Crafty Moves
Dynamic Beer Category Continues Growth

It's trendy to drink beer again. Thanks to some primo light domestics, some star imports and some innovative craft brews, the consumption of beer has become more profitable than ever on-premise, where the beer-serving protocols of Europe are catching on in the United States, and beer and food pairings are being taken as seriously as wine and food matches long have been in finer culinary settings.

Attractive
No less a financial authority than Wall Street is beginning to take notice of the new direction of beer. A Goldman Sachs financial analyst recently upgraded her rating of the beer sector from “Neutral” to “ Attractive.” For its part, the National Restaurant Association rated the craft end of the beverage commodity at No. 5 in its Top 10 list of the hottest consumer trends for 2007. Even iconic domestic brewer Anheuser Busch, which has lost market share for its flagship Budweiser and Bud Light beer in recent years, has reason to be bullish bout the beer category in 2008, with Anheuser-Busch executives recently telling investors at a Lehman Brothers Consumer Conference that they expect sales and earnings growth in the second half of the year to exceed its 7 to 10 percent long-term objective. Overall, beer shipments were up 1.9 percent from January through July of 2007, with the upward surge driving momentum and prognostications that the big three domestic producers will meet their earnings targets for 2008. Yet real growth in the brew category still is being driven by a holy trinity of beer subcategories, namely light beer, imports and crafts beers, that were barely visible on the radar of the beer segment as little as two decades ago. The light beer category, viewed by most of the top brew houses as a hedge against its main full - bodied product line when introduced beginning back in the 1980s, now accounts for 53 percent of total U.S. volume sales. And driven by sales of Corona, Corona Light, Molson, Becks, Heineken, Heineken Light, Amstel Light and others, the imported beer category is on tap to become the second largest segment of the beer category in 2008, accounting for an impressive and growing 14 percent of market share. With affordable luxury, authenticity, variety and flavor driving the trend across the various categories, including a craft beer segment that also is enjoying double digit growth, the beer category’s size is projected to reach 3 billion cases by 2009.

Volume and Margin
As important as cost savings are to the improved growth equation of beer today, it’s the marketing of the category’s constantly expanding array of beers and brands that is helping the segment to compete against the better entrenched spirits and wine categories. Taking a cue from the spirits industry, which saw sales of its premium and super-premium spirits skyrocket across the various categories in the wake of sophisticated and carefully targeted marketing efforts, big beer, too, is relying on Madison Avenue savvy advertising and marketing messages that are hitting the mark with consumers in search of unique and authentic beer experiences. The comeback of beer, a trend that many expect to achieve even greater momentum in 2008, is a combination of old and new  from novel tastes to old-world service and tradition. And the best news is that beer may be trending upward for many years. There is also the unfolding success story of craft beers. The volume of craft beer sold in the first half of 2007 rose 11 percent compared to the same period in 2006, and dollar growth increased 14 percent, according to the Brewers Association.