The U.S. Beer Industry Experienced a Slight Decline in 2005, Dropping Total Shipments 0.1 Percent, According to the Beer Institute. but While General-market Domestic Beers Continue To struggle, High-end Products are Enjoying Growth in the High Single-digits.

Import beer shipments grew 7.2 percent, and craft beer shipments were up 9 percent — and they carried that momentum into the first part of this year.

Through June 18, IRI reports that retail dollar sales in the domestic beer category are down 1.2 percent in supermarkets, drug stores and mass merchandisers (FDM), excluding Wal-Mart. Imports and micro/craft beers showed impressive gains through all channels, with imports growing almost 10.5 percent to nearly $1.8 billion and micros/craft beers gaining 12.7 percent to $452.4 million.

Although shipments were down, retail dollar sales improved, with the discrepancies between the segments’ performance attributed to consumers’ willingness to trade up to more expensive products and their desire for choice.

Global beer volume (MILLIONS OF LITERS)
SUBSECTOR	2005	FORECAST 2006
DARK BEER	5,906.7	6,014
STOUT	1,735.8	1,771.6
NON-/LOW –ALCOHOL	2,076.3	2,199.7
TOTAL BEER	155,244.1	159,989
Source: Euromonitor International, 2006

The big brewers, Anheuser-Busch in particular, have come out swinging this year with a number of new specialty-type brands. Anheuser-Busch recently added Singapore’s Tiger Beer to its lineup to increase its position in the import market, and plans to increase Tiger’s currently limited distribution to nationwide exposure. The company also took over the Grolsch Lager business from United States Brewing this spring, several months ahead of schedule in order to get the brand in its system before the summer selling season. In addition, A-B introduced Peels, a malt beverage made with juice to appeal to female consumers. Other innovative A-B offerings include organic Wild Hop and Stone Mill beers, Spring Heat Spice Wheat, and Spykes flavor shots, which are made to be mixed with beer so consumers can customize flavors.

As for its more traditional products, A-B’s Bud Light and Budweiser brands continue to lead the beer category, with nearly 25 percent combined market share in FDM channels, according to IRI. Bud Light managed to grow 1.1 percent as of June 19, while Budweiser is still seeing sales decline with a 7.3 percent decrease. Competitors Miller Lite and Coors Light pulled off sales gains, with Miller Lite picking up a slight 0.7 percent sales gains and Coors Light growing 3 percent.

Miller Brewing Co. has taken a slightly different tack to Anheuser-Busch’s innovation efforts to help boost sales. The company has spent the past months revamping its brand images with advertising that plays up the premium quality of its products. Indicating that the beer industry has allowed its marketing to become too lowbrow, Miller Chief Executive Officer Norman Adami earlier this year told a group of beer industry observers, “We believe the single biggest factor determining the success or failure of each of our brands is the quality of the marketing behind those brands.”

Top domestic beers (individual brands)
VS. BRAND	DOLLAR% SALES	CHANGE VS. PRIOR YEAR	MARKET SHARE	% CHANGE PRIOR YEAR
BUD LIGHT	$1,346,753,280	1.1	15.4	-0.1
BUDWEISER	$782,950,400	-7.3	8.9	-0.9
MILLER LITE	$713,175,680	0.7	8.1	-0.1
COORS LIGHT	$603,865,280	3.0	6.9	0.1
NATURAL LIGHT	$285,951,616	-0.1	3.3	-0.1
MICHELOB ULTRA LIGHT	$208,512,176	-14.6	2.4	-0.5
BUSCH LIGHT	$203,824,256	3.1	2.3	0.0
MILLER GENUINE DRAFT	$178,441,024	-9.7	2.0	-0.3
MILLER HIGH LIFE	$173,374,544	-6.0	2.0	-0.2
BUSCH	$169,905,360	-3.5	1.9	-0.1
CATEGORY TOTAL	$6,085,234,176	-1.2	69.5	-2.0
Source: Information Resources Inc., Total food, drug and mass merchandise (excluding Wal-Mart) for the 52 weeks ending June 18, 2006.

The company re-tagged its Miller Genuine Draft as “Beer. Grown Up.” and has put renewed focus behind import brands Peroni as “refreshment with Italian style and sophistication,” and Pilsner Urquell as “the beer aficionado’s beer.”

Adami also emphasized that he believes beer pricing wars are damaging to the industry.

“Commoditized industries are usually governed by two laws — whoever is cheapest wins … and whoever has the scale is cheapest. As the much smaller player, we have every reason in the world to seek sensible pricing,” he said.

Top imported beers (individual brands)
BRAND	DOLLAR % SALES	CHANGE VS.PRIOR YEAR	MARKET SHARE	% CHANGE VS.PRIOR YEAR
CORONA EXTRA	$467,633,248	10.1	5.3	0.4
HEINEKEN	$289,937,760	10.5	3.3	0.3
CORONA LIGHT	$115,754,640	10.7	1.3	0.1
TECATE	$81,473,616	8.4	0.9	0.1
LABATT BLUE	$49,865,544	-5.4	0.6	0.0
AMSTEL LIGHT	$48,372,172	3.4	0.6	0.0
MODELO ESPECIAL	$46,966,472	39.8	0.5	0.1
BECKS	$46,273,352	4.2	0.5	0.0
GUINNESS DRAUGHT	$44,843,888	6.4	0.5	0.0
NEWCASTLE BROWN ALE	$42,634,696	18.0	0.5	0.1
CATEGORY TOTAL	$1,762,464,768	10.5	20.1	1.6
Source: Information Resources Inc., Total food, drug and mass merchandise (excluding Wal-Mart) for the 52 weeks ending June 18, 2006.

Coors Brewing Co. is focusing its efforts on its Rockies image with new packaging and a “Taste the Cold” tagline. The company rolled out new aluminum bottles with liners to keep beer colder longer. The company also released Stay-Cold Glassware made from borosilicate glass for the on-premise market.

A lesser-known Coors brand, Blue Moon Belgian White, has quietly performed very well for the company. The brand has enjoyed double-digit growth during the past three years, and is particularly popular on-premise where it plays up its coriander and orange peel content by being served with an orange slice.

Craft beers boasted the largest growth of any beer segment, and according to a recent Citigroup wholesaler survey, beer distributors think the major brewers should consider adding micros to the mix. Sixty-four percent of wholesalers surveyed thought the major brewers should add craft beers through acquisition, but leave the smaller companies to operate independently. The wholesalers also indicated that within more traditional offerings, seasonal beers have the best chance at raising the image of beer with consumers.

Demonstrating that Citigroup’s wholesaler survey was correct, Anheuser-Busch has been investing in Chicago’s Goose Island Beer Co. via its interest in Widmer Brothers Brewing. Widmer, based in Oregon, has acquired a minority share of Goose Island. A-B in turn, owns a stake in Widmer, giving the Chicago brewer access to a wider distribution network. BI