Beer Market Woes

Today’s issue of Ad Age Daily has a lead story on declining beer sales. Ad Age Daily

Industry shipments are down 4% (Beer Institute); for the four weeks ending May 16, only 4 of the top 30 brands posted gains  (SymphonyIRI); the big boys saw large declines – Bud Light down 5.3% and Miller Lite down 7.5%, both vs. 2009 sales.

How come?

I don’t think it’s the economy, beer held its own vs. spirits and wine at the height of the recession…why should it decline now?

Could it be the growth at the top and bottom of the beer market? Craft beers and imports are doing okay as are the price brands. Bud Light and Miller Lite are hurting and that’s enough to upset the entire category.

Maybe after a few years of substituting beer for wine and spirits, consumers have returned to pre-recession consumption patterns.

My view is that the marketplace is cluttered with light beers including new entries such as MGD 64 and Budweiser Select 55. Adding to the clutter is a barrage of new products, line extensions, brand extensions at all price tiers, especially the top end. And, let’s not forget about the growth in craft beers.

So, maybe it’s just that consumers are drinking less but drinking better. Those of us in the spirits world know that phenomenon well.

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Say it isn’t so…

Two news items that caught my eye recently and just in case you haven’t seen them here they are. Both were reported in Mark Brown’s newsletter.

Southern Wine alcohol distributor seeks loans of $2 billion

Source: The Associated Press

Not even the alcohol distributors are immune from the national financial crisis.

Southern Wine & Spirits of America Inc. is seeking $2 billion in loans to refinance existing debt. The Miami-based distributor is the largest in the United States.

Bank of America Corp. is arranging a $1 billion revolving credit line and a $1 billion term loan, a source said. Both loans will mature in five years.

Budweiser’s Clydesdales now come clopping at a cost

Source: USA Today

The Budweiser Clydesdales are still available for appearances … at a cost.

The St. Louis Post-Dispatch reported Monday that Anheuser-Busch has quietly begun charging $2,000-per-day for Clydesdale appearances, ending the brewery’s long practice of absorbing nearly all of the cost of showcasing the iconic horses.

The brewery says the fee helps to offset the $8,000-per-day cost of putting a hitch team on the road. Until now, event organizers or beer wholesalers were asked to pay nominal costs for stabling and feed.

It’s tough out there…

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From Spirits to Beer

Mark Brown’s newsletter reported today that Tony Foglio and Keith Greggor are the new owners of Anchor Brewing Company, which includes its portfolio of craft beers and artisan spirits, including the well-known Anchor Steam Beer.

In addition to wishing Tony and Keith well, I think it’s great for the spirits industry. Like many, I believe that craft (or artisan) spirits will grow in importance in the spirits world with lots to learn from craft beer.

I’m happy to know that mainstream players are on the case.

Even if they’re not ex-Seagram folks.

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