Sunday, August 06, 2006


If the above phrase leaves an oxymoronic aftertaste on your palate, you have an idea of what beer makers are up against.

U.S. beer shipments last year were flatter than a stale ale, falling 0.1 percent according to the Beer Institute. The industry group says shipments to the U.S. market -- which accounted for about 86 percent of overall business -- declined 2.2 percent to 178.8 million barrels. The drop was offset by a 7.2 percent increase in imports and an 8 percent increase in exports.

Shipments fell in 30 states including Pennsylvania, where they declined less than 1 percent to 8.6 million barrels.

Meanwhile, the Wine Institute reports wine consumption grew 5.2 percent in 2005 while the Distilled Spirits Council says sales rose 2.9 percent based on the volume of alcohol sold.

Marketing experts say the disparity indicates the degree to which wine and distilled spirits producers have capitalized on changing consumer tastes. Drinkers are more sophisticated, willing to try something new, and looking for different beverages that are appropriate for different occasions.

More importantly, they don't want to be seen drinking the same thing as everybody else.

Brewers, long criticized for advertising that targeted the lowest common denominator, are finally realizing that a crucial market is more sophisticated than their baby boomer parents.

"This twentysomething is so different from anything we've seen before," says Judy Ramberg of Iconoculture, a consumer research consulting firm. "They don't want to be seen as a guzzler, a dumb guy, six-pack drinker. They want to be seen as a connoisseur."

The beer industry created those perceptions with high-priced advertising: Old Milwaukee's Swedish Bikini Team, Miller Lite's "Catfight" ad featuring two scantily clad women trying to resolve the "tastes great, less filing" debate, and Coors Light's bikini twins.

"When you drink a lot of wine, you're refined. When you drink a lot of beer, you're just a beer drinker," says Michael R. Solomon, an Auburn University professor whose specialty is consumer behavior.

Perception is only part of the problem. While major brands such as Budweiser, Miller Lite and Coors Light still dominate the market, all the growth is coming from craft brewers and imports. That reflects what Mr. Solomon calls "some sort of boredom with the major brands." Drinkers want something unique, something that makes them stand out.

"Domestic beer occupies this territory of being ordinary, every day," says Jim Forrest, vice president of Synovate, a market research firm. "It's hard to get incremental growth when you're perceived to be ordinary and every day."

Mr. Forrest says wine and distilled spirits producers have done a good job of fashioning strategies around occasions to consume their products. Craft and import beer producers have done the same, he says.

The importance of appealing to more discriminating, higher-brow tastes is evident in the distilled spirits industry. While overall sales grew 8 percent last year, sales of premium products grew at a double-digit clip, says David Ozgo, chief economist for the Distilled Spirits Council. Consumers view a $30 or $40 bottle of vodka as an affordable luxury and "tend to want to drink better," he says.

Brewers are catching on. To tap demand for specialty brews, Anheuser-Busch introduced Beach Bum Blonde Ale this summer, the fourth in its lineup of seasonal beers. "Beach" and "blonde" may conjure images of previous advertising, but the marketing literature takes the high road, highlighting the ale's "rich golden color, pleasant hop aroma and slightly spicy and malty taste."

The industry hopes to capitalize on more discriminating palates through its Here's To Beer campaign, an initiative spearheaded largely by Anheuser-Busch. Advertising features Spike Lee and other famous people describing who they'd like to share a beer with.

"You want to romance the product. The young consumer wants a variety of experiences with their drink," says Kevin Sproule, general manager of Fuhrer Eagle Sales and Service, the South Side wholesaler of Anheuser-Busch products.

The St. Louis brewer has stakes in two craft brewers -- Redhook Ale Brewery of Seattle and Portland, Ore.-based Widmer Brothers Brewing. More recently, it paid $82 million for the Rolling Rock brands, beers that are marketed nationally but retain a cult following because of Rolling Rock's green bottle.

Ms. Ramberg says Anheuser-Busch realizes it has to grow by increasing its portfolio of specialty products, not by getting more people to drink its flagship brands. The danger is that the specialty brands will lose some of their appeal if drinkers realize who's making them.

"If beer drinkers find out they're involved in some of these craft beers, they'll lose all of their cachet," says Ms. Ramberg, a Heineken drinker.

Mr. Forrest disagrees, arguing many drinkers don't connect the dots. He says many people in the industry don't realize Blue Moon Belgian White is made by Molson Coors, the world's fifth-largest brewer. Protests from diehard Rolling Rock aficionados notwithstanding, the iconic brew should give Anheuser-Busch a buzz.

"From a consumer standpoint, as long as they stay true to what that brand represents ... they'll still have the following," Mr. Forrest says.

There are some signs the industry's new approach is paying off. Nearly half of the 250 bartenders and bar managers surveyed recently by Synovate are forecasting domestic beer sales will top 2005 results, while only one out of 25 forecast a flat to light year for beer.

"Bartenders may be reacting to the domestic beer industry's renewed focus to appeal to a wider range of consumers and their innovative strategies to make beer consumption more palatable," Mr. Forrest says.

Pittsburgh Post-Gazette

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