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Beer Sales In America Are Declining

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barfridge

Small fridge, powerful thirst
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My thoughts: Maybe Americans are just getting sick of shite beer? The micro/craft/premium market is growing strongly, but crap bland stuff is declining at a great rate.

The Story:

ST. LOUIS Jan 11, 2005 — If you sometimes find yourself ordering a glass of wine or a mixed drink when you used to order a beer, you're not alone.

Wines and distilled spirits continue to gain a bigger share of the alcoholic beverage market, at the expense of the beer industry.

It's a trend that has been going on since the late 1990s and continued in 2004. Analysts who follow the alcoholic beverage industry don't see it stopping anytime soon.

"We believe there is an overall image crisis with beer," Smith Barney Citicorp analyst Bonnie Herzog said.

As baby boomers age, they are more willing to buy wine and spirits instead of beer. And the wine and spirit companies are successfully targeting younger drinkers with advertising and promotions.

"Our wholesaler contacts have told us through a survey we conducted recently that beer has lost its 'sexiness' and 'appeal to young consumers,'" Herzog said. "We continue to believe the road ahead is a long one for the beer industry."

Beer remains, by far, the most popular alcoholic beverage in the United States. But its share of the alcohol market has slipped.

Beer Marketer's Insights, a trade publication, estimates that beer accounted for 59.5 percent of the absolute alcohol content sold in its peak year, 1995. That had fallen to 56.7 percent in 2003.

The spirits industry began its big push in 1999, when it had 28.6 percent of the market. In 2003, its share had risen to 29.7 percent. Wine went from 12.6 percent to 13.6 percent.

The totals for 2004 aren't in, but it was "more of the same," said Benj Steinman, president of Beer Marketer's Insights.

The spirits industry spent almost $100 million on broadcast advertising in 2004, compared with "almost zero" in 1999, said Frank Coleman, a senior vice president at the Distilled Spirits Council of the U.S. in Washington.

August Busch IV, president of Anheuser-Busch Cos. brewing unit, has said that wine and spirits represent "a threat" to his company and the rest of the beer industry.

Miller Brewing Co. President Norman Adami said, "The single biggest threat facing the American beer business today is the possibility that we will allow the American consumer to get bored with beer."

So what are the brewers doing about it?

For one thing, they are spending more money on promotions, including what they call on-premise spending. That means mostly bars and restaurants, but also hotels, clubs, and concession stands.

On-premise sales, as opposed to store sales, account for only 25 percent of all beer volume in the United States, but 48 percent of all beer retail dollars, making it an important battleground.

Wine and spirits companies have promoted themselves aggressively in bars and restaurants, increasing their sales, Legg Mason analyst Mark Swartzberg said.

Anheuser-Busch, the brewer of Budweiser and Bud Light, has said it plans to spend an additional $30 million for on-premise promotions in fiscal 2005, a 150 percent increase.

Milwaukee-based Miller Brewing also has increased spending.

"Miller is spending about 40 percent more on advertising and promotion than 18 months ago," Swartzberg said.

And a little generational rebellion must be overcome, as well, Swartzberg said. Younger drinkers may choose wine and cocktails because their parents chose beer.

"Any given generation wants to be different than its parents," he said. "It's the natural ebb and flow."
 

Corey

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Typical mega-swill reaction.

Our beer sales are declining. Two options:
1) Make better beer
2) Spend more on marketing / promotion

Lets spend an extra 100 squillion on marketing / promotion.
 

Rubes

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I thought the problem wasn't with people switching to wine but to the RTDs like cans of bourbon and coke or west coast cooler. It is sweet stuff and gets you drunk - designed for kids.

Edit - found this link with frightening info on the rise of RTDs here
 

Backlane Brewery

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I thought the problem wasn't with people switching to wine but to the RTDs like cans of bourbon and coke or west coast cooler.
Maybe that's not such a problem in the US as it is here?
I like the way the brewers blame some sort of generation gap for their problem.

At least here the mega brewers are making some sort of effort to provide different or "better" brews to attract customers.
I don't like Beez Kneez, for instance (honey- comes out of a bee's bum- don't eat it) but I do like the fact that simply by producing it & putting it on tap in so many pubs, Fosters show that maybe they are trying to address a demand for better beer to increase their sales, rather than just trying to get everyone to drink more VB or whatever.

that'll be .02c, thanks
 

Weizguy

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Corey said:
Typical mega-swill reaction.

Our beer sales are declining. Two options:
1) Make better beer
2) Spend more on marketing / promotion

Lets spend an extra 100 squillion on marketing / promotion.
Corey,

I'm sorry. I didn't see that they even looked at option 1.
Was it ever considered?
Is it possible that this is a backlash in the same sense that we are experiencing here. That is, the consumer has come to expect, and wants to have a beverage with flavour. In the US situation, this is on offer only from microbreweries (not mentioned in the article) and the consumers have chosen other more palatable drinks rather than swill at the trough on the big name beers.
According to Barfridge, flavourful beers are not in the same boat.
Seth
 

Corey

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I was suggesting that they had two options, not that they actually considered them both.

I don't think they thought for one second about improving their beer.
 

Tony M

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Rubes comment on RTD's is spot on. I was talking to a bottleshop owner last year and he said that the four little RTD display fridges which took up about 5% of his floor space accounted for a third of his profits!
 

Weizguy

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It's a dirty shame that the beancounters, rather than the brewers, run the show.
But that's business. big business.
They'll all be first against the wall, come the revolution...
 
P

phantom

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RTD,s are just symptomatic of our i want it now fast food disposable western mentality.Fact is home made is better,be it food or beer.

But maybe I'm in the minority.

P.S i love my bread maker too.
 

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