Beer industry in identity crisis

Sales are down for 3 years in a row, while alcoholic spirits are seeing renewed interest.

By Kim Peterson Oct 19, 2011 2:41PM
The beer industry is in a slump. Sales will likely drop this year for third year in a row.

And now the industry is in a bit of a panic. One reason? The old ways of doing business just don't cut it anymore. Jokey Super Bowl commercials don't resonate like they used to. Weak, watery beer is falling out of favor.

Consumer attention has especially turned to alcoholic spirits lately. Spirit volume sales rose 3.2% for the year ended in mid-September, Ad Age reports. Beer sales fell 1.5%. How can beer compete when Captain Morgan, Johnnie Walker and Skinnygirl cocktails have all the momentum?

The chief executive of MillerCoors says the beer industry is to blame, and he let the industry know in a forceful speech this week, Ad Age reports.

"The days of beer guys knocking each other around and not worrying too much about spirits and wine is over, and it's frankly been over for a long time," Tom Long told beer distributors at a meeting of the National Beer Wholesalers Association.

It was a powerful speech, and while Long didn't give specific recommendations, he seemed to point to one overall strategy: Selling the brand of beer.

In other words, the industry needs to unite and remind people that yes, beer is still there, it tastes good and it's a better choice than vodka or wine. Maybe something like the "Here's to Beer" image campaign that Anheuser-Busch sponsored but couldn't get rivals to join, Ad Age reported.

MillerCoors is a joined venture owned by SABMiller (SBMRY) and Molson Coors (TAP).

Beer used to pretty much own the airwaves. You wouldn't see much television advertising for rum in the past, for example. But that's changed.

"Look at Grey Goose," Long told the crowd. "This brand was created right out of thin air. French Vodka? Who would have thought such a thing?" But yet Grey Goose jumped out there, advertised liberally and was able to create a new price tier in vodka (and spawn relentless copycats).

So does the beer industry need an overhaul? Perhaps the industry should look more to its own rising star -- craft beers -- for inspiration. Even in a turbulent economy where unemployment is stubbornly stuck at 9%, the more expensive craft beers are all the rage.

Why is craft beer doing so well when the rest of the industry sinks? Why are people more open to pricier liquors and cocktails in a stumbling economy?

No one knows the answers. But Long's message was loud and clear: The beer business needs to change, and fast.

VIDEO ON MSN MONEY

103Comments
Oct 19, 2011 3:58PM
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The answer is that craft beers are actually brewed with quality indgredients and taste like beer should.  The major brands are all watered down cheap filler garbage.  This isn't rocket science.
Oct 19, 2011 4:16PM
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The big breweries stink. Corn and rice and other crap adjuncts in their beer. Close your eyes and drink one and they are all the same, crappy. Craft brews are here to stay and would have never stopped except for Prohibition, when only the big breweries could survive, by selling other things. Americans are finding out what quality craft brews are like and that is the future of beer. We are sick of Bud, Bud light, Miller, Coors, and all the other excuses for real beer.

Oct 19, 2011 5:01PM
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I own a liquor store in Colorado and can you tell you that the big beer companies have a lot things wrong. Notice that Miller, Coors, Molson, all of these beer companies are all owned by a south African interest. Also Anheiser Busch got sold out to a huge  corporate conglomerate Inbev. Two huge multi-national corporations run the beer industry.
 Every year of this economic turmoil they have raised the price on there crappy beers. The strategy is simple buy up the competition and raise the price. However they forgot that there big advantage over spirits was price. These companies are greed heads and are not even American companies anymore. Buy your local craft beers support america and drink good beer !
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Im not supprised at all  that Anheuser-Busch & Miller/Coors are seeing a down fall in there beer sales. There beer is not "good" beer. It's disgusting! Watery! Flavorless!

At the same time that their beers are slumping in sales, the Micro Brewery business is growing stronger than ever! Coinsidence, I think not.

Good beer with flavor and an alcohol content of more that just 4.5% ABV sells [period]

People want good beer NOT corporate beer.

Oct 19, 2011 5:26PM
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I don't feel sorry for Bud,Miller,Coors. First reason they are not American company's anymore!
Second they produce waterdown beer with cheep ingredients & charge way to much.
I'm glad American craft brews are still up 12% this year they provide economic growth in this country we live in.  Bud is owned by a Belgian co. & Miller & Coors are owed by a South African co.  Vote with your hard earned dollar!  Help USA get back on it's feet again...  
Oct 19, 2011 5:12PM
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People are tired of CHEAP beer that taste like water or worse... Thats why Craft beer is taking off and generic pisswater is sitting on the shelf.

 

Make good quality beer, people will buy it.

Oct 19, 2011 5:00PM
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The big brewers have always focused on trying to make beer for people that don't really like beer, which used to be the majority of Americans.  Now, there is a beer renaissance going on in the U.S. I live in a town of 6,000 and we have 6 breweries! Fantastic tasting, flavorful local beer using local, fresh ingredients. God bless the Pacific NW. A lot of local pubs don't even have the big guys on tap any more. We're all still drinking beer, just not their beer. In the days before prohibition, it was common for towns to have their own, local breweries. The big guys came along and muscled everyone out. They homogenized the industry and dug their own grave. Cheers. 
Oct 19, 2011 4:15PM
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"Why are people more open to pricier liquors and cocktails in a stumbling economy?
No one knows the answers."

It's actually pretty obvious: In this economy, people want to get drunk.

Oct 19, 2011 5:12PM
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Quite simple, give me 3 Sam Adams & I'll piss you a bud, miller or coors.
Oct 19, 2011 5:01PM
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A  porter, a stout, ****....now THAT is a brew.  Tell Bud to put their product back in the  horse.  Your tasteless pap is appreciated less and less.  People......there is great microbrew out there.  OR, you can make your own.  I raise my glass to the folks who are throwing over the huge corporate producers who have woefully lost their way.
Oct 19, 2011 4:25PM
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I own a bar and the issues of why beer sales are declining are evident.  Several years ago we saw way more women drinking beer.  Mainly light beer but beer never the less.  The majority of women these days are drinking martinis or wine.  Men are also drinking more wine.  Also, people are drinking less.  When was the last time you saw a bar selling beer by the pitcher?  Other then pool halls or dives that's pretty much gone.  We sell mainly micro-brews.  Its heavier and better tasting then m****duced lagers and guys, especially the 25-45 year old group whom we cater too, love it.
Oct 19, 2011 4:40PM
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The answer is very simply, your basic bud, miller, coors tastes like crap, people including myself spend extra money on craft beer because it tastes really good.  I didn't even start drinking beer until my mid 20s because I thought all beer tastes like bud, wow was I wrong.

 

Oct 19, 2011 5:07PM
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Don't wanna be Captain Obvious here,but...WE'RE IN A DEPRESSION!!!!  Beer is the working man's drink,& the working man simply can not afford it any more........
Oct 19, 2011 5:21PM
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The article should look through "Micro" and "Nano" sales and then retool their argument.  While larger beer brands may be seeing a slump in sales, what about the growth of the little guys?  I'm not going to lie either, who really cares if Miller or Inbev drops in sales, means there is better beer being passed around at the local pub. Isn't that what we are about these days, the growth of the local, mom and pops?
Oct 19, 2011 5:43PM
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Price and Pride--Executives (Highly over paid) sitting around a table worried about making billions over millions is a great place to start look at why their sales are down. They gave up years ago to remain in touch with their customers.  Selling out to foreign investment companies didn't help them either.     Most of these mico brewers are local boys who know what their looking for in taste and pricing.

Ultra Light, 54 calories---WTH Beer is fattening, no two ways down that road. They just need to get back to making beer that people want to drink and I don't give two cents over transportation costs ($8-$10 for a six pack) when they all have satellite distribution everywhere. Why don't they refund some back to me for driving to the store to buy their product in the first place. I cover my transportation cost.

Oct 19, 2011 6:11PM
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I deliver for Budweiser in Boston and ya the sales are down compaired to years ago. But we still cant keep the selves full. I deliver in just my truck around the city over a 1000 cases a day.   Im a big beer drinker and love all kinds of beer.  In the summer when Im working in the yard there is nothing like pounding cold buds.  At night I like a European beer.  Czechvar is my favorite right now.   I like some Micro brews also.  But Ive had my share of crap micro beers to.  One was a watermelon beer I almost puked and another was a spiced beer that tastes like a spice rack in a bottle real nasty.  A lot of these micro brew guys got it wrong when it comes to beer.  But when they get it right its delicious.  Beer prices go up every year without a hitch.  People are just noticing it more now that we are all broke.  Blame the greed of the big corps but dont blame all the people here in the US that are working. 
Oct 19, 2011 4:44PM
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It is weak and it is watery and it is tasteless and cannot compete with the european imports even when twice as cheap (or even mexican, or japanese for what matters). From bigger brewers only Sam Adams has products that deserve my money. And the executives think that (as usual) the problem is that they don't advertise enough , haha. 
Oct 19, 2011 5:34PM
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Firstly I own 3 liquor stores

Beer sales  =  US economy 
the people who are at the lower level jobs are getting lay-offs and are on unemployment and are switching from 30-pk to maybe 6-pk. So less sales of these beers.

they are watered down anyway. good beer= good flavor :)

whereas the craft beer and cocktails and spirits drinkers have steady jobs and more white collar and have decent amount of income are still enjoying new things.

PS Sam Adams Oktoberfest is flying off the shelves


Oct 19, 2011 4:17PM
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@NU72 Could not have said it better myself. If you enjoy beer you enjoy the taste and quality of a GOOD beer. The over produced beer used to be a cheap way to get drunk fast, now people use liquor.
Oct 19, 2011 6:31PM
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No one knows the answers?  Journalists don't do research anymore?  No one knows is good enough? lol.

 

I am not a journalist, but three paragraphs in (so figure fifteen seconds of thought while reading) and I'm pretty sure I know exactly why sales are down for m****duced, weak, and watery beer.

 

DUI convictions are becoming a business for a lot of states.  The laws are getting tighter and tighter, so it's getting easier every day to convict a person of driving under the influence.  The punishments are getting more and more strict, with mandatory jail time being the norm.  Screw rehab and education, fine the hell out of the offenders, take their license, throw them in jail with rapists, murderers, drug addicts, and charge them every day they're in there lol.  It's a freaking circus.

 

I am an alcoholic, and since I went through rehab and 'cleaned up' I have never been happier.  I don't drink any more, nor do I have any real desire to, but if I were to go out to have a drink it most certainly would not be Miller, Bud, or Coors Light.  It would likely be a good Microbrew from a company that takes pride in their product, or a shot 'on the rocks' of a Liquor that is held to an exceptional standard.  That's it, any more than two drinks and you're flirting with a DUI.  I would imagine that this thought process is very common, and very likely a big contributor to the decrease in sales that these m****duction beer companies are feeling.

 

Our government will let the Automotive, Oil, and Steel industries get away with murder, but not the beer giants lol.  Unless of course they are throwing them a bone by NOT sponsoring any form of alcohol rehabilitation and education programs.

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