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/82861
"Think back 15 years ago and the brand set of a consumer might have been a favorite and two others. Now, it's a favorite and five others." —JIM SABIA, chief marketing officer, Crown Imports reclaim drinking occasions from wine and spirits. In that new breed of bar with dozens of tap handles, "even if many of them are not ours, it's good for the beer business, it gets people excited about beer rather than spirits," said Markstein, the San Diego distributor. In that sense, it helps to grow the entire portfolio. It's a market where once-reliable engines, like light beers, have sputtered, even as full-calorie domestic pre- miums and superpremiums continue their long decline. But flavored malt beverages (FMBs) continue to advance, and craft beers – seemingly impervious to the ongoing eco- nomic malaise despite six-pack prices that can top $15 – explode. FMBs rose 3.8% to nearly 43 mil- lion cases, while craft beer surged 14.1% to about 179 million cases, good for a 6.4% share (see table). Though not strictly a beer, cider has claimed a more visible spot on the store shelf and at the bar, seemingly out of nowhere. Most of these growing segments tilt higher in price, making them an oasis of profitability in an economic environment that has not offered much help to brewers. "Despite the economic challenges of the past four years, the upscale segment is the only area driving growth in the beer industry," noted Heineken USA chief marketing officer Lesya Lysyj, which has managed to keep Heineken relatively steady even as its Mexican brand Dos Equis breaks out. For its part, Heineken USA aims to capitalize on this by elevating the marketing ini- tiatives behind its core brands while innovating more and pushing harder to own the group of consumers it calls "multicultural millennials," who happen to be most receptive to new brands and experiences. Like everyone else, it's proliferating skus, from an Amstel wheat beer to Newcastle's limited-edition beers like Werewolf. As 2012 progressed, challenges for major premi- ums continued, with three of the four megabrands down again, although Bud Light and Miller Lite had moderated their decline from those of recent years, noted Benj Steinman, publisher of trade newsletter Beer Marketer's Insights. Budweiser's trend had not improved, but Coors Light was solid, except in the Northeast region. Imports have bounced back a bit, said Steinman, who was speaking as Labor Day approached. Though shipments were only up 1% as of mid-summer, sales to retailers were probably more like 4-5%, he figured. Even Corona and Heineken were showing slight growth after a prolonged slump. The hot brands con- tinued to be Stella Artois (from A-B InBev), Dos Equis (Heineken USA) and Modelo Especial (Crown Imports). Rational Pricing I Both Corona Extra and Corona Light saw sales increases in 2011. n one encouraging sign for all beer's tiers, there seems to be fundamentally rational pricing, give or take the odd skirmish. Take Florida, where domestic premiums and mainstream imports still retain most of their market dominance. When couponing got out of hand the major brewers were quick to put a stop to the practice. And in mid-August Crown disclosed that it would be levying significant price increases on brands like Corona and Modelo Especial, the first in many years but moves that would maintain the price gap versus domestic premiums, which had earlier announced increases. That seemed to attest that marketers were determined to keep beggar-your-neighbor price wars a past memory, partic- ularly as the economy hopefully edges closer to prosperity. "There's plenty of room for pricing in beer," believes UBS' Gajrawala. He expect 3% pricing increases per year to continue. "Corona pricing should finally move and give the entire industry a little more space," he noted, speaking just before Crown announced the price hike in Florida. The Good News T he good news is that all this ferment, though immensely complicating the business, also is extending a halo over the entire segment, in a manner that may actually help with the task of making brands like Budweiser and Miller Lite reclaim their relevance in sophisticated environments where wine and spirits have captured the momentum. That's the view of Crown's 18 • Beverage Dynamics • www.beveragedynamics.com • September/October 2012