Lights And Imports Are Beer's Stars

July 1, 2005
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Lights And Imports Are Beer’s Stars

U.S. brewer volumes were essentially flat last year, with a decline from 23.892 billion liters in 2003 to 23.888 billion, according to Euromonitor International. More segment-specific figures include those from the Brewers Association, based on data from the U.S. Department of Commerce, which reports that “mass market” beers grew 0.5 percent in volume in 2004, while pricier imports and craft beers gained 1.4 percent and 7 percent, respectively.
World beer sales totaled 151 billion liters in 2004, an increase of 2.5 percent over the previous year, reports Euromonitor. Within the wider context of the global alcohol drinks market, where sales reached more than 201 billion liters in 2004, with spirits up by 1.2 percent and wine up by 1.9 percent, beer is showing an above-average performance. Value sales grew more rapidly than volume sales in 2004, with a growth rate of 8.5 percent, says Euromonitor. This was due primarily to the success of premium imported and specialty beers at the expense of standard and traditional products.
Top imported beers by brand
Brand Dollar Sales % Change Vs. Prior Year Market Share % Change Vs. Prior Year
Corona Extra$421,891,9360.226.6-0.8
Heineken$260,021,8082.116.4-0.2
Corona Light$104,115,6885.46.60.1
Tecate$75,066,9361.74.7-01
Labatt Blue$52,567,132-5.23.3-0.3
Amstel Light$46,407,1122.62.90.0
Becks$44,535,0840.82.8-0.1
Guinness Draught$41,907,2967.62.60.1
Foster’s Lager$36,853,860-9.12.3-0.3
Pacifico$36,423,3725.72.30.1
Category Total$1,583,418,1123.4    
Source: Information Resources Inc., Total food, drug and mass merchandise (excluding Wal-Mart) for the 52 weeks ending June 12, 2005
On the global scene, China emerged as a key battleground for the world’s leading brewers in 2004, reports Euromonitor International. In May, Anheuser-Busch won a take-over battle for Harbin Brewery, China’s fourth-largest brewer, after its rival SABMiller withdrew from the bidding. China also overtook the United States in 2004 as the world’s largest beer market, with total volume sales increasing by 39 percent from 1999 to 2004, says Euromonitor International’s The World Market for Beer report.  
But in the United States beer’s share of the total alcohol beverage market has been challenged by wine and spirits. Information Resources Inc. estimates that beer lost a full point of its market share in grocery and drug channels last year, with wine picking up 80 percent and spirits 20 percent of that loss. Overall, U.S. spirits volume increased 3.1 percent in 2004, while wine volume grew 2.7 percent, according to the Commerce Department.
Demographics are on the side of all alcohol companies, with a wave of new legal drinking age consumers expected to come of age during the next decade. But today’s youth have been trained on sweet beverages and likely will carry that preference into adulthood. Brewers are trying to combat this trend with new products such as Anheuser-Busch’s BE, a sweeter, caffeine-enhanced product designed to appeal to new flavor preferences and combat the Red Bull cocktail phenomenon. Molson Coors has followed with Molson Kick, a guarana-enhanced beer, initially only available in Canada.
Global beer sales (millionS of dollars)
Subsector 2004 Forecast
2005
Lager$371,614.0$380,411.2
Dark beer$26,015.8$26,201.5
Stout$8,990.0$9,119.5
Non-/low-alcohol$5,996.8$6,076.2
Total$412,616.5$421,808.4
Source: Euromonitor International, 2005
Add to that a newly awakened health-consciousness among older, more traditional beer drinkers, and the influence of “Sex and the City” on America’s cocktail culture, and you have several more reasons consumers have branched out into new beverage categories.
Competition isn’t the only reason beer is losing share. Among those problems are price discounting practices and similar product profiles that have turned domestic beers into commodity products, according to industry watchers.
The major brewers are still hanging in there though. Anheuser-Busch may have lost its title as the largest brewer in the world last year when Belgium’s InBev became the largest brewer by volume, but the King of Beers still holds the top spot in beer sales, and last year increased shipments to wholesalers 0.4 percent. The company holds nearly half of the total U.S. beer market, with a 49.4 percent share, down a tenth of a point from 2003. For the first quarter of this year, A-B has reported domestic volumes are down 2.7 percent vs. the same period last year.
The St. Louis-based brewer has been focused on new product development during the past year, rolling out BE and Budweiser Select. It also has increased its marketing spending 6 to 7 percent for 2005 and will put patriotism front and center with a “Here’s to the Heroes Tour 2005” that will let consumers record messages to U.S. soldiers and broadcast them on American Airforces Radio and Television Service and the Pentagon Channel. The company is playing up its “made in the USA” advantage now that competitors Miller and Coors both have non-U.S. ownership components. Outside of the United States, Mexico reportedly is A-B’s biggest market, turning in double-digit growth last year.
Miller Brewing Co., Milwaukee, came out swinging in 2004, and caught some in the industry off guard. Miller’s domestic beer shipments were down 0.4 percent for 2004, but the company was up 5.9 percent in the second-half of the year, thanks to improved sales of flagship Miller Lite.
Preliminary results for 2005 include improved growth in both retail sales and domestic shipments, according to parent company SAB- Miller. North American profits are up as well, it says.
2005 has been a big year for Molson Coors, the company created by the merger of Golden, Colo.’s Coors Brewing Co. and Montreal’s Molson Inc. The companies called the move “a merger of equals,” and cited cost synergies as one of its benefits, but first-quarter results have been less positive. U.S volume was down 4.1 percent and volume in Canada was off 7.2 percent for the first quarter of this year. While the quarter’s results included special charges related to the merger, it also reflected “weakness in all four of the company’s businesses, U.S., Canada, Brazil and Europe,” said Citigroup Smith Barney analyst Bonnie Herzog in a recent report.
The Brazil business has been a drain on the company, but Molson Coors announced in May that it believes Brazil is a valuable beer market with potential for long-term growth. It plans to explore options for Kaiser beer and possibly Coors Light in Brazil.
While a smaller player in the United States, InBev, based in Leuven, Belgium, became the world’s largest brewer by volume in 2004. The company created by the merger of Belgium’s Interbrew and Brazil’s AmBev, reported a 60 percent volume increase as a result of the merger, with 3.3 percent organic growth in 2004. During the first quarter of 2005, the company turned in 4.4 percent organic growth.
InBev’s U.S. business echoed the organic growth trend at 3 percent in 2004, with strong performances from Beck’s, Bass and Stella Artois. First-quarter ’05 results, however, were down 13.5 percent vs. the same period last year. The addition of AmBev’s Brahma, which the company will be taking global this year, also will boost the import portfolio. The Brazilian brand could help offset the loss of the FEMSA brands that the company lost to Heineken in the United States.
Top micro/craft beers by brand
Brand Dollar Sales % Change Vs. Prior Year Market Share % Change Vs. Prior Year
Sierra Nevada Pale Ale$47,171,3566.811.8-0.1
Samuel Adams Boston Lager$44,408,8043.811.1-0.4
Samuel Adams Seasonal$18,959,10813.04.80.2
Samuel Adams Light$18,207,706-1.84.6-0.4
New Belgium Fat Tire Amber Ale$17,857,46623.04.50.6
Shiner Bock$14,750,4267.33.70.0
Widmer Hefeweizen$13,873,79611.43.50.1
Redhook ESB$12,556,022-4.03.1-0.4
Pyramid Hefeweizen Ale$6,761,47116.41.70.1
Deschutes Mirror Pond Pale Ale$6,642,59615.21.70.1
Category Total$398,667,6487.8    
Source: Information Resources Inc., Total food, drug and mass merchandise (excluding Wal-Mart) for the 52 weeks ending June 12, 2005
Top domestic beers by brand
Brand Dollar Sales % Change Vs. Prior Year Market Share % Change Vs. Prior Year
Bud Light$1,339,416,4482.034.20.0
Budweiser$846,230,400-7.121.6-2.1
Miller Lite$700,851,9046.917.90.8
Coors Light$532,471,58410.513.61.0
Miller Genuine Draft$194,824,864-5.25.0-0.4
Coors$75,031,480-10.11.9-0.3
Icehouse$62,200,356-11.41.6-0.2
Budweiser Select$47,375,648NA1.21.2
Yuengling Traditional Lager$28,036,89629.00.70.1
Bud Ice$27,476,222-12.20.7-0.1
Category TOTAL$3,918,205,9522.0    
Source: Information Resources Inc., Total food, drug and mass merchandise (excluding Wal-Mart) for the 52 weeks ending June 12, 2005
During the past year, Heineken, best known in the United States for its flagship Dutch beer, has expanded to also include FEMSA’s Tecate, Dos Equis, Sol, Carta Blanca and Bohemia. Heineken said the Mexican brands complement its lineup of imports that also includes Amstel Light, and the move increased its volume 28 percent to give it a 26 percent share of the U.S. import market. The company also announced it would delve farther into the industry’s other big growth segment — light beer — with the rollout of Heineken Premium Light Lager.
The industry looks even brighter for beer if the focus is shifted to imports, craft beers and lights.
Imports and craft beers have been growing and they have largely been spared the retail discounting practices of the more mass market brands. Mexican and European imports lead the import beer segment, with 46 percent and 38.4 percent of the category, respectively. And Mexican imports grew 2.2 percent last year in dollar sales, while European brews gained 5.1 percent, according to IRI. Canadian and Australian imports both lost sales — 2 percent and 9.8 percent, respectively. Latin American brands start from a small base of 1 percent, but enjoyed a 17.5 percent sales increase in 2004, and the category of “all other imports” jumped almost 24 percent.
Although craft brewers may be the 1,400 smallest companies in the beer industry, their total dollar volume is nearly $3.6 billion, and with 7 percent sales growth last year, they bucked the trend set by the biggest companies. For the first time since 1996, all four segments of the craft brewing industry, which include regional specialty breweries, contract-brewing companies, microbreweries and brewpubs, showed growth in 2004, reported the Brewers Association, Boulder, Colo.
Another bright spot for beer is light products. Six of the top 10 beers sold at retail are light beers. The No. 1 beer in America, Bud Light, grew 2 percent in dollar sales through food, drug and mass merchandise channels for the year ending June 12, according to IRI. Miller Lite increased 6.9 percent in food, drug and mass outlets during the same time period. The full-calorie counterparts did not fare as well. Budweiser dropped 7.1 percent in food, drug and mass merchandise, and Miller Genuine Draft lost 5.2 percent of sales in those channels.
New packaging, such as aluminum bottles, is helping brewers bring excitement to bars and restaurants. Budweiser Select and Molson Kick’s new aluminum bottles both are offered exclusively in on-premise locations. BI

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