Silver Bullet Aims at Bud for No. 2 Beer Spot
MillerCoors CMO Andy England recently told distributors that Coors Light will overtake Budweiser as the no. 2 selling brew in the U.S. Analysts are saying that’s not just braggadocio, considering Budweiser’s long-running drop in sales and Coors Light’s steady trajectory upward. According to Beer Marketer’s Insights, Coors Light ended 2010 with an 8.5% market share, while Bud is barely ahead at 8.7%. Bud Light is the leader of the pack at 19.1%. MillerCoors is increasing marketing spending by $50 million this year, and part of its efforts for Coors Light include signing hip-hop artist Ice Cube to appear in ads for the brand.
Craft Beers Creeping Up as Contenders
As the big boys are fighting it out at the top, craft beers – defined as brands that produce less than 15,000 barrels a year – are taking a bigger piece of the beer-market pie. The Brewers Association reported that while overall beer sales in the U.S. declined by 1% in 2010, craft beer sales rose 12%, from $7 billion in 2009 to $7.
6 billion in 2010. Some large players are taking notice and bringing craft breweries into their operations, such as Anheuser-Busch’s recent purchase of Chicago’s Goose Island Beer.
Bill May Give Boost to Small Brewers
Small brewers may get even more good fortune if a bill that would give tax breaks to brewers who produce 6 million barrels or less annually is passed by Congress. The Small BREW Act (Small Brewer Reinvestment and Expanding Workforce Act) aims to reduce the excise tax from $7 to $3.50 per barrel on the first 60,000 barrels of beer produced by breweries each year. For beer production between 60,000 and 2 million barrels per year, the tax would be reduced from $18 to $16 per barrel. The bill is sponsored by U.S. Reps. Jim Gerlach, R-Pa., and Richard Neal, D-Mass. “With the economy sputtering, Congress must create conditions that allow small businesses to become more competitive, protect existing jobs and create new employment opportunities,” Gerlach said.
If You Can’t Beat ‘Em, Join ‘Em
Meanwhile, some of competition may turn into cooperation as more consolidation takes place in the global beer industry, SABMiller CEO Graham Mackay said at the Marketing Society’s annual lecture in London. However, companies may face a harder time getting value from such deals, he said. Global brewery acquisitions totalled $141.9 billion in the last five years, according to Bloomberg data. “There are bolt-on acquisitions to be done around the world, and there are major deals,” Mackay said.