Refilling a Category
Strategy and Addressing Consumer Tastes Kept Beer Flowing

When a well-known Eastern publication heralded the death of beer last year, it was news to beer men like Dave Peacock, vice president of business and finance operations at Anheuser-Busch in St. Louis.
    For America’s largest brewer, maker of Budweiser, King of Beers, Michelob, and more than 40 other domestic band imported brands, such talk is sacrilege almost. Sales of beer may be somewhat flat of late for the industry as a whole, even as hard spirits and wine revenues soar by comparison. And indeed, as beer executives such as Miller Brewing Co.’s Norman Adami recently acknowledged, the beer industry may have done a poor job of marketing itself by comparison in the past decade or so.
Yet there is no tear in Peacock’s beer. Far from imminent demise, the 12-year Anheuser-Busch veteran sees just the opposite.

Can’t Keep a Good Brew Down
    “We see a resurgence,” Peacock says. “Beer is 57 percent of total alcohol consumption. We have come down a little bit, and we have grown faster in the last decades, but beer is coming back. We are hearing anecdotal comments, and we’re seeing people consuming on more occasions.”
    In fact, the comeback of a beer industry with volume of 6.4 billion gallons in 2005 and worth an estimated $60-$80 billion dollars, has already begun, he says, and he predicts the trend will accelerate in 2007. “Sales for Anheuser-Busch for the first quarter (2006) were up by five percent. Domestic beer increased five percent. That is good for us, good for the beer industry and good for retailers at the end of the day. Beer is still the preferred product for retailers.”
    Other initiatives, such as calculated marketing tools like Coors Brewing Co.’s focus on “cold,” including innovative can designs, have kept the category lively.
And the biggest single factor that will drive this beer renaissance? “Variety is going to be key,” Peacock says. “In some respects beer was a late category for variety if you think of soda or liquor. Consumers have a greater desire for variety than ever before.”

Beer Is Back
    Officially, the numbers for the category in all its divisions –– domestics, imports, craft beer and exports –– don’t necessarily support such an overtly optimistic forecast, particularly for the domestic side of beer sales. According to the Beer Institute in Washington, D.C., “the malt beverage industry declined ever so slightly in 2005 compared to 2004. The total industry production declined by 185,000 barrels to end the year down by 0.1 percent.  The major segment of domestic production fell by 2.15 million barrels or 1.2 percent.”
    Indeed, Anheuser-Busch’s actions in its recent agreement to become the U.S. importer of the upscale Grolsch traditional beer brands on April 1 may speak louder than its words in terms of grasping the larger beer outlook that in 2005 and this year so far as well, has been characterized by the continued growth of beer imports such as Stella Artois, Heineken, Molson and craft beers. As opposed to domestic beer’s flat performance last year, imports jumped by 7 percent and craft beers by 9 percent, continuing a trend that has been on going for a number of years.                    NCB