“I’ll have a beer.”
Once, that simple order produced a simple response: a glass of Hamm’s, or Olympia, or Ballantine—or any one of the geographically-replacing brands of American pale lager that were part of our regional identity.
By the sixties, “I’ll have a beer” would result in a pint of one of a handful of the newly dominant brands: Budweiser or Miller or—more exotically—Coors. Though each beer had its adherents, the flagship brands were broadly similar lagers, fighting one another for market share on the new medium of television. Some decades on, these beers, together with their low calorie variants and value brands, owned 90% the U.S. beer market.
Then, about ten years ago, growth stalled for major domestic lagers. The brands saw slight or flat growth in good years, and losses in bad ones. Analysts blamed the recession; when that ended, they sought other explanations.
For the big brands, the single challenge is falling numbers. But there are different—and sometimes contradictory—plausible reasons given for the disruption in the beer market, ranging from sociological to demographic to lifestyle trends. And if each explanation is partly true, each also demands a slightly different approach. Some companies are focused on one; other, larger companies have the clout to counter them all.
Explanation one: Consumers are tired of pale lager
The story of pale lager fatigue is undercut by the continuing success of…pale lager. Of the top 18 selling American beer brands in 2017, 17 were mainstream lagers, according to the Beverage Information & Insight Group’s Handbook Advance 2018. Yes, numbers are down, which is never welcome news, but the volume is still huge compared with any other beer or beverage niche that could claim to make up the losses.
The big producers continue to put marketing effort into existing brands.
“Bud Light’s ‘Dilly Dilly’ campaign has broken through into pop culture, and we’ll continue to leverage its popularity,” says Anheuser-Busch senior director of corporate communications Josh Gold. “We’ll continue to seek out opportunities for hyperlocal and real-time activation, as we did with the ‘Philly Philly’ campaign toasting the Eagles’ Super Bowl victory, and the Cleveland Browns’ Victory Fridge.”
At MillerCoors, manager of media relations Marty Maloney reports, “We have built a lot of momentum with Miller Lite, our second biggest brand, in large part due to our ‘Hold True’ campaign that was launched in 2017. Earlier this year, Miller Lite surpassed Budweiser to become the third-largest beer in the country.”
Some new launches are also sticking to the pale lager recipe. Yuengling, the country’s oldest brewery (founded in 1829), hews close to its German origins for a new offering. According to Wendy Yuengling, the sixth generation at the helm of the family-run company, “My sisters and I worked hard to develop our first new year-round product in 17 years, Yuengling Golden Pilsner, which launched in April 2018.”
The company’s promotional campaign, “‘Spread Your Wings,’ symbolizes the independent and spirited nature of the Yuengling brand,” she explains. It honors the name of the original brewery, (The Eagle Brewery) and the company logo, as well as invoking a potent patriotic symbol.
One of Boston Beer’s most visible new launches of last year was also a variation on the lager theme, but with important differences. Sam ’76 is a lager/ale hybrid, with the crispness of the former, but the fruity notes of the latter. It has hop character, but low bitterness and an appealing session strength under 5% ABV.
The strong showing of individual brands also undermines the notion that pale lager per se has outstayed its shelf life. Imported pale lagers continue to do well, despite their similarity on the tongue to domestic brands. Number six-selling Corona Extra enjoyed 5.3% annual growth by this summer; Modelo Especial 21%; and Anheuser-Busch InBev’s Stella Artois 6%. The first two are Mexican lagers. The third, a Belgian pale, capitalizes on its super-premium image. Both these traits continue to be influential.
Explanation two: Consumers want more flavor
The craft beer movement of the past four decades can be seen as a response to a monoculture of pale lager. American beer diversity was at an all-time low in the early seventies when the first microbreweries gave consumers the opportunity to try new styles, most from non-lager traditions. The craft beer category has grown every year since, sometimes by double digits. Granted, this growth was built on a miniscule base, but the big companies paid attention.
Over the years, the response of the big brewers ranged from ridicule of the upstarts, to using their distribution muscle to restrict shelf space, to trying their hand at in-house versions of craft styles (like Crossroads, a very credible hefeweizen AB test-marketed in the mid-nineties).
The big companies feared that consumers might not accept a craft-styled beer from a national producer. Coors’ Blue Moon, based on a Belgian wit beer style, demonstrated that a large company could brew and market a highly successful beer in the craft mold—but the fact that it was not marketed as a Coors product suggests the fear was probably well-founded when the brand launched in 1995. Last year, Blue Moon fell just outside the top ten-selling brands, the only non-pale lager in the top 18—and it grew by 9.2%.
A new tactic emerged in the past decade: the biggest players would simply buy bona fide craft producers. By the 2010s, the oldest of the craft pioneer founders were nearing retirement age, and some were prepared to sell.
Following the mixed success of purchases of parts of Widmer and Redhood, AB-I acquired the whole of Chicago’s Goose Island in 2011. Beer geeks protested, but the Goose Island brand kept its separate identity, and bottles of Bourbon County Stout appeared nationwide, thanks to the second-to-none distribution network.
To date, AB-I has acquired another nine craft companies of different sizes and ages in different parts of the country, and MillerCoors has picked up four. The output of these smaller companies in no way compensates for the loss in sales of the main brands, but if a search for flavor is the issue, these moves offer an answer.
Different challenges confront Boston Beer, the only brewery with a craft beer pedigree to have broken into ranks of the top-selling brands. Boston Lager, its flagship brand and the focus of a promising campaign, and Angry Orchard Cider may fuel the company, but Boston Beer’s craft beer credibility depends very much on more cutting-edge styles.
New England IPA debuted last year. “We knew we’d be introducing a lot of people outside New England to this style, so we wanted to make sure that we had a version of a New England IPA that presented the best of what the style can be,” says Jim Koch, the company’s founder and president. “I think we’re in the beginning of the growth and the development of this style, which is really exciting.”
Closely aligned with the love of craft is consumer attraction to products that are local.
“It’s not unique to beer,” says Bart Watson, chief economist at the Brewers Association, the trade group for small, independent companies. “This is true with a lot of consumer product goods areas. It’s a challenge to be a big brand in this environment. We have a U.S. consumer base that increasingly wants products that they feel are special, that they have a connection to. We are seeing a lot of product categories where the big brands struggle.”
Explanation three: Consumer culture has changed
Immigration and the “browning of America” are volatile subjects in U.S. politics, but at the level of consumer goods, the growth and influence of Hispanic populations and cultures is both a fact and an economic driver. In the beer world, this growing consumer might is felt in the success of Mexican lager brands in particular, at the expense of nearly identical-tasting brands from long-standing U.S. producers. These brands appeal not only to consumers of Hispanic backgrounds, but also to the prized millennial demographic that is increasingly at ease in a multicultural world.
In a pattern familiar from the early pushback against craft brands, American legacy brewers have dabbled in house brands brewed in the manner of their competitors, before simply resorting to buying shares in the companies (or purchasing them outright).
“In many cases, yes, specific demographic groups are in mind when a brand is developed,” says MillerCoors’ Maloney. “There is Sol, our Mexican import and one of the newest additions to our portfolio. With that we are targeting younger Latinos, which are also considered millennials.”
Then there’s fifty percent of the population, a neglected market in beer’s past. Women have been acknowledged as the principal buyers of beer off-premise. But they are also consumers in their own right, and not just on behalf of the beer-drinking men in their homes. Belatedly, big brewers have learned that the “bro culture” celebrated in beer ads can repel women, whether as shoppers or consumers. But beverages targeting women are often based on the assumption that women want a beverage that is lighter, sweeter and less beer-like have met with mixed success.
Cider has been adopted as a drink that may appeal more to a female audience. MillerCoors addresses this specifically, according to Maloney. “Crispin Rosé is a product that was aimed at female consumers, specifically women who drink wine,” he says. For women who prefer vodka with seltzer, companies large and small are pitching spiked seltzers as an alternative that matches beer in strength, price and occasion.
But many companies have realized that they can appeal to women by simply removing the impediments that made women drinkers feel unwelcome. “What’s the most common craft style amongst women?” asks the BA’s Watson. “It’s IPAs, the same as men. So I think lots of companies have recognized that they’re not marketing to men or women, they’re marketing to beer drinkers, and there are plenty of opportunities in just offering what you offer and creating an inclusive environment where everyone wants to come and enjoy your product.”
Boston Beer’s approach is to concentrate on the beer, not the demography. “We have an amazing team in place who focuses on new beers and products and looks at whitespace within the industry,” Koch says. “While we’re always thinking about what’s next, we’re committed and focused on the growth of Boston Lager and Sam Adams with all drinkers, regardless of gender or age.”
Ever since Miller Lite’s “tastes great, less filling” ads in the seventies, marketers have struggled to make healthful beers appeal to men, as well as the women, who were thought to be the brands’ natural constituency. With the switch in emphasis from low calories to active lifestyle, their campaigns seem to have found the right approach.
Watson cites the example of AB’s Michelob Ultra, one of the fastest-growing among the top brands.
“The health and wellness trend is a huge reason for Michelob Ultra’s success,” AB’s Gold says. “We took that a step further with Michelob Ultra Pure Gold, which is made with organic grains. We see a long runway for growth in the burgeoning ‘beyond beer’ category, which includes Spiked Seltzer.”
A final lifestyle trend that affects all brewers, no matter what size, is the pull of alternative beverages. As the meme says, blame the millennials. They are more inclined to drink wine or spirits (although beer is still the preferred beverage, according to a Gallup report this summer). These young adults are “cross-drinkers,” willing to order beer, wine or spirits—or no alcohol at all—depending on the occasion and personal preference.
Explanation four: All of the above
The day when a small range of offerings will satisfy most beer drinkers has passed. We look ahead to a future of increasing beverage choice, and no doubt some spectacular misreadings of the public mood.
Big brewing companies, unable to count on one or two brands for the bulk of their volume, have the luxury to launch products to chase any perceived need. Smaller ventures will focus on a narrower slice of the drinks market. The emphasis may be millennial, traditionalist or multicultural; healthy, full-flavored, wine-like or mock-cocktail; global or local. The beer market may be headed towards a new stabilization, but until then, shelves are going to be full—and a little confusing. BD
Julie Johnson was for many years the co-owner and editor of All About Beer Magazine. She has been writing about craft beer for over twenty years. She lives in North Carolina, where she was instrumental in the Pop the Cap campaign that modernized the state’s beer laws. Read her recent piece Trends Driving Flavored Malt Beverages in 2018.