The Professor posts this because everything but the last paragraph 
indicate how clueless big beer execs, and especially the writer, seem to be. They should have led with that last paragraph and done more analysis. Anyone dare to think they’re simply not quenching more educated palates these days?- The Professor
Distributors Seek Solutions in Vegas Amid Slumping Sales Trends, Aggressive Competition From Spirits
Stuck in a multi-year slump that shows no sign of lifting, beer industry leaders have blamed everything from the economy and weather to anti-smoking laws in bars. But one top executive is bluntly suggesting that industry itself is the problem for failing to out-market the spirits category.
The last three years have been brutal. In the 52 weeks ending in late August, the number of beer cases sold in stores was down 1.5% from the year earlier, according to Nielsen, while spirit volume sales were up 3.2% in the year ending in mid-September. By year’s end, experts are forecasting beer volume to be down some 2%. That would mark the third year in a row of a decline, which hasn’t happened in 50 years, Beer Marketers Insights President Benj Steinman noted in a presentation to distributors, who met at Caesars Palace for their annual convention and trade show. “If we have yet another year of 2% decline, it will be a lost decade,” he said. “We’ll be back to where we were 10 years ago.”
Mr. Long, who took over as CEO in June, suggested advertising is playing a role in the rise of spirits, with more brands spending liberally on TV, moving into a medium that beer used to have to itself. He even took the unusual step of showing off several sprits ads from brands such as Captain Morgan and Smirnoff — hardly the presentation you expect at a beer conference.
“Spirits advertising has been praised by lots of folks and I think rightly for its ability to connect with its target,” he said. “It’s apparent they have read the beer-marketing book and they’ve been borrowing pretty liberally from it.” He also cited spirit line extensions and new flavors, as well as new brands. “Look at Grey Goose,” he said. “This brand was created right out of thin air. French Vodka? Who would have thought such a thing?” he added. But with a “relentless sales effort” and clear positioning, “they created a whole new price tier in vodka and Grey Goose took flight.” Mr. Long, whose frank language was well received by distributors, did not offer specific prescriptions for beer, saying that “we’re all going to have to work that out for ourselves as we compete in the marketplace.”
Indeed, there does not appear to be anything in the works to start an industrywide pro-beer campaign. Still, National Beer Wholesalers Association President and CEO Craig Purser did not rule it out. “What’s positive is that there is a recognition and a realization that in order to grow beer and address the volume issue we are dealing with … there’s got to be some refocus and some collaboration,” he said in an interview. (The last big beer image campaign, called “Here’s to Beer,” was put forth by Anheuser-Busch several years ago, but the brewer was not able to lure competitors on board, who rightly calculated that A-B would pay for it all anyway.)
As of late, big beer brands — which used to be known for buzzworthy ads — are having a hard time breaking through on their own. Distributors interviewed at random at the conference seemed particularly frustrated about what they are seeing on the airwaves, with some complaining about image ads that seem to have nothing to do with the product and others saying joke-filled ads don’t seem to be resonating. “Maybe not enough beer commercials are talking about the relevance of the beer and what the beer is about and too many [are] about the joke,” said Frank Politano, VP-sales and marketing for Kohler Distributing Co. in New Jersey. “I think the consumer is looking more about, ‘What’s my experience? What is the beer about? Why am I drinking it?’ ”
Brewers seem to acknowledge the need for a reboot. Anheuser-Busch InBev, for instance, is reviewing agencies for Bud Light, recently cutting ties with longtime roster agency DDB. Mr. Long’s MillerCoors, meantime, is expected to unveil a new campaign next year for Miller Lite, whose “Man Up” campaign has not lifted the brand from a sales slump. The brand’s agency, DraftFCB, which also handles the more successful Coors Light brand, is said to have multiple teams furiously working on new Miller Lite ads.
Heineken USA, meantime, signaled in a presentation this week in Vegas to its distributors that it would begin talking more about the beer. Its ongoing “Open Your World” campaign has mostly been about image. “We do have a high-quality product, we just haven’t talked about it in a long time,” said chief marketing officer Lesya Lysyj.
Yet, advertising is hardly to blame for all the woes of big beer brands. Experts continue to cite high unemployment among blue-collar drinkers, who have less to spend on a night out at the bar. These lower-income drinkers are key for big brewers because they are more likely to buy big mainstream brands like Bud Light and Miller Lite. High unemployment among Hispanics is also hurting big beer brands because these drinkers overindex on beer.
On the other hand, smaller craft brands — which tend to appeal to wealthier drinkers — are still on fire. Craft was up 14% in the first half of the year, according to Mr. Steinman. (The craft category still only controls about 5% of beer volume.) “The brands that are growing are the brands the rich people drink,” Harry Schuhmacher, editor of Beer Business Daily, said in a convention presentation. Crafts also rarely do any expensive advertising, relying instead on social media, events and word-of-mouth buzz.