Imagine, if you will, a world without Budweiser, one in which beer drinkers make their selections based not on marketing and T&A, but on taste and taste alone. Imagine Bud Light, Coors Light and MGD being rump brands, criticized for lacking flavour and appeal, and Michelob carrying all the cachet of Old English 800.
Sound impossible? Well, in truth, it probably is, but that doesn't mean a watered-down version is beyond belief. Certainly not if you agree with the postulations recently put forth in Slate magazine.
In an article posted May 2, Slate financial writer Daniel Gross notes that America's Big Three breweries - Anheuser-Busch, Molson-Coors and SAB Miller - are all reporting problems, with A-B announcing that first quarter sales volumes were down 2.7% from a year ago and Molson-Coors posting a loss in its first quarter as a newly merged entity. The only major brewer with anything even close to a positive result was SAB Miller, if you consider growth of less than 1% to be good news.
In explaining these results, Gross points to the familiar causes: increased costs, difficulty in passing these costs along to consumers and highly competitive imports. But the main problem, he says, is that Americans are raising wine glasses, martinis and highballs at ever increasing rates, with much of this growth coming at the expense of beer. U.S, wine sales are up more than 10% from 200 to 2003, he states, citing numbers from the Wine Institute, and better marketing by distillers coupled with the trendiness of cocktails has spurred sales of vodka, bourbon, gin and other spirits. In this environment, what Miller used to hype as the "good old macrobrew" doesn't seem to have quite the appeal it once did.
Gross' arguments are sound, but in my opinion he doesn't go far enough in his analysis. Because as much as Americans are indeed 'trading up' in their purchases of beverage alcohol, buying pinot noirs and cosmopolitans in place of six-packs, they are also seeking increased value within the beer segment itself. This is why sales of imported beers were up 3.7% in the first nine months of 2004, as Gross reports, and why the Association of Brewers (AOB) just trumpeted a 2004 increase of 7.2% in the market for craft-brewed beers.
Illustrating that growth in the craft-brewing segment, the AOB also published a "Tiger List" of the top ten craft brewers ranked by size and percentage of growth in 2004. The ten, which were headed by, in order, Widmer Brothers Brewing, Pyramid Breweries and New Belgium Brewing, averaged production of 115,000 barrels and a sales increase of 28% over 2003.
Now, cumulative sales of 1.15 million barrels of beer between ten breweries are hardly likely to cause August Busch to lose any sleep, not with quarterly domestic sales of more than twenty times that amount, but as I am fond of reminding people, there was a time not all that long ago when Schlitz ruled the U.S. beer market. Popular tastes do change with remarkable regularity, as do purchasing habits, and a journey of a billion beer bottles begins with a single palate.
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