LIGHTS ON

LIGHTS ON6803BEER1

By Michael Sherer

What do you say about a category that year in, year out shows solid growth in volume and share? In the beer business, you thank your lucky stars and do whatever you can to take advantage of the trend. Like our present economic expansion, growth of the light beer segment shows no sign of abating, giving brewers, wholesalers and retailers good cause to be bullish.

“It’s not new news that you have two main growth engines in the beer industry,” said Tom Cardella, vice president of marketing, Labatt USA. “You have the refreshment of low-calorie products on one end and the fuller taste of imports on the other.”

“A number of factors contributed to light beer’s growth in the past year,” said Tom Levenick, vice president of national accounts for Coors Brewing Co., “including the move to premiums and above-premium brands, health concerns, advertising, and in a lot of key geographies the benefit of warm weather.”

The light beer segment grew another 6% percent last year, to 1.4 billion 2.25-gallon cases, driving the category’s share of the industry past 42%. Bud Light, Miller Lite and Coors Light continue to dominate the list of best-selling beers, surpassed in sales only by Budweiser (with the gap shrinking slightly year after year). The top three light brands account for almost three of every four light beers consumed, but segment growth means opportunity for everyone willing to brave the competition.

The light beer juggernaut is fueled by a number of factors, only some of which have anything to do with the original premise for the product. “Great taste, less filling,” and beer “that won’t fill you up and never slow you down” may still be primary benefits of light beers. But light beer’s appeal has expanded far beyond a low-calorie proposition. Invented when most baby-boomers had already come of age, light beer has had considerable share of voice with successive generations. While light beer initially may have appealed to the subconscious health concerns of armchair quarterbacks approaching middle age, it is now most definitely a lifestyle product.

“You have to be in awe of light beer,” said David English, group vice president of premium brands at Anheuser-Busch. “It has become synonymous with beer. Light beer brands have done a great job of showing good times, people having fun with their friends and good beer.”

The lifestyle imagery of light beer brands strongly appeals to young contemporary adults, and the new generation of beer drinkers has grown up being exposed to these brands and their message. The product itself also has strong appeal both to this generation and entry level drinkers in general.

“The 21 to 25 year age group is expanding and the 25 to 35 age group is leveling off as opposed to declining,” said Cardella. “We have a large group moving into the beer segment that grew up on sweet carbonated beverages, which drives and fuels growth of low- calorie beers that are sweeter and highly carbonated.”

“It’s a combination of quality and image that appeals to consumers,” Levenick said. “The product is very refreshing and drinkable and has a great image with consumers.”6803BEER6

HIGHLIGHTS

The big three light brands continue to push hard to capture the hearts and palates of domestic beer drinkers. Segment leader Bud Light is coming off its eighth consecutive year of double-digit growth, up another 11.9% in 1999 to 395 million 2.25-gallon cases, according to Adams Business Media Research. With A-B’s marketing muscle behind it, the brand has successfully leveraged Bud’s heritage with today’s consumers.

“Bud Light really owns center ground,” said English. “It’s synonymous with fun, friends and good times. It’s about great advertising, integrated marketing programs that are relevant to contemporary adults and a highly targeted regional approach.”

Advertising continues to use humor to show the lengths people will go for a Bud Light. New spots in the on-going campaign were unveiled during the Super Bowl. The brand also effectively uses sports properties on a local level. Associations with the NBA and NHL help A-B promote Bud Light through local team franchises, while a spokesperson like Wayne Gretzky, new commissioner of the “Bubble Boys Hockey League” in the Bud Light campaign, appeals to consumers nationwide.

The brand plans big summer promotions as usual this year that will be announced at A-B’s national sales meeting as this issue comes off the press. While Memorial Day and mid-summer promotional themes were still under wraps as of this writing, brand activities during the Labor Day period will focus on the Olympics in Sydney, Australia.

A-B’s above-premium brand, Michelob Light, also has been performing well, especially in supermarkets. The brand is increasing its media spending this year and off-premise chain accounts will be a focal point of its efforts. To leverage Michelob Light’s appeal to women, the brand has signed LPGA tour star Annika Sorenstam as a spokesperson. Promotions will focus on special occasions such as holidays. New this year is a Father’s Day promo.

Mich Light also will test several promotional packaging concepts that will continue to leverage the trademark teardrop bottle shape.

Miller Lite seems to have stemmed a steady decline in recent years with a strong showing in the last quarter. “Last year was even better than we anticipated,” said Scott Bussin, public relations manager for Miller Lite. “Changes in our advertising and packaging plus pricing contributed to a year that ended on a strong note. Our numbers improved across all channels.”

The celebrity bar debate that replaced the controversial “Dick” campaign a year ago has been tweaked and is getting a good response from consumers. John Bowlin, who replaced Jack MacDonough as Miller ceo last spring, has stated he’s committed to world-class marketing, so the brand will continue to evolve the campaign until it comes up with something even better.

Both primary and secondary packaging were redesigned last year to give them a cleaner look. The label was made simpler, and secondary packaging was made more distinct and now creates a billboard effect in the cooler. While Lite plans to use special one-off packaging as a promotional tool, it will occur less often.

Kicking off the Memorial Day holiday and continuing up to July, Lite plans a NASCAR-themed promotion featuring driver Rusty Wallace. Miller’s big summer promotion this year will be dual-branded, featuring both Lite and Miller Genuine Draft. Details are being announced this month, but the brand indicates that the promotion will contain a number of non-traditional elements that it believes both retailers and consumers will be excited about.

In the fall, Miller Lite will launch an NFL promotion similar to last year’s, with a pre-season merchandise offer, and an NFL handbook promotion over Labor Day. On a local level, Miller offers distributors “toolbox” promotions they can tailor to their markets.

TOTAL BEER VERSUS LIGHT BEER, 1991-1999
(Thousands of 2.25-gallon cases)

TOTAL BEER LIGHT BEER LIGHT BEER SHARE OF TOTAL
1999 2,707,200 1,147,250 42.4%
1998 2,667,752 1,082,574 40.6%
1997 2,632,184 1,031,709 39.2%
1996 2,621,141 998,753 38.1%
1995 2,600,162 961,116 37.0%
1994 2,648,889 930,779 35.1%
1993 2,631,823 935,203 35.5%
1992 2,624,300 883,913 33.7%
1991 2,620,771 835,152 31.9%

Coors Light also grew at a respectable rate last year, and plans to keep refining its efforts. “We’re looking to get better on the fundamentals,” Levenick said. “We want to expand our keys areas of distribution and our display area at retail, do a better job of category management and focus on getting closer to retail.”

Advertising likely won’t change much other than adding new spots to the existing “beer man” campaign. The advertising has worked well and has given the brand a lot of momentum.

A strategy that could boost the fortunes of both Coors Light and Original Coors is tying the two brands together more often. In addition to being in a sports venue like the beer man ads, the John Elway campaign for Original Coors created an even closer link with Coors Light in January, and Coors expects to do more co-branded displays this year.

Innovative and unusual promotional packaging, a brand hallmark in recent years, will likely continue. “One of the things we like to do is catch the eye of consumers so they always wonder what’s coming next,” Levenick said. “But packaging has to be hot enough to move it in and out of the market quickly. We’re looking to build on what we’ve done, so we’re always looking for innovative ways to draw attention to the brand.”

OFFSHORE LIGHTS

Premium domestic light beers aren’t the only ones showing growth in the segment, however. Imports are making their mark, too. A non sequitor for years, imported light beer is poised to take advantage of growth trends in both segments. Consumers have added products to the portfolio of brands they consume based on drinking occasions. They are drinking imported light beers both for the fuller flavor they offer and the cachet that imports represent.

Leading Brands Share of Light Beer
Total Light Beer: 1.14 billion 2.25-gallon cases

“If you were to define what’s hot and what’s not, lights and imports are definitely hot,” said Bill Hackett, president of Barton Beers, Ltd. “Light beer within the import category, though, is way underdeveloped. It’s less than 10% of the business. That means a huge opportunity for us.”

Corona Light is pushing to become the dominant imported light beer. The package was redesigned last year to make it more distinct from Corona Extra, yet still associate it with its parent. The new package hit store shelves in November and December, and numbers on the brand are already higher.

To set the brand apart from Corona Extra, Corona Light will get its own outdoor ads with the theme “Grab the Lime Light” as well as TV spots for Hispanic markets and Corona Light graphics on delivery trucks. Both Barton and Gambrinus, Corona’s other importer, are looking into sponsorships for the brand.

To leverage the success of the parent brand, however, Corona Light will encourage distribution and retail buy-in with co-branded p-o-s materials, especially during Corona’s on-going stream of holiday promotions. Radio and outdoor advertising also will be co-branded where possible.

Amstel Light, the category originator, will continue its successful strategy of the past few years, focusing on key markets. Back this summer is the brand’s successful “Beach Patrol” promotion. The brand will heavy up support in strong East and West Coast markets, using the promotion to introduce new consumers to Amstel Light and let existing consumers have fun with the brand.

The “beer drinker’s light beer” campaign remains the same this year, with the brand committing to national print coverage and TV, radio and outdoor support in key markets. New creative executions for radio and television will have more synergy to generate a more unified message.

The growth of imported lights in recent years convinced Beck’s NA to re-enter the segment. Beck’s has had three previous light beer entries — Roland, the ill-timed Dribeck’s Light and Beck’s Light — none of which clicked with consumers for one reason or another. Results from test markets in Rhode Island, Florida, Chicago and Denver last fall suggest the new Beck’s Light could be a winner.

The new product is packaged in a patented clear bottle that protects the beer from light damage as effectively as colored glass. The bottle has a slight green tint when empty, and is embossed with the word “Beck’s” and the brand’s key icon. A paper label identifies the product as Beck’s Light, but the overall package clearly distinguishes it from Beck’s.

“The taste is altogether different from Beck’s, too,” said Bill Yetman, president of Beck’s NA. “It has more of an American taste profile. We did extensive research on the taste profile and the package, testing it against both American and European light beers, and ours was preferred.”

Because Beck’s Light is so different from the parent brand, it isn’t as limited, according to Yetman. “We’re pursuing a different strategy. Beck’s Light has no boundaries. It isn’t limited to import accounts or white tablecloth restaurants, so we’re shooting for normal distribution channels.”6803BEER9

The national launch this month will be supported initially by a wholesaler program to drive distribution. Media buys for the brand’s “All beer, no compromise” ad campaign, as well as promotions, will be determined on a market-by-market basis as the brand rolls out. Beck’s NA field staff, which has doubled in size this year, and distributors will have a lot of latitude in formulating programs for local markets. Hispanic markets will get a heavy investment this year.

Labatt Blue Light also is taking advantage of growth trends with plans for expansion this year. Brand sales grew nearly 37% last year, leading the brand to invest more heavily this year in pushing beyond core geographies of New York and Michigan.

Labatt USA is working with Canadian headquarters to develop a North American ad campaign. Blue Light, which to date has been attached to Labatt Blue, will get its own positioning and support. It also will continue to be marketed as part of the Labatt family, especially during big promotions like the summer “Outfitters” program.

To help make the brand even more distinct, Labatt is unveiling a new package design in April.

LIGHTEN UP

Surprisingly, even below-premium light beers continue to perform well. The below-premium segment as a whole has suffered in recent years as consumers have traded up, leading to last year’s sale of Stroh brands to Miller and Pabst. But light beers within the segment have experienced healthy growth.

Busch Light, marketed as part of the Busch family, will be supported with the brand’s NASCAR sponsorship in the spring featuring Dale Earnhardt, and themed activity around hunting and fishing in the fall.

A-B’s other light beer brand, Natural Light, also has benefited from industry consolidation. Positioned as a beer that goes well with food, Natural Light will be supported with barbecue- related POS during the summer.

Miller Brewing also reports that Miller High Life Light and Milwaukee’s Best Light also grew last year, and will continue to be supported with display materials this year.

As we get the new millennium underway, beer marketers are especially optimistic about the light beer category’s effect on the industry.

“It’s been a very solid year for the beer industry overall, but especially for light beers,” said A-B’s English. “There’s been growth year after year, and there’s no turning back as to what the opportunities are for light.”

Michael Sherer is a Seattle-based writer and consultant specializing in beverages and foodservice.


WHERE DOES THE LIGHT COME FROM?

A breakthrough in beer-making technology in 1964 led to the development some years later of so-called “light” beers, which began to transform the U.S. market with the introduction of Miller Lite in 1973. Before that, low calorie, or “diet,” beers were made by watering down a regular beer or using processes that reduced both calories and taste.

Brewers discovered that an enzyme called amyloglucosidase could render all the dextrins (fermentable sugars) in beer completely fermentabele. The result reduced the beer’s carbohydrate content (calories) by using all the sugars, but also raised its alcohol content slightly above that of regular beer. In addition, a byproduct of using the enzyme is that it caused the alcohol to be more easily absorbed into the bloodstream. Thus, while the process reduced the brew’s calorie count and maintained its flavor, it also made the product a bit more intoxicating. So brewers have chosen to adjust the alcohol content of their light beers slightly below that of regular beers.

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