Global Beer Play, Domestic Impact?

The recent buzz about a potential takeover of SABMiller by Anheuser-Busch InBev is prompting much speculation about the impact this could have on the global beer market. It’s likely that such a deal would set off a worldwide chess game among brewers and beverage companies as both entities seek to divest certain businesses to avoid antitrust issues and their competitors jockey for position. But here in the U.S., it’s unlikely to change what’s on the shelf or at the bar (at least not immediately), and certainly won’t do much to reverse the trend of decline for the two brewers’ respective domestic regular and light brands.

The top four beer brands in the U.S. – Bud Light, Coors Light, Budweiser and Miller Lite, which collectively account for 41.1% of total beer volume – each shed volume again in 2014, according to our BeerTAB Report. Following the lead of those top brands, the overall domestic regular beer and domestic light beer categories each declined, and that downward spiral appears to be continuing this year. These brands and categories remain the largest, as well as the most frequently imbibed by U.S. consumers, but the growth in imported beer and craft beer seems unstoppable.

Recognizing that movement of American consumers to brews beyond mass-marketed domestics, both AB InBev and MillerCoors have diversified their portfolios through innovation and acquisition in recent years, although with mixed results. While Bud Lite Platinum came out of the gate strong and hit 20 million, 2.25-gallon cases in its inaugural year of 2012, the brand finished 2014 at 13.6 million. Meanwhile, growth continues for craft label Goose Island, which the brewer acquired in 2011. The retro appeal of the white can introduced last year gave Miller Lite a boost, but the brand overall is challenged.  MillerCoors’ Blue Moon franchise enjoys ongoing expansion while the Redd’s Apple Ale portfolio is growing in terms of both flavors and volume.

Even as AB InBev and MillerCoors tap into emerging segment trends, they’re losing ground. Since 2010, the two together have ceded 5.2 share points of the total U.S. beer market. During that period, the brewers that play primarily in imported or craft beer, such as Constellation Brands, Heineken and The Boston Beer Company, have realized share gains.

The deal – whether or not it occurs – demonstrates how much the beer industry is evolving. When Budweiser, Miller and Coors ruled the market, it was a volume game in which the brewer with the most cases won. For these major brewers today, it’s all about increasing efficiencies and delivering on margin. Both certainly are worthwhile endeavors for any marketer, but at the end of the day, volume still matters. The brewers who engage and satisfy the consumer will realize the volume gains that lead to sustainable growth.

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Donna Hood Crecca

A veteran of the foodservice industry, Donna Hood Crecca leads the firm’s Convenience Store Practice and is active in its Adult Beverage Practice. She develops research-based insights and recommendations for leading and emerging supplier and operator companies to enhance their go-to-market and product development programs and strategies.

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