It's Time for a Light Beer Game Changer


August 30, 2013

Dear Client:

"Time, time, time, see what's become of me." -Paul Simon, Hazy Shade of Winter

Earlier this week we reported on hot market share growth of brands like Bud Light Lime-A-Rita, Redd's Apple Ale, Black Crown, Modelo Especial, Corona, Michelob Ultra, Angry Orchard, Busch Light, Pabst Blue Ribbon, Dos Equis, and Third Shift. We noted that while some of these are FMBs, new brands, and darker lagers, the majority are pale yellow lagers, yet only two are low calorie. Many of you noted that it's not the style that matters, it's the branding and marketing.

This fact should give heart to those who have resigned themselves to the dark notion that there are brand life-cycles and that the premium light beer segment has seen its day. It's important, because there's never been a segment of the US beer business which became so large so fast than premium light. It's historical and it forever changed the landscape of the industry, enriching many and breaking others as formerly high share regional brands fell to the national light beer sword.

If you believe some, those days are over. Light beers are losing share at an alarming rate, and it's accelerating. Light volumes are down 3.6% this year through mid-July, according to IRI. Premium lights are down 2.2%. But it looks better when you peel back the onion: Bud Light has lost 0.3 share (but looks better when you add line extensions, and Coors Light is actually gaining share, up 0.2 points. The real dog is Miller Lite, which has lost 0.34 share in IRI scans.

I don't think anybody will argue that the marketing for these three brands has been breakthrough. What we've seen are the same tired retreads of beer ads of yore and some sports executions. The fact remains that there's just not much excitement in premium light beer, either in the marketing or the product itself.

"What we see and hear a lot about light beer now is consumers have become tired of the taste--the light brands are a little too watery for them and not a rewarding enough experience," said Olga Osminkina, senior brand director at Heineken USA to CNBC. Which is why HUSA is adding Cascade hops to Heineken Light. Will that work? Is that what people want in their light beer? Maybe.

MillerCoors is taking a different tack with Miller Lite by taking the product literally back to its glory days of meteoric growth by introducing the original label for a limited time in early 2014. That has no doubt gotten many legacy Lite distributors excited, if only for the pavlovian experience of seeing those old labels in their warehouses again, reminiscent of better days. Will that work? Is it retro enough? Maybe.

It matters because if these things don't work, light beer's slide will likely accelerate and an extremely profitable monolithic segment could be replaced by fractionalized flavors-of-the-month with little brand loyalty and two or three year brand life-cycles. That former prints money for all three tiers. The latter is expensive and difficult to manage.

It's my impression that nobody has cracked the code to revive light beer yet. I mean really cracked the code. The problem is the segment is so big, so you have to appeal to so many diverse people and occasions. (Yes, part of it is pricing). But whoever does will get very rich.

When I say cracking the code, I mean things like "Beach vacation in a bottle" (Corona), I mean "active lifestyle" (Mich Ultra), I mean "Most Interesting Man" (Dos XX), I mean "retro-cool" (PBR), or yes, "Tastes Great, Less Filling" (original Lite). We need new ideas.

Time time time has taken the luster off light beer. It's due for a game changer. It's been too long.

Have a great and profitable Labor Day weekend. Next issue on Tuesday.

Until then, Harry

"A cynic is not merely one who reads bitter lessons from the past, he is one who is prematurely disappointed in the future."
-Sidney J. Harris

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