E-Malt.com News article: USA: Two largest brewers trying to boost sales of their cheaper beers

For years, US sales of the cheapest beers fell as America’s two largest brewers focused on higher-priced craft brands. Now the neglected suds are back in the spotlight, The Australian reported on February 3.

Anheuser-Busch InBev plans to air its first Super Bowl ad for Busch, its namesake economy brand. The 30-second spot follows the company’s move last year to shift its Nascar sponsorship back to Busch from Budweiser.

MillerCoors, the US business unit of Molson Coors, has begun rolling out new ads and redesigned logos for its economy beers, including Miller High Life and Keystone. It is increasing the quantity of beer in some bottles and packages, without raising prices. Both companies are offering price promotions on cheaper brands.

Sales of so-called sub-premium brews, costing an average $US16 ($21.90) for a 24-pack, have long been in decline. From 2010 to 2015, shipments dropped by 16 per cent to 46 million barrels, while craft beers shipments doubled to 22 million barrels, according to Beer Marketer’s Insights.

But the sub-premium category still represents about one out of every five beers sold in the US. AB InBev and MillerCoors, together accounting for about two-thirds of US beer sold by volume, acknowledge they must stop the slide to achieve their performance goals.

From consumer surveys, “one of the greater realisations that we have is that as we prioritise other parts of our portfolio for all the right reasons … we also did that at the expense of our economy portfolio,” said Ryan Marek, director of economy brands for MillerCoors. “It’s not only critical to our growth but critical to the health of the entire beer industry.”

After the merger of InBev and Anheuser-Busch in 2008, the company began raising prices on its lowest-priced beers more sharply than on premium beers, analysts and industry observers said. MillerCoors did the same.

Those moves boosted revenue for a time but resulted in other consequences: some consumers switched to inexpensive spirits, and the beer industry lost some of its most loyal customers. And young people, for whom cheap brands might be a gateway to a lifetime of beer consumption, increasingly turned to other options.

“We’ve lost a generation,” said industry consultant Joe Thompson, president of Independent Beverage Group. “And I think we’re going to pay a price for it.”


03 February, 2017