USA: MillerCoors ceases production of Two Hats after just six months
After just six months, MillerCoors has pulled the plug on Two Hats, a light beer brand that was targeted at 21- to 24-year-old consumers, Brewbound reported on August 7.
The company announced the decision to cease production of the beer, which will remain on retail shelves until early 2019, in a letter to employees and wholesalers on August 6.
The news comes less than a week after Molson Coors Brewing Company, reported second-quarter U.S. revenue and depletions declines of 3.1 percent and 4.8 percent, respectively. During a call with investors and analysts, Molson Coors executives discussed negative Coors Light trends, which ultimately factored into the decision to eliminate the Two Hats brand, according to MillerCoors vice president of national craft and innovation, Bryan Ferschinger, and president of sales and distributor operations Kevin Doyle.
“[R]ight now we simply cannot get to profitable growth without significant improvement in Coors Light and without gaining a bigger piece of above premium,” they wrote in a memo. “Therefore, we need to focus resources against Coors Light, further build momentum on Miller Lite, and foster our above-premium brands like Arnold Palmer Spiked and Sol.”
Ferschinger and Doyle added that the company will also remain focused on other economy brands, such as Keystone Light, Hamm’s and Miller High Life.
“MillerCoors remains committed to quality and innovation, and we aren’t afraid to try new things in an effort to be part of the solution to grow beer,” they wrote.
The short-lived Two Hats offerings launched in February, as MillerCoors attempted to capture new legal-drinking age millennial and Generation Z consumers, who are increasingly veering away from beer and to cheaper wine and spirits options.
The 4.2 percent ABV light beer rolled out in 6-packs of 16 oz. cans in two flavors — lime and pineapple — at a $5 price point. The company had hoped that entry-level consumers would purchase Two Hats, and eventually trade up to other, more expensive MillerCoors offerings.
According to market research firm IRI Worldwide, which tracks sales at off-premise retail accounts, Two Hats racked up about $1.6 million in dollar sales through July 15. Combined volume sales were under 100,000 case equivalents (CEs), according to the firm.
By comparison, Boston Beer Company’s Sam ‘76, a sessionable craft beer targeted at lager drinkers that also launched earlier this year, surpassed 160,000 CEs through April, according to IRI. Through July 15, Sam ’76 has sold more than 319,600 CEs.
Eschewing traditional advertising channels such as television, Two Hats’ marketing focused on digital media platforms such as College Humor, Spotify, and SnapChat. The brand also attempted to leverage YouTube personalities, and put on sampling events at music festivals, street fairs and sporting events.
Advertisements pandered to millennials with the tagline: “Good cheap beer. Wait, what?” One digital-only ad featured a bowling ball rolling across a bar and smashing through bottles of wine with the phrase “Good cheap beer is coming, so stop your wine-ing.”
MillerCoors senior director of innovation Sofia Colucci told the company’s blog that Two Hats was created to “bring something to these drinkers that’s relevant to them, that speaks to them and is at a price point that makes sense for them.”
However, MillerCoors’ own blog acknowledged that reaching those consumers would be “an uphill battle,” with company data showing that 40 percent of beer’s volume losses are coming from 21- to 24-year-old drinkers. And the declines among that age group have continued at a rate of 3 percent annually over the last 15 years.
“There haven’t been any new mainstream light beer launches for this group at this price point … so it’s no surprise they think of beer as dusty and old and migrate to wine and spirits,” MillerCoors brand manager Justine Stauffer told the blog at the time of the launch. “With Two Hats, our goal is to build the next generation of beer drinkers. This is a beer they can get behind because it offers drinkers what they want: A great beer at a great low price.”
06 August, 2018
