Core brands receive primary marketing focus - ST

Brandweek, June 21, 1999 by Gerry Khermouch, Theresa Howard

Major new-product blowouts remained a thing of the past as major domestic brewers continued to focus rigorously on core brands, with widely varying degrees of success.

Industry leader Anheuser-Busch, showing real signs of attaining a 50% share of market within a Few years, continued to pour it on in advertising, promotions and other investments, thanks, in part, to troubles at No. 2 brewer Miller Brewing and a pricing squeeze last summer which forced further consolidation among lesser players Stroh and Pabst. (Stroh sold off its brands to Miller and Pabst and now is in the process of liquidating its remaining assets as it nears its 150th anniversary.)

Thus, A-B was the only one among the Big Three brewers to increase its ad budget in 1998, adding $77 million on the strength of a $70 million increase in media behind its rocketing Bud Light brand, to $126 million from $56 million the prior year. Spending on full-calorie Budweiser declined by 10% to $122 million, but that by no means suggested a weakening in A-B's resolve to stem the decline of its flagship brand. In fact, as newsletter Beer Marketer's Insights noted, all of that decline reflected cuts in public service announcements; with those excluded, Bud spending actually rose. For 1999, the prospect was for continued gains, particularly in light of favorable pricing trends generating flusher margins, and the sheer momentum A-B has enjoyed.

Beyond the Bud family, spending has been undergoing a dramatic increase both for the (slightly) superpremium Michelob family and for the sub-premium Busch family as A-B screws up the pressure another notch on its domestic rivals. Ditto for promotional spending: for Bud-family brands, for instance, this summer's core promo was cueing up a face value of $32 million in sports memorabilia for winners of various sweepstakes tied to Bud's sponsorship of ESPN's Sports Century programming.

And while the creative approach seems to be opening up a bit, with even a hint of salaciousness making an appearance in some TV advertising, A-B execs apparently see no reason to take the risks involved in aiming for breakthrough advertising, not with archrival Miller struggling so much. All the brewer has to do, as one insider put it, "is hit the ball gently down the middle of the fairway," while waiting to see what Miller comes up with to reverse its sagging fortunes.

Over in Milwaukee, Miller dramatically cut back media spending in 1998 in the face of irrefutable evidence that its campaigns behind Miller Lite and Miller Genuine Draft, intended to be groundbreaking, in fact were failing to move the needle, and in fact may even have been undermining the brands' premium status. Thus, spigots were turned way down, so that overall spending dropped 18% to $216 million, with Lite taking the steepest hit, sustaining a cut of $54 million to $95 million, a decline of 36%.

Miller Genuine Draft also got cut back, but spending on one-time flagship Miller High Life surged from zero in 1997 to $14 million in 1998 as a new campaign from Wieden & Kennedy, Portland, Ore.--the same agency that has twice misfired on the more critical MGD brand--showed initial signs of reviving the previously moribund brand.

"Plank Road" brands Icehouse and Red Dog likewise got modest budget increases to build on gains that in part can be attributed to aggressive pricing in some regions.

For 1999, with parent Philip Morris having reached over to its food and tobacco operations to install a new triumvirate of CEO, vp-marketing and vp-sales to run the beer unit, all bets were off as to what would happen next. On the positive side, new CEO John Bowl-in quickly made it clear he wanted to move away from the price discounting in favor of a more affirmative brand-building approach, while also working to remedy seriously frayed relations with independent wholesalers. But it was clear that the spigot would not open until Bowl-in was convinced Miller's agencies had produced what he likes to call "world-class" advertising.

Lite's new effort, via Fallon McElligott, Minneapolis, which resurrected aging sports heroes for an updated version of the classic "tastes great, less filling" campaign, was viewed by many in the industry as an interim effort that either will need to get a far more contemporary thrust or be replaced entirely. Similarly, a new Wieden effort following a repudiated MGD campaign that featured singing brewery workers was acknowledged by Miller execs as strictly an interim effort; it played up the packaged-draft attributes of the product while retaining much of the tone and feel of the prior campaigns, albeit using more appealing-looking characters.

Meanwhile, No. 3 brewer Coors surprised many in the industry by enjoying a record 1998, dodging the worst of the price discounting battles while riding Coors Light, which accounts for two-thirds of volume. For 1999, the trick was to keep the marketing behind Coors Light fresh, while finding ways to invigorate full-calorie premium beer Original Coors. An effort to do so by playing up that brand's alcoholic strength, a notion prompted by the need to dispel the erroneous "Colorado Kool-Aid" image of the brand, was repudiated by wholesalers at the company's national sales meeting.