A-B and MillerCoors are both getting into the cider business at the same time. That's good for cider. Even competing cider. Because getting more chain authorizations and shelf space and media exposure will validate the category, particularly to accounts who wouldn't think to carry ciders. (To give you a perspective on how small cider is: In the off-premise, non-alcoholic beer sells more than cider. In fact, all of the cider volume put together is about half the size of Old Milwaukee).
But the category has two thing going for it: 1. It's pricy, selling at an average of $35 a case in IRI scans, much more than any beer category, and; 2. it's growing, to the tune of 23% a year, now selling 350k barrels a year, mas o menos. It could be a million barrel category in no time. Now that A-B and MillerCoors are in the game, it could grow much faster than that.
What is interesting is the two different paths A-B and MillerCoors have taken, which have mirrored their divergent strategies in the past on the high end. A-B is from Mars and MillerCoors is from Venus, if you will (and I know you will).
A-B is taking the path of least resistance. They are taking a very well-known and high end brand, Michelob Ultra, and line-extending it to create Michelob Ultra Light Cider (A-B is notorious for long brand names). They will put a big marketing budget behind it to make a big splash and get instant brand recognition. They will get great chain authorizations and wide and deep distribution. It will take Mich Ultra into a new category and into a new part of the cooler. It will be everywhere. There's little doubt it will be an instant success. The question is, will it still be around two years from now? That's the risk, both in the obvious desire to create a longterm brand and on the image of the Mich Ultra mother-brand.
MillerCoors is taking a different strategy. Instead of putting the upfront money into marketing, they are putting it into buying an established cidery, Crispin, and using their chain and distribution resources to expand distribution and grow more organically within the Tenth and Blake framework. It may not be a five million case brand overnight, but it may be a million case brand in a year.
Both strategies have their pros and cons. It's Blue Moon versus Shock Top all over again, kind of. All in, I would say that A-B's strategy probably gets a faster return on investment with lower risk in the short term, but with higher risk of the brand petering out in a few years like another four worded brand, Bud Light Golden Wheat. They are making the bet that they can make Mich Ultra Light Cider a mainstream offering. MillerCoors' strategy has a lower ROI in the short term, but maybe less risky in terms of long term growth. Their bet: To create a more craft-like offering to a narrower audience, at least initially.
Both strategies are valid and both can live successfully in the same sandbox. It will be interesting to see how they both pan out.
MODELO SUES WINERY EXCHANGE
Winery Exchange (the private label sourcer, also called World Brews) has found itself involved in another lawsuit, but this time as the defendant. Here's the skinny: Cerveceria Modelo, a Grupo Modelo brewery, claims Winery Exchange has "attempted to capitalize on the tremendous goodwill associated with Corona" through their own private label beer, Playa de La Cruz. Playa is a brand that is being heavily displayed in Walgreens as a private label. We've seen six packs retailing for $5.99 to $6.99.
Modelo submitted a nationwide survey stating that about 36% of people who saw Playa de La Cruz thought it was brewed and/or sponsored by or affiliated with Corona due to the high degree of similarity in the packaging. The list of similarities include blue, yellow and white labeling; lettering; clear bottles; and the "beach and relaxation" marketing theme. "These striking similarities have caused and will continue to cause widespread confusion, deception, and mistake in the marketplace," wrote Modelo's lawyers. Modelo also points out Play de La Cruz is being sold in the same retail chains as Corona, sometimes even side-by-side.
They're looking for "premilimary and permanent injunctive relief, disgorgement of defendants profits, actual damages, treble damages, attorneys' fees and costs for defendant's numerous and willful violations of state and federal law." That could end up being a lot of dough.
MILLERCOORS ANNOUNCES COMMUNICATIONS REORG
MillerCoors chief Tom Long announced in an internal note to employees yesterday a few high level personnel changes at the company. Cornell Boggs, chief responsibility officer, has "made a personal decision to leave the company to return to his first passion, which is practicing law," he wrote. Effective immediately, Nehl Horton will take on an expanded role as chief public affairs and communications officer, reporting to Tom (although Cornell will stay on until April for the transition). In addition to his current role, Nehl will now lead their alcohol responsibility, sustainable development, community affairs, community investment and multi-cultural affairs strategies. That's a lot of stuff to cover, old man.
Mike Jones, vp of corporate affairs; Al Timothy, senior director of community affairs; and Kim Marotta, director of corporate social responsibility, will report to Nehl, although Al and Mike will be retiring in August, and Greg Tierney, senior director of strategy and planning, will now report directly to cmo Andy England.
CONSUMERS DEMAND AUTHENTICITY FROM THEIR BRANDS
Whether you want to blame it on technology or their inherent desire to establish themselves as individuals, consumers (especially Millennials) are not as dumb as they used to be. With people's BS meters constantly on high alert, the fight to influence their purchasing decisions has escalated in recent years. Since we're all focusing on the Super Bowl ads already, we dug up some great tips on marketing trends.
STATUS SYMBOLS ARE OBSOLETE. The idea that consumers will buy a product for the status alone is obsolete, according to Progressive Grocer. Consumers now crave authenticity and satisfaction from a brand. "Authenticity is therefore becoming the new consumer sensibility, the buying criteria by which consumers are choosing who they're going to buy from and what they are going to buy," says Joseph Pine, author of "Authenticity: What Consumers Really Want." To be authentic, a brand has to create relevant content. For example, Negra Modelo has capitalized on the larger trend of pairing flavorful foods with beer, and Heineken has integrated a sort of hipster musical aesthetic into its branding.
INTERRUPT THE CYCLE. Consumers are constantly assaulted by marketing, most of which they barely process, unless they are engaged through experiential marketing. We're not just talking about bar samplings. Joseph says that to be successful at experiential marketing a company needs to provide "places for consumers to experience who you are." Craft brewers are especially good at this. One example is Shiner Bock's portable Biergarten, constructed outside the gates of the popular Austin City Limits festival. There concert-goers engaged with Shiner brand by sampling and receiving branded koozies.
HEINEKEN USA HAS APPOINTED BRIAN FRIED as the regional vp sales, Western region. Brian will report to svp of sales Scott Blazek. Brian has been with Heineken since 2004, but got his start in the beer business at Miller Brewing Company.
A-B PARTNERED WITH POGGLED to promote Bud Light Platinum in the Chicago Market. Poggled, a nightlife events and promotions company, will host 18 special events to promote Platinum between February 9 and March 8. "Aside from the fact that we know how to organize and promote terrific events leveraging our popular online offering, Anheuser-Busch understands the value of Poggled's targeting and tracking capabilities," said Poggled chief and co-founder Joe Matthews.
BLUE MOON TRIES OUT EXPERIMENTAL flavors in test markets. Caramel Apple Spiced Ale, Blackberry Tart Ale and Dark Chocolate Bacon Porter are the three new flavors Blue Moon will be testing in 35 markets across the country to have fans vote on their favorite, reported Denver Westword. The winner will be included in Blue Moon's mystery packs beginning August 31, which coincides with the next blue moon.
Until tomorrow, Harry
"All the problems of the world could be settled easily if men were only willing to think. The trouble is that men very often resort to all sorts of devices in order not to think, because thinking is such hard work."
-Thompson J. Watson, first CEO of IBM
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