BRIGHT LIGHTS

399lbrIf there is a bright spot in the beer industry these days, it’s one that provides its own light — light beer, that is. Light beer continues to show strong growth in a relatively slow-growth industry. Virtually nonexistent less than 25 years ago, the light beer category now accounts for an astounding 40% of U.S. beer sales. Indeed, the category increased an estimated 3.5% in 1998, to significantly more than 1 billion 2.25-gallon cases, according to the 1999 Adams Handbook Advance.

What was once an offbeat fad beer that filled a small niche is now a huge category with a group of brands that stand on their own merits. When it was first developed as a diet version of regular beer, light beer had little future. It wasn’t until Miller positioned Miller Lite as a great-tasting beer that wouldn’t fill macho beer drinkers up as fast that it began to come into its own.

Now the pendulum has swung the other way. Light beer continues to grow because today’s consumers are more health-conscious. Light beer appeals to a much broader consumer audience than ex-jocks who want room to put away a few extra beers.

“There’s a long-term trend of people moving to lighter-bodied beverages in general, from milk to diet soda. It’s everywhere,” said Bob Lachky, vice president of brand management at Anheuser-Busch. “Lifestyle choice, calorie-consciousness, fitness and concern about DWI — the combination is fueling the segment.”

Light’s broader appeal means that new and different consumers, including young adult drinkers and more women, are making light beers their brands of choice.

“In the past, drinkers evolved from full-calorie beer to light,” said Pat Moertl, Miller Lite senior brand manager. “Now light beers stand on their own merits for drinkability. Consumers aren’t just moving to lower-calorie beer. Lights are a point of entry for beer drinkers, especially in the 21 to 27 age group.”6803BEER7

Lights have grown to such a degree that Miller Lite and Coors Light are the biggest brands put out by those two brewers. And though Budweiser is still the world’s largest beer brand, Bud Light’s heady growth certainly has more than helped offset several years of sales declines on Bud itself. In 1998, sales of Bud Light increased once again, up an estimated 10.5% compared to 1997, to almost 350 million 2.25-gallon cases, according to the 1999 Adams Handbook Advance.

The fact that three of the top four beer brands in the country are light beers also has a lot to do with category growth. Brands like Bud Light, Miller Lite and Coors Light have spent a considerable amount of time and energy over the years delivering a lifestyle message. Light beers have positioned themselves as part of a fun, active lifestyle, and consumers have gotten the message.

“Consumers tell us they want an easy-drinking liquid,” said Devin Kelly, senior brand manager of Canadian brands at Labatt USA. “It’s what makes lights popular. Media weight behind the big brands certainly has pushed consumers in that direction.”

Miller Lite, the brand that started it all, is starting over this year. Lite is scrapping the controversial “Dick” ad campaign in hopes of finding a strategy that’s even more compelling to consumers. While the quirky campaign created a buzz among younger drinkers and raised the brand’s visibility, it didn’t move product as fast as expected.

“We’re going to continue to evolve the Lite brand,” Moertl said. “Our never-satisfied approach has been putting the brand back on radar screens in the past few years. Now we’re looking to evolve the campaign.”

Miller likely won’t abandon the “Miller Time” umbrella that made all Miller brands a little more fun and unexpected. New creative for Lite hasn’t been finalized yet, but future ads are expected to spend more time extolling product virtues than oddball characters and offbeat humor. In the meantime, Miller continues its associations with NASCAR racing and NFL Football.

Bud Light continued on a tear last year, racking up its seventh year of double-digit growth. Ironically, the brand’s advertising touts the very product benefits that helped Miller Lite create the category. Bud Light’s tagline, “The great-tasting light that won’t fill you up and never slows you down,” echoes Lite’s infamous “Great taste, less filling,” tag of the ’70s and ’80s. But Bud Light ads also emphasize choice, according to Lachky, and the great lengths to which people will go to get the taste of Bud Light.

“We still use a preference strategy,” Lachky said, “though we talk about product benefits. We use Bud ads to sell quality and heritage and use humor to sell Bud Light, and we’ve been pretty single-minded in terms of message and strategy over the years.”

Coors Light, the workhorse of the nation’s third largest brewer, also will continue its winning formula of the past several years. The “Beer Vendors” campaign has hit a chord not only with consumers, but also distributors and many retailers. The brand saw increased sales in 1998, up an estimated 5% to 210 million 2.25-gallon cases, according to the 1999 Adams Handbook Advance.

“Beer Vendors has been extremely successful for us, and we’ll continue to use it,” said Dave Taylor, spokesperson for Coors, “but we’ll also be looking at new creative.”

SHINING LIGHTS

The big three domestic brands account for the lion’s share — about 70% — of light beer sales. But brands that have been on fire in the past year are imports. Imported lights once faced an uphill fight to attract consumers. To some, the concept of a fuller-bodied light beer seemed like an oxymoron. To others, the thought of paying above-premium prices for a watered-down version of an import didn’t make sense. Now, in many cases imported light beers are growing faster than their regular counterparts, which haven’t been standing still themselves.

Leading Brands of of Light Beer
(Thousands of 2.25-Liter Cases)

BRANDS BREWER/
SUPPLIER
1997 1998p % CHANGE
Bud Light Anheuser-Busch 316,200 349,250 10.5%
Miller Lite Miller Brewing 223,900 218,000 -2.6%
Coors Light Coors Brewing 200,000 210,000 5.0%
Natural Light Anheuser-Busch 96,000 99,000 3.1%
Busch Light Anheuser-Busch 62,500 65,000 4.0%
Michelob Light Anheuser-Busch 34,300 33,900 -1.2%
Keystone Light Coors Brewing 26,950 27,250 1.1%
Milwaukee’s Best Light Miller Brewing 25,700 27,000 5.1%
Old Milwaukee Light Stroh Brewing 13,000 11,000 -15.4%
Miller Genuine Draft Light Miller Brewing 12,000 11,000 -8.3%
Total Leading Brands 1,010,550 1,051,400 4.0%
Others 21,089 16,180 -23.3%
Total 1,031,639 1,067,580 3.5%
(p) 1998 Preliminary.
Source: Adams Handbook Advance 1999

“Imported light beers have lagged far behind the overall industry,” said Bill Hackett, president of Barton Beers, Ltd. ” [Light beers] only account for a 10% share of imports versus a 40% share of domestics. When consumers trade up, they want to get what they pay for, so they’re drinking fuller-flavored beers. In the past they’ve said, ‘Why pay extra money for a light version of what I really want?’ But that’s changing. Consumers are not only willing to try imported lights, but they are becoming a brand of choice.”

Brands like Corona Light, Amstel Light and Labatt Blue Light aren’t attracting drinkers of their parent brands as much as they as are attracting light beer drinkers who want to trade up. And a strong economy has meant that even entry level drinkers, drawn to light beer’s taste profile and lifestyle imagery, also want the cachet of an import.

“People are segmenting their palates between light and full-flavored beers, and they are drinking better,” said Yuri Schwalbe, Amstel Light brand manager. “For some that means fewer calories, and for some that means better taste. We offer both.”

Amstel Light kicks off a new campaign — the “beer drinker’s light beer” — that focuses on taste. After putting a lot of effort behind the launch of full-calorie Amstel and Amstel 1870 two years ago, the focus has been put back on Amstel Light in the past year. The campaign gets heavy support in print, radio and outdoor promotions.

Corona Light also has experienced heady growth. A sales increase of about 45% last year put the brand over the 3 million case mark and bumped it up to 13 on the list of top-selling imports. This year, the brand gets a new gold and navy label to help it stand out and make it more distinct from Corona Extra. And it will see a much stronger presence in co-branded programs this year. However, overall strategy for Corona won’t change.

“Corona is an attitude, whether it’s full-bodied Extra or Light,” Hackett said. “We found the right formula some time ago, and we continue to pound away. Corona has a great story to tell. No matter what market retailers are in, sales are up. We have a very aggressive plan to co-brand this year. Extra is widely available, but we have a huge opportunity to grow our distribution base on Light.”

Labatt Blue Light is another import that has seen sales soar. “Our growth has been fantastic,” said Kelly. “It was in excess of 40% in ’98, and we anticipate growth in excess of 50% in ’99. In part, it’s driven by the success of the brand family, but also because of the growth of both light and imports, a package redesign two years ago, new p-o-s and new programs for Blue Light. “

OTHER LIGHTS

Imports and premium domestics have shown the strongest growth in the category, but other brands on the fringes of the premium segment also show good growth. In the above-premium price range, Michelob Light had a solid record last year, growing about 4%. New creative in the “Beer or Michelob?” campaign aired during the Super Bowl in January. While the campaign pushes the Michelob brand, the beer featured in the ads is Michelob Light. Indeed, Michelob Light will play a more prominent role this year in the brand’s sponsorship of the PGA Tour and the brand’s own Kingsmill Michelob Classic. In the below-premium segment, Busch Light Draft also had a good year last year.

With the millennium nearly upon us, many marketers are eagerly waiting to see what effect, if any, the “baby boomlet” will have on beer sales as those consumers reach legal drinking age. Whether or not industry volume increases faster as a result, brewers still see light as the bright spot in their portfolios. *


6803BEER5Lights On

Light beers, which revolutionized U.S. beer marketing in the late 1970s and early ’80s, were the result of a breakthrough in technology in 1964. Until then, low-calorie beers could only be made either by diluting a regular beer, or by using a couple of processes that reduced calorie content but resulted in poor taste.

An enzyme called amyloglucosidase was developed that renders all the dextrins in beer completely fermentable, reducing the carbohydrate content and raising the alcohol content (about 1% higher than regular beer). The enzyme reduced the calorie content of beer, but because were no dextrins left in the beer, the alcohol was more rapidly absorbed by the bloodstream, making it more intoxicating.

Brewers, therefore, adjusted the alcohol content of light beers to a level slightly below that of regular beer (about 2.9% by volume, instead of the usual 3.2%) so they would have the same effect as regular beer.

The first light beer to use the new technology, Meister Brau Lite, was developed and marketed by the Peter Hand Brewery in Chicago in 1964. When the brewery went into bankruptcy in 1972, Miller Brewing bought the Meister Brau and Lite brands and even continued to brew Meister Brau Lite for a while.

“Diet” beer never really caught on, however. In 1975, Miller reintroduced the product as Lite Beer from Miller, and the famous “Great Taste, Less Filling” campaign positioned it as something even a beer drinker could love.

Lite’s success was followed by Schlitz Light in 1976 and Natural Light in 1977. In 1978, A-B and Coors launched Michelob Light and Coors Light, respectively. Budweiser Light was introduced in 1982 and renamed Bud Light in 1984. The big three — Bud Light, Miller Lite and Coors Light — have since been joined by scores of other light beers that appeal to today’s consumers.

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