|To Reconnect with Consumers, “Big Beer” Needs to Think Locally and Authentically|
|Tuesday, October 25 2011|
Last week, the National Beer Wholesalers Association (NWBA) held its annual conference in Las Vegas, Nevada. The organization comprises distributors, brewers, importers, and other vendors related with the business of making and selling beer. The beer industry at large has been experiencing difficulty over the past few years, and this is particularly the case for larger organizations like AB-InBev and MillerCoors. While these companies have strong distribution networks and virtually limitless budgets for marketing and advertising, “big beer” (as it is often referred to) has been losing out as spirit makers, wineries, and craft brewers continue to take away share.
Advertising Age reported on some of these issues last week, highlighting data from Nielsen that shows a steady decline of big brand beer sales in the face of rising volume from spirit producers and craft brewers alike. The publication reported on a keynote address given by MillerCoors CEO Tom Long, where he openly and frankly noted that those in the spirit category have been able to connect with their target audience better than the larger beer brands over the past few years. Many of those spirit makers are selling their products for a premium price, and have been wisely investing their marketing dollars on connecting with their audience on a more personal level (for instance, we highlighted some experiential marketing efforts by whiskey makers The Macallan and Dewars back in August).
So why is “big beer” losing out lately? Some of it has to do with the marketing and advertising efforts of large beer brands over the past few years. As the Ad Age article notes, Miller Lite’s most recent campaign called “Man Up” has not been performing well. The economy is also playing a factor, since large beer brands are driven by lower-income, blue collar consumers. Nevertheless, there are other issues afoot, including the publicity of big beer’s nefarious tactics, along with the actual products that are being sold to consumers.
Starting in the 1980s, home brewing and craft brewing had something of a renaissance as people started to tinker around with their own beer recipes that went far beyond the pale yellow pilsners and lagers that the beer conglomerates were selling. Today, there are hundreds of craft breweries across the United States offering consumers much more choice and variety. Many of them cater to the regions where they started, while others (like Boston Beer Company’s Sam Adams brand) have seen nationwide success while still remaining independent. While craft brews only make up about 5% of total beer sales in the U.S., this hasn’t stopped the big beer companies from trying to cash in on the action. MillerCoors created the “Blue Moon” brand in 1995 as a way to eat away at the craft brew market share, and AB-InBev made a similar move with its “Shock Top” brand. These brands typically use artificial ingredients while craft brewers would use authentic ingredients. Additionally, the movie Beer Wars highlighted a lawsuit that AB-InBev filed against renowned craft brewer Dogfish Head in regards to the naming of some beer brands (the lawsuit was eventually deemed frivolous).
While craft beers are typically geared toward more affluent audiences, some regional brewers are offering high-quality beer at prices that are comparable to some of the country’s biggest breweries. Yuengling (based out of Pottsville, Pennsylvania) is the country’s oldest brewery. Over the past decade, the brewery has expanded its distribution from the mid-Atlantic to spots along the entire east coast. Lone Star is a popular brew across the state of Texas. Narragansett Beer, which was a low-cost regional hit in New England through the mid-20th century, was revitalized a few years ago and is making a grassroots push to once again become a popular brew. It is currently outpacing favorites like Pabst Blue Ribbon and Miller High Life throughout bars in the northeast.
Ultimately, large beer companies and their brands are not connecting with consumers for a number of reasons—Americans are waking up to the fact that there are better-tasting beers out there, consumers don’t like some of the tactics and messaging that these brands have used to enter the craft beer market, and the big brands aren’t connecting with audiences on a local or even regional level in the same way that other brewers are. If the big beer companies hope to right this ship, they will need to become much more targeted. This is a case where “throwing more money at the situation” won’t help. By selling high-quality products, highlighting authenticity, and tying the brand back to some provenance (even if it isn’t local or regional), the big beer brands can start earning their way back into the good graces of American consumers. This will lead to steadier sales in the years to come.