For all the hoopla about new products and craft beers during the past several years, malt liquors have been quietly gaining a greater share of the overall beer market. Malt liquor was one of only three segments showing growth in 1996, and held steady this past year in an extremely competitive environment.
Sales of malt liquor now number more than 106 million 2.25-gallon cases, comprising approximately 4% of the entire beer market. Though the segment
has its detractors, who suggest that malt liquor is a product looking for a party and its consumers are just into a cheap buzz, marketers say that view is unfair and add that the segment still has plenty of room for growth.The acquisition of G. Heileman Brewing in 1996 gave Stroh Brewery Company more than a 50% share of the segment and a heavy reliance on its viability. Stroh already had Schlitz Malt Liquor, and acquired Colt 45 and Mickey’s Malt Liquor with the merger. A year-and-a-half later, marketers at Stroh said the brands have pretty much sorted themselves out.
“We’re satisfied with the merger of the two companies,” said David Morris, vice president of brand management for Stroh. “We’re able to manage the portfolio easily because the brands have geographic strengths. Price positioning is a big part of it. Where brands are strong, they’re priced at a premium levels; other brands are priced below premium.”
Stroh is also the marketing partner and distributor for McKenzie River Partners’ St. Ides brand, which has shown strength as a player in the premium-priced arena.
All these combined brands have given Stroh more marketing dollars to use for strategic support. Because of their geographic skew — Schlitz is strong in the South, Colt 45 in the North and Northeast, and Mickey’s on the West Coast — budgets can be spent more effectively on a regional and local basis. The brands also are getting a fresh look in terms of how they’re positioned and supported.
For example, Stroh is trying to position its major malt liquor brands as a part of social occasions. “The image of malt liquor is about sociability, not alcohol level,” said Morris. “This makes Schlitz Malt Liquor, for instance, more acceptable for a lot of different occasions, like a mainstream beer.”
To reinforce that image, both Schlitz Malt Liquor and Colt 45 will be airing network television spots in 1998. Radio advertising will be used to support promotional tie-ins in key markets this year. Both brands will also be tying their products into Black History month.
Stroh also is experimenting this year with ways to expand Mickey’s Malt Liquor out of the primarily urban demographics of the segment. Edgy, tongue-in-cheek humor in ads from agency W.B. Doner last year helped make Mickey’s popular with young contemporary adults — what Morris calls the “snowboarding crowd” — on the West Coast. The brand is taking the creative to other markets in the East and looking for additional ways to leverage the brand’s distinctive bottle and bee icon.
Does Strength Matter?
Malt liquors, because of their smooth drinkability, higher-than-normal alcohol content and competitive price points have often been accused of being a cheap buzz and unfairly marketed to ethnic communities. Today, more than ever, it’s a bum rap.
Like almost any other product, beer is sold on marketing imagery. Consumers buy a particular brand of beer because of what it represents and how its image fits their lifestyle.
Malt liquors, which typically have alcohol content levels that range from 5.7% to 5.9%, are somewhat more potent than typical mainstream beers, which have alcohol content levels of about 5%. But there are a wide range of beers with higher levels of alcohol than the mainstream domestic brands.
Ice beers, for example, created a stir when first introduced because of alcohol content levels of about 5.6%. Most ice beer brands, however, sell on the basis of their brand imagery, not their potency. And a number of craft beers have alcohol content levels that are even higher than malt liquor, and they’re not even an issue.
So, does strength matter? Well, image, after all, is in the eye of the beholder.
Morris even sees a potential opportunity to make Mickey’s even more mainstream. “Baby boomers may rediscover the brand,” he said, “since some of them first drank it as young adults.”
As part of the trend, Stroh is introducing more multi-packs in retail accounts, especially convenience stores, in addition to traditional single-serve packages.
The malt liquor segment’s viability hasn’t been lost on Anheuser-Busch in recent years. In an attempt to bolster its share of the segment, A-B launched two new malt liquor brands in 1996 to flank its King Cobra brand. Michelob Malt was supposed to anchor the high end and Hurricane the premium tier, while King Cobra became a value brand to compete more successfully with brands like Miller Brewing’s Magnum that have dropped their prices in recent years.
Michelob Malt didn’t do as well as expected, but found pockets of popularity in the South. Miller Brewing saw a similar consumer reception to its Löwenbräu Malt Liquor and quietly killed the brand shortly after its introduction a few years ago. Michelob Malt distribution has been relegated primarily to the Carolinas and parts of the Southeast. The brand will be supported with point-of-purchase materials.
Hurricane did well enough, particularly in markets where King Cobra wasn’t that strong, that A-B rolled the brand out nationally last June. The brand has been in the process of building distribution, particularly in the top 30 malt liquor markets, using price point promotions and local market retail executions. After the initial campaign that urged consumers to “Brace yourself,” Hurricane has changed its slogan to “Give me some wind.”
King Cobra introduced clear glass bottles in all markets, including California, this past fall, and is expanding media support in 1998, particularly radio, in key markets.
“We’re a little surprised at the growth King Cobra is experiencing in markets where it hadn’t done well,” said Walter Allen, malt liquor brand manager at A-B. “Overall, it’s growing at double-digit rates because of the new package and its competitive pricing. Consumers realize that A-B has a good quality product out, and a good competitive price will help sell more of it.”
|Leading Malt Liquor Brands
(Thousands of 2.25-Gallon Cases)
|Olde English 800||Pabst Brewing||23,000||22,900||-0.4%|
|Colt 45||Stroh Brewing||22,500||22,300||-0.9%|
|Schlitz Malt||Stroh Brewing||21,000||20,900||-0.5%|
|St. Ides||Stroh Brewing||11,000||11,200||1.8%|
|Total Malt Liquor||116,000||116,300||0.3%|
|(e) 1997 estimates.|
This year, the brands are adding wide-mouth bottles in larger single-serve sizes, but are also pushing 12-packs and 15-pack cans in some markets.
“For King Cobra, we want to turn up the volume in California with the new clear bottles and gain a healthy growth trend,” Allen said. “For Hurricane, we want to garner the attention of young contemporary adults.”
Olde English 800, the largest brand in the segment, held steady last year, and expects things to stay pretty much the same this year. Still, Pabst marketing director Gary Danveld sees a growing potential for the segment.
“We see the market expanding for malt liquor,” he said. To meet consumer needs, the brand is getting new wide-mouth bottles for some of its larger package sizes and is working on increasing sales of cans and 12-oz. bottles. Support will continue to include p-o-s materials and television, radio and outdoor advertising in key metro markets. Creative is likely to remain constant.
“We’re the largest-selling malt liquor, so we’re not going to change much,” Danveld declared.
Whether malt liquors really break out of the mold and become more mainstream remains to be seen. For now, they’re holding their own, and with nearly 4% of industry volume, they have a solid base to work from.