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Posted July 2018

The future of macro beer brands

US beer market | Is there no end to market fragmentation? Consumers are becoming more finicky. New products are creating their niches and category lines are blurring. Craft beers, the bright spot in the beer industry, keep on growing. So do wines, bourbons, tequilas, and cognacs, thanks to craft’s trailblazing. Without much effort they have adopted craft beer’s cachets of heritage, craftsmanship, regionality, a sense of premium and exclusivity. The consequence: macro beer brands continue to slip.

Lights off, sound level up: Boom boom boom … Bud Light … boom boom boom … “we are the #1 beer by far” … boom boom boom … “light lagers are most preferred” … boom boom boom … “beer has become too serious” … boom boom boom … “watch our highly successful Bud Light ad ‘Dilly Dilly’” … boom boom boom … “light lager has always been about fun and friends” … boom boom boom …Bud Light. Sound off, lights on. Polite applause from the audience.

It was a momentous performance delivered by Andy Goeler, AB-InBev’s Vice-President Bud Light Marketing, at the Beverage Forum in Chicago at the end of April. Pacing the stage back and forth to the beat of pounding drums, he gave the audience a bit of chest-thumping testosterone assertiveness from the King of Beers. His message: Bud Light, the number one beer brand in the US, is alive and kicking.

Probably designed to rally the troops – his distributors – at the brewer’s annual Sales and Marketing Communication Meeting (SAMCOM) and to energise them around the brand, his presentation failed to bring out cries of Hallelujah!. Blame it on the audience. This time, Mr Goeler was not preaching to the converted. Rhetorically and otherwise, he was up against the closed ranks of the most stubborn infidels you can think of. The Beverage Forum’s audience was packed with the Who’s Who of the US beverage industry, who all probably wondered: “Andy where’s the beef? How do you think you can turn Bud Light’s sales around?

Josh Joel, the author of the excellent book on Goose Island (“Barrel-Aged Stout and Selling Out”), describes Mr Goeler, 61, as the epitome of the Anheuser-Busch company man. He joined the brewer in 1980 and was named director of marketing for Bud Light in 1995. On his watch Bud Light rose to replace Budweiser as the company’s best-selling beer. He then took over Budweiser to stop that brand’s decline. Spectacularly cast against type, he later ran Anheuser-Busch’s craft and import division. This forced him to don a more subdued demeanour as well as chinos and a polo shirt at a Beverage Forum a few years ago. Back in charge of Bud Light, Mr Goeler is putting up a brave fight. Whether he can perform miracles – and nothing less will do – remains to be seen.

The problem, after decades of research into consumers’ minds and preferences, is that the Big Brewers have not come with much and what they have is still erroneous. Mr Goeler said that new drinkers seek “variety”, something “local” and “fun”. If “variety” is Mr Goeler’s shorthand for consumers’ apparently promiscuous tastes, he has not grasped the basics. Consumers do not seek variety, they seek diversity. The difference is essential. Variety means spin-offs from an original, diversity an assortment of differences.

If the Big Brewers believe a wider brand portfolio – variety – is the answer, they got it wrong. Today’s consumers want a full drinks cabinet and whatever else the fridge can hold. Bud Light obviously fails on the first two counts: diversity and localism. Neither can it bring out an endless stream of new styles on a weekly basis, as many craft brewers do, nor can it self-deflate to local brand. Apropos delivering “fun”, Anheuser-Busch’s stage hog sounded a bit pathetic when he insisted that “light lager has always been about fun and friends.” So how come younger consumers do not associate macro beer brands with fun?

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