makes good sense if you consider the target market, which I'll get to.

Let's face it. Young drinkers, particularly college students, are a big target. Why? Because big beer believes young tastes are not yet formed and they are willing to try different kinds of beer. Natty Light is popular on many college campuses and AB intends to keep it that way with new stubby, "Fatty Natty" bottles. MillerCoors will target colleges with Keystone Light and hipsters with Hamm's. 
Miller High Life, once widely known as The Champaign of Bottled Beers, definitely fits an older, blue collar audience. MillerCoors is teaming up with Harley Davidson on a promotional campaign for High Life. That makes some sense. Baby boomers love their Harleys. How the campaign will be received by MADD and the anti-drunk driving crowd is an open question. Inquiring minds wonder.

To bolster its longtime, low end standard, Busch, AB is launching the "Here's to Earning It"campaign. It's a variation on the work-reward theme embodied in Busch's now obsolete "Head for the Mountains"campaign. The updated version will feature eight working class men and women from around the country. The Marlboro man has nothing on working class heroes who love Busch beer.

Big beer won't say what they will to spend to protect their share of the subpremium market this year. Certainly less than the $22 million spent in 2011. Expect to see more store displays, web video, ads in newspapers and select magazines, probably some billboards. TV is on the table, but big beer is reluctant to spend lavishly on low tier products. We'll see.

This effort to bolster the subpremium segment is apt to have no impact at all on the growth of craft beer.   In fact, defending the subpremiums is a sort of rear action. Big beer realizes its premium brands are being cannabalized by the growth of craft. Protecting the subpremium category is a way for them to stay in the game...until they can buy up or partner with more craft breweries.

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