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Rebuilding Market Share; Brewhaha: Beer Makers Battle Declining Taste for Suds

Posted on: Friday, 26 August 2005, 09:00 CDT

New York Times News Service

Beer remains the nation's most widely consumed alcoholic beverage. But more and more American consumers, in bars and at home, are shunning beer in favor of liquor and wine. So brewing companies are fighting back. Hoping to change the way people think about beer, brewers are devising new and unusual packaging, spending more money to promote their brands in bars and restaurants, and producing new kinds of specialized brews. Take Sam Adams' limited- edition "extreme beer," Utopias, which, with 25 percent alcohol and selling for $100 a copper decanter, is meant for quiet after-dinner sipping. Served at room temperature, Utopias taste "like cognac smells," said Jim Koch, the founder of Sam Adams' maker, Boston Beer Co. Then there are Anheuser-Busch's new malt beverages, BE and Tilt, which are crosses between beer and energy drinks that the company intends to be consumed in place of cocktails. The alcoholic content is 6.6 percent (most beers have 4 percent to 5 percent alcohol), but also present are ginseng, guarana and caffeine. "Beer and caffeine," said Rhonda Kallman, the founder and chief executive of the Boston area's New Century Brewing Co., laughing. "What more do we need?" New Century is testing its own caffeinated beer, called Moonshot, in the Boston market. Kallman, a Cohasset resident, said the beer is an effort to give beer drinkers an option that can offer them a lift if they're feeling tired. In the last six years, beer's share of the alcohol market has declined from 56 percent to 53.2 percent, according to the Distilled Spirits Council. At the same time, the share of the market going to spirits has increased to 31.3 percent, from 28.2 percent, and wine has grown to 15.8 percent, from 15.5 percent.

That is a problem for the beer industry, which is accustomed to creating powerful brands and producing effective marketing campaigns. But beer no longer captures the imagination or tastes of trendsetters, or even trend followers. Brewing executives acknowledge that over the last 10 years they have basically been beaten in marketing and innovation by liquor companies and, to some extent, the wine industry. Even as beer companies spent hundreds of millions of dollars a year fighting each other via incessant television commercials, liquor makers devised clever and quieter ways to market their products. Spirits companies regularly send foot soldiers to woo bartenders and bar owners and tell them about their many new flavors and products. The companies also sponsor sampling events where customers can try drinks free.

At St. Louis-based Anheuser-Busch, which sells roughly half of all the beer in the United States, executives acknowledge they need to do a better job of making a "personal connection" with the customer.

To that end, Anheuser-Busch is trying to re-establish a prominent presence in bars and restaurants. For the introduction last March of Budweiser Select, a lower-calorie beer that the company describes as a full-bodied, more flavorful and more upscale version of the original Budweiser, the company held "bartenders' balls" in hundreds of cities across the country.

Anheuser-Busch, which spends several hundred million dollars a year on network television advertising, says it has shifted $30 million from that budget this year to "on premise" marketing like the bartenders' balls and various sampling events.

And at Boston Beer, Koch said that the idea of Utopias, though brewed with standard methods, was to "push the boundaries of beer." Recognizing that the $100 beverage is not for the average beer drinker, the Boston company has brewed only 8,000 bottles. If beer makers want to make a profit, they know they must pursue that more sophisticated and upscale image without losing core customers. "Part of beer's strength is its mass appeal, its everyday-ness," said Benj Steinman, publisher of the Beer Marketer's Insights newsletter. "If everything is trending up, how do you compete and not lose your identity?"

Source: Patriot Ledger, The; Quincy, Mass.

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