Beverage Dynamics is the largest national business magazine devoted exclusively to the needs of off-premise beverage alcohol retailers, from single liquor stores to big box chains, through coverage of the latest trends in wine, beer and spirits.
Issue link: http://read.dmtmag.com/i/777147
www.beveragedynamics.com January/February 2017• Beverage Dynamics 37 At the global level, last year's $107-billion merger between Anheuser Busch InBev (ABI) and SABMiller altered the beer landscape dramatically. For other international players in the beer industry, this merger has implications in almost every market. But it's not clear whether these companies need to revise their approach to selling their products in the U.S. market. The U.S. Department of Justice gave the merger the nod in June, but with conditions. Given that the two beer companies involved were already the biggest in the world before the deal, there were concerns about a too-large a share of the U.S. market consolidating under one mega-company. One anti-monopolistic requirement called for ABI to divest MillerCoors brands in the domestic market. As Paul Hetterich, president, Constellation Brands Beer Division, explained, "ABI sold the rights to the MillerCoors beer portfolio in the U.S. to Molson Coors as part of their recent acquisition of SAB Miller. So, in that respect, the competitive landscape has not changed much." MARKETING LAGERS AS PREMIUM BRANDS Importers are faced with a US market that is divided broadly into two unequal parts: the traditional, mainstream domestic lager market that, despite fl at sales, still represents huge volume; and the specialty and premium market—exemplifi ed by craft beer brands—that continues to experience robust growth, despite its much smaller market share. Constellation is the largest importing company in the coun- try, with a portfolio led by the two top-selling brands, Corona Extra and Modelo Especial (all sales data from the Beverage In- formation & Insights Group). But Hetternich, head of the com- pany's beer division, could have been speaking for any executive in a major beer company surveying changes in the U.S. market when he explains his company's approach. "Our focus is on leading the contin- ued transformation of the U.S. beer market as the industry premiumizes and consumers shift to high-end beer brands," he says. "Today, 100 percent of beer category volume and dollar growth is driven by the high-end, and growth of high- end beer has accelerated the past fi ve years. We expect this trend to continue for many years to come." Imported beers have long enjoyed a kind of prestige with cus- tomers simply because of their foreign origin. Hetternich's ob- servations underscore the ability of importers to ally their brands with the specialty/premium side of the beer aisle, although the most successful imported brands are brewed in the same basic beer style categories as the major domestic brands. In fact, eight out of the ten top-selling brands are pale lagers (fi ve of these from Mexico), and one is a light lager. All but two of these lager brands experienced positive growth last year, topped by num- ber-two ranked Modelo Especial growing 19% in volume sales and Stella Artois growing 20.1%—fi gures domestic producers can only dream of. This "premiumization" trend, Hetternich believes, affects at all tiers: from the 4,000-plus companies producing beer to the BY JULIE JOHNSON BLURRING THE IMPORT LINES