For months now, I've been asked: "Whither the big brewers of North America." At issue is the fact that, unlike the craft beer and import markets in both Canada and the United States, sales of mainstream, commercial beer continent-wide are shrinking. Witness, for example, the following numbers:
- In 2004, according to the Brewers Association, craft brewed beer sales rose 7.2%, while the market for non-craft domestic beer grew a paltry 0.5%;
- For 2005, again in the U.S. and again according to numbers reported by the Brewers Association, craft beer sales rose 9% and imports grew 7.2%. Sales of mainstream domestics, meanwhile, declined slightly;
- In Canada, one of the Big Two, InBev-owned Labatt, reported that sales volumes in the fourth quarter of 2005 were down by 4.7% and gross profit was off 4.3%, according to a recent report in The Globe and Mail.
So, things aren't terribly rosy for most mainstream brewers in Canada and the U.S. these days, and with the traditionally lucrative spring and summer beer drinking seasons fast approaching, all are wondering what their strategies will be for a return to growth. While I can't report what Molson Coors, SABMiller and Anheuser-Busch plan to do, I can tell you a bit about what Canada's Labatt has in mind, thanks to The Globe and Mail's Andy Hoffman.
Quoting Miguel Patricio, CEO for North America for AmBev, who control operations of Labatt as part of InBev, Hoffman reports that the key brands for Labatt this year will be Bud Light and Brahma, the former of which Labatt brews in Canada under license and the latter being a beer that has yet to be introduced nationally.
Excuse me? The health of one of the two companies that together control over 80% of the Canadian beer market is being pinned on one beer they have to pay for the privilege to brew and another that's as yet only been test marketed in Alberta, the number four beer province in the country, responsible for in 2004 for a paltry 10% of the national market? Can this be right?
Well, yes, apparently it is. More from Mr. Patricio: "(Bramha) will fill a hole we have in our portfolio - the clear bottle - which represents a 4.1% share of the market in Canada."
Indeed. So this is what we've come to in big brewing: No longer are market segments defined by beer style or alcohol content, or even price, but by bottle colour. Which means, apparently, that we may now lump together Sleeman Cream Ale, Britain's Old Speckled Hen and Mexico's Corona. And soon, Brazil's Brahma. Next up, presumably, will be the battle for the yellow beer carton market, or the red bottle cap market.
Perhaps Mr. Patricio and the other tall foreheads at Labatt/AmBev/InBev weren't paying attention a couple of years when Molson introduced their own clear bottle beer from Brazil, A Marca Bavaria, which, to say the least, never quite caught on. Canadians, it seems, don't vacation much in Brazil, and so had little context in which to place the brand, unlike, say, Corona, which is and has long been gulped down with abandon during countless winter vacations and spring breaks.
Or maybe AmBev hasn't quite noticed that the above mentioned growth markets of imported and domestic craft brewed beers, two segments largely populated by beers of flavour and character. Beers the likes of which, it deserves to be added, parent company InBev already has populating their international portfolio.
Or maybe it's just that the correct answer to the question of what we might expect in the future from the big brewing companies of this continent is, simply, "More of the same."
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