Beer Growth Brands

While the beer category has seen consistently modest growth for several years — with consumption increasing incrementally from 2,621 million 2.25-gallon cases in 1996 to 2,825 million 2.25-gallon cases in 2002 — total beer consumption decreased 0.2%, to 2,818 million cases, in 2003. According to the Adams Beer Handbook 2004, the slight overall volume decrease included a 0.5% decline in domestic beer and a 2.2% increase in imported beer. As would be expected, these compare unfavorably with 2002 figures, when imported beer gained 6.0% and domestics were up 0.7%. Still, beer sales continued to climb, with total dollar volume increasing by 4.9% in 2003 to approximately $78.1 billion nationwide. This suggests that most brewers are successfully holding the line on pricing, as well as underlining the continued impact of higher-margin malt-based products.

“Low-carb” emerged as the marketing mantra over the past year, with a few product introductions following on the heels of Michelob Ultra’s successful debut as the first so-called “low-carb” brew late in 2002. Labatt’s Rock Green Light and, more recently, Coors’ Aspen Edge, joined the “low-carb” sub-segment. But Miller made the most noise with a hard-hitting ad campaign declaring that its flagship Miller Lite has been a low-carb product all along. And it worked. Sales of Miller Lite climbed in the marketplace in 2003, reversing three straight years of declines. This instigated an equally hard-hitting ad campaign from Anheuser-Busch stating that, in fact, all light beers, including Bud Light, are low in carbs. And so it goes, with Miller and A-B continuing to slug it out over the airwaves.

The “malternative” revolution of the past few years slowed considerably in 2003, with some of the original successful brands taking major hits. For example, Smirnoff Ice, which exploded on the market with more than 20 million cases in 2001 and more than 23 million in 2002, lost about 8 million cases to just over 15 million in 2003. But the brand made up for the loss with the introductions of Smirnoff Ice Triple Black (6 million-plus cases) and Smirnoff Twisted V (1.3 million cases) in 2003.

Overall, though, beer industry trends have maintained the same course for a number of years. The light beer category continues to do the industry’s heavy lifting, comprising more than 47% of all beers consumed in the U.S., led by the seemingly indomitable Bud Light, which continues to increase sales and remains the best-selling beer in the U.S. by far.

Sales of superpremium and micro/specialty beers slowed last year, following a double-digit percentage gain in 2002 (though off a small base). Meanwhile, the premium, popular, malt liquor and ice beer segments continued to see their market shares decline.

BRAND EQUITY

Still, as we’ve said here before, while identifying general trends comprises an important element in evaluating the health of an industry, brand equity remains the cornerstone of the beverage industry. Through the economic uncertainty and brewing industry consolidation of the past few years, as well as always-fluctuating consumer tastes, specific brands of beer have grown their business more than others. A melding of resources, creativity, perseverance, the right economic environment and just plain luck often go into creating and developing a successful brand, and still, it remains somewhat of a mystery. Indeed, there are beers in every category and at every price point that, for a variety of reasons, have either fallen behind or outpaced their respective competitors. And although identifying category consumption trends is helpful, actual brand activity is what generates profits. Thus, the rationale behind “Beer Growth Brands,” which uses the latest industry results to highlight those brands that have demonstrated noteworthy increases over the past few years.

Fast Track Brands

Domestic Brands must have exceeded 9 million 2.25-gallon cases in 2003,
and imported brands/microbrews must have exceeded 1.5 million 2.25-gallon cases in 2003,
with double-digit growth over each of the past four years.
(000 2.25-Gallon Cases)

BRAND SUPPLIER 1999 2000 2001 2002 2003 % CHANGE ACGR*
Yuengling Traditional Lager Yuengling Brewery 7,300 9,000 13,860 16,336 18,100 10.8% 25.5%
Modelo Especial Barton Beers/
Gambrinus
4,300 5,248 6,657 7,759 9,268 19.4% 21.2%
Corona Light Barton Beers/
Gambrinus
3,700 4,626 5,823 6,979 8,142 16.7% 21.8%
Michelob Amber Bock Anheuser-Busch 3,000 4,000 4,500 5,570 6,300 13.1% 20.4%
Newcastle Brown Ale Scottish & Newcastle
Importers
3,089 3,475 3,953 4,391 5,093 16.0% 13.3%
Stella Artois Labatt USA 68 232 490 981 1,568 59.8% ++

++ Greater than 100%. *Annual Compound Growth Rate

There are four categories of Growth Brands and the Fast Track represents the most demanding set of criteria. Domestic beers included in the Fast Track must have exceeded 9 million 2.25-gallon cases in 2003 with double-digit percentage growth over each of the past four years. Imported (and micro/specialty) beers included in the Fast Track met the same criteria, with their sales having exceeded a lower threshold of 1.5 million 2.25-gallon cases in 2003. All Fast Track Brands must have at least a five-year history.

Established Growth Brands

Top-selling brands that have grown moderately or substantially over the past four years.
Brands must have exceeded 3 million 2.25-gallon cases in 2003.

(000 2.25-Gallon Cases)

BRAND SUPPLIER 1999 2000 2001 2002 2003 2002-2003
% CHANGE
1999-2003
ACGR*
Bud Light Anheuser-Busch 395,000 436,000 469,500 505,000 517,000 2.4% 7.0%
Natural Light Anheuser-Busch 106,000 110,500 113,000 113,500 115,000 1.3% 2.1%
Corona Extra Barton Beers/
Gambrinus
65,500 74,000 85,119 91,224 96,105 5.4% 10.1%
Busch Light Anheuser-Busch 70,500 72,500 75,500 78,300 80,500 2.8% 3.4%
Heineken Heineken USA 47,000 54,000 56,800 62,400 62,500 0.2% 7.4%
Keystone Light Coors Brewing 28,920 31,480 33,100 35,820 39,800 11.1% 8.3%
Natural Ice Anheuser-Busch 26,000 29,500 30,900 32,500 33,500 3.1% 6.5%
Tecate Labatt USA 8,943 11,024 12,019 13,109 13,464 2.7% 10.8%
Guinness Stout Diageo-Guinness 9,579 10,035 10,684 10,715 10,987 2.5% 3.5%
Amstel Light Heineken USA 6,000 7,100 8,500 9,770 9,980 2.1% 13.6%
Sierra Nevada Pale Ale Sierra Nevada Brewing 5,264 6,032 6,626 7,106 7,165 0.8% 8.0%
Miller High Life Light Miller Brewing 3,800 3,900 4,300 4,900 6,200 26.5% 13.0%
Labatt Blue Light Labatt USA 2,301 3,260 4,160 5,067 5,482 8.2% 24.2%
Dos Equis Labatt USA 3,988 4,424 4,861 4,997 5,337 6.8% 7.6%
Pacifico Barton Beers/
Gambrinus
1,791 2,797 3,323 3,414 3,849 12.7% 21.1%
Fat Tire Amber Ale New Belgium Brewing 1,695 1,947 2,658 2,979 3,233 8.5% 17.5%

*Annual Compound Growth Rate

Other brands that have shown significant growth over the past few years, but have not yet been on the market for a full five years, have been designated as Rising Stars.

Rising Stars

Brands less than five full years of age that have exhibited notable growth over the past few years.

(000 2.25-Gallon Cases)

BRAND SUPPLIER 2000 2001 2002 2003 2002-2003
% CHANGE
Michelob Ultra Anheuser-Busch – – – – 5,900 41,000 ++
Smirnoff Ice Triple Black Diageo-Guinness – – – – – – 6,395 – –
Seagram’s Smooth United States Beverage – – – – – – 6,000 – –
Bacardi Silver O3 Anheuser-Busch/Bacardi – – – – – – 2,500 – –
Smirnoff Twisted V Diageo-Guinness – – – – – – 1,285 – –
Bacardi Silver Raz Anheuser-Busch/Bacardi – – – – – – 1,000 – –
Rock Green Light Labatt USA – – – – – – 523 – –
Warsteiner Premium Dunkel Warsteiner Importers 52 72 182 208 14.3%

++ Greater than 100%

In addition, in order to highlight traditionally top-selling beers that have consistently grown over the past four years, we’ve created an Established Growth Brands category. Because many of these brands are already operating from huge sales bases, their percentage gains are often modest relative to their overall case volume, even though these brands have had substantial sales increases and are often leaders in their respective segments. As in the Fast Track category, there is a threshold difference between domestic beers and import/craft brews.

Comeback Brands

Brands that have rebounded in sales to at least the previous level after a recent decline.

(000 2.25-Gallon Cases)

BRAND SUPPLIER 2001 2002 2003 2002-2003
% CHANGE
Miller Lite Miller Brewing 217,000 214,500 217,000 1.2%
Warsteiner Warsteiner Importers 1,442 1,434 1,499 4.5%

Finally, there are brands that we have termed Comeback Brands, which are traced back only three years. This means that a Comeback Brand must have experienced a sales decline in 2002 (compared to 2001) but will have rebounded in 2003. Importantly, the 2003 sales rebound must at least equal (or better) the sales levels in 2001 from which the brand had declined. *

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