Bright lights big volume: a variety of light beer offerings sparks new growth in this powerhouse segment

Cheers, April, 2007 by Lew Bryson

Does anyone remember when pickup trucks came in one style: utilitarian? Pickups were working trucks, the tools of farmers, ranchers and small contractors. They were nothing fancy, just a cramped cab with a big engine to haul big loads. Manufacturers managed to sell big pickups and little ones, but everyone figured, "It's a truck, they're farmers--who would want an expensive truck?"

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And then it happened: urban cowboys. Today's pickups are all about room, comfort, and styling. Whoever thought there would be a pickup from Cadillac? Consumers love 'em and car dealers make more money off pickups than ever before.

Similarly, does anyone remember when light beers came in one style: light? Miller Lite defined the category with their landmark "Taste great, less filling" ad tagline, and that's what drove the category for years. Light beer was less filling, had fewer calories (not necessarily a lot fewer; see sidebar), and tasted like ... beer. Lighter beer.

The category grew like wildfire, and light beer now comprises the largest part of the U.S. beer market, which, oddly enough, has been somewhat frustrating to brewers and operators alike. "It is the number one category," notes Brent Campbell, beverage director at 41-unit Claim Jumper Restaurants, based in Irvine, Calif. But Campbell would like the chance to trade up those light beer drinkers. "More options [would be] a great thing, given the relatively modest selection currently available. Definitely the trade-up option is a plus."

BREAKOUT BRANDS

Campbell is not alone. Light beer variety has been the goal of a variety of brewers, starting with Amstel Light all the way back in 1980. More recently, craft brewing entrepreneur Rhonda Kallman conjured up a great image when she launched Edison Light. "I had a picture in my mind of an open fridge, and there are bottles of Bud Light, Coors Light, Miller Lite, Miller Genuine Draft Light, Corona Light, Amstel Light, Busch Light and Edison in there. That's the whole section! There is a need for some choice and for something that's better."

A number of brewers are trying to re-stock that fridge as well. Light beer has always been a competitive category, but it was largely a competition between Bud Light, Miller Lite and Coors Light, a competition that was becoming increasingly a price-driven fight over a product that had become a commodity.

Now value is being put into the category, notably with the growth of Sam Adams Light by Kallman's old boss, Jim Koch, and last year's successful launch of Heineken Premium Light. Corona Light grew almost 20 percent last year (and looks poised for good growth this year with a new, consolidated importer in Crown Imports). Anheuser-Busch has just re-packaged Michelob Light, and re-tooled it as an all-malt premium light beer.

Jim Koch, president of Boston Beer Company, says his Sam Adams Light is ready to take the category to a new level. "For an on-premise operator, light beer was the largest category for which they didn't have a trade-up," he explains. "Until recently, it was a big piece of business that was all at domestic pricing. The success of [beers like] Sam Adams Light and Heineken Premium Light shows that consumers are willing to trade up for more image or more flavor. That's a big profit opportunity."

The beer market is essentially flat, but there are some very bright spots. One of those is the craft segment, those beers generally recognized to be "more characterful" than mainstream beers; that is, more flavorful. That interest in flavor is getting attention in some very high places.

"Frankly, there is a lot of interest in flavorful light beers," says Anheuser-Busch brewmaster Nathaniel Davis. He's pumped about the new all-malt formulation of Michelob Light. "A lot of imports and crafts are coming out touting the most flavor with the least calories. [Michelob Light, as] a beer with particular roundness on the palate and a beefed-up Euro hop character, really stands up. It stands apart from the crowd." Light beer? Differentiating on malt and hop character? That's a real change.

But it's a welcome change. "They need to get away from light beers being thought of all the same way," says Keith Landry, senior general manager for ESPN Zone, the Glendale, Calif.-based chain of eight sports-themed restaurants. "Only now are we seeing higher-end light beers. It would be nice to see light beers make their way into other categories as well: ales, stouts, hefeweizens, etc."

LESS CALORIES, MORE PRESTIGE

Let's be honest, though. Light beer drinkers are not looking for a lot more flavor; if they were, they'd be drinking a different style of beer already. Some of them really are looking for less taste, but still want to trade up to that something special. So instead of more flavor, you offer these customers more image, more prestige, more badge.

Andy Glaser, Heineken USA's brand director for Heineken Premium Light and Heineken, has that all doped out. "The dominant light beer drinker is predominantly not a Heineken drinker," he acknowledges. "Heineken has a full flavor, and they need reassurance that Heineken Premium Light is going to fit their needs. We wanted to connect with this consumer group and say, 'Look, this is what you're looking for; it's very smooth and very premium.' You get that signature Heineken taste, but it finishes very clean and quickly."