The always insightful Harry Schumacher has a thoughtful, well-reasoned piece on the question Are Mega-Brands in Permanent Decline? Definitely worth a look.
Jay R. Brooks on Beer
Jay R. Brooks on Beer
The always insightful Harry Schumacher has a thoughtful, well-reasoned piece on the question Are Mega-Brands in Permanent Decline? Definitely worth a look.
Thanks for sharing this very interesting article.
Harry is too pro big beer to make the call, the answer is yes, big beer is in decline and it is inevitable. The overall volumes for bud light and miller lite have been down for a couple of years now, and coors light managed to initially grow and then stay flat thanks to the expanded distribution from the JV. The the reason for big beer’s decline is not the economy, big beer was able to grow in other recessions with a smaller US population, and the fact that people are switch from 12-packs to 30 packs because it’s a better deal should increase volumes not reduce them. Big beer is sitting on the leading edge of a population boom of their target market, a market that has shown it is not unwilling to spend in this recession on iPads, organic food, and other luxuries, yet big beer hasn’t been able to convert them in the same numbers as their parents. “This is my Dad’s beer” is also not the reason for big beer’s decline – millennials are actually quite close to their parents and have a strong nostalgia streak (PBR, the new old Schlitz)…but the bud light of today is not the bud light of their father, it’s a different recipe and AB admitted it back in 2006.
The reason big beer is in trouble is that this new generation has been exposed to many different flavors, concepts, and life styles at a young age. They expect a wide range of choice and have very different palates. Three very similar options = one option, something has gotta give. Yes, some millennials will choose BMC light, but not in the numbers/percentages of previous generations, and hence the steady decline of big beer. The majority of markets will see further fragmentization, and the exceptions (Apple, Google, etc) prove the rule as their business models actually promote and are strengthened by fragmentization.
Big brewers can survive this decline if they “forget” their brands and realize that their true strengths lie in the size/control of their distribution networks, their technical expertise in brewing 5,000 bbls to any spec they desire, and their ability to drive down cost. If they can invert their way of thinking from pushing products on to consumers to allowing the consumer to pull new products through the system, these big brewers can become platforms for fragmentatization and consumer choice and grow. Though if they’re listening to guys in soda business…another market seeing a decline in the volumes of their major brands, then they won’t get it.