Foster’s raises the alcohol in its main seller VB beer
Better late than never. Carlton & United Breweries (CUB), the Australian beer business SABMiller acquired with its takeover of Foster’s last year, will revert to a formula for its flagship brand Victoria Bitter, which it abandoned in 2007, and raise the alcohol content from 4.6 percent to 4.9 percent from October this year, CUB said on 4 September 2012.
Apparently, SABMiller hopes it was the lower alcohol content which saw Victoria Bitter, or VB as the locals call it, being overtaken as Australia’s top seller by rival Lion’s XXXX Gold. Lion is owned by Japan’s brewer Kirin.
On 4 September 2012, CUB placed a full-page advertisement in the Herald Sun, Australia’s top selling daily newspaper, saying “we got it wrong.”
This brings back memories of another big marketing flop: Coca-Cola’s New Coke. Coke was showered in protests when it replaced Coca-Cola’s classic formula in 1985 with New Coke. A few months later a po-faced Coke reintroduced the original product.
The reason why VB dropped its alcohol content twice – in 2007 and 2009 – was money. In order to maintain prices in the face of rising excise levied on alcohol content, the former Foster’s management saw no other way out than to lower VB’s alcohol content.
The company also introduced new packaging and new variants of the brew to arrest a slipping market share.
Alas, XXXX Gold, has since overtaken VB as Australia’s top-selling beer, a position VB held for over 20 years. According to Nielsen data, XXXX Gold had a 12.4 percent market share in the 12 months through June 2012 compared to 12.1 percent for VB.
The decision to up VB’s alcohol content will cost SABMiller more than AUD 10 million a year in excise tax, it was reported.
“The Vic Bitter drinkers have spoken and told us that we should not have tinkered with their beer,” Andy Gibson, CUB’s chief marketing officer, was quoted as saying. He added: “We have listened.”
However, market observers are not sure if a higher alcohol content will be enough to restore VB to its former glory. Does it not seem strange that VB was overtaken by XXXX Gold when the latter is a mid-strength, low carb beer (3.5 % abv). Ultimately, many wonder if alcohol content really plays such an important role.
Australian beer drinkers in recent years have increasingly taken to buying premium imports. The prices of imported beer are now more competitive, thanks to a strengthening of the Australian dollar against the U.S. dollar over the past few years. They have also taken to more flavoursome craft beers and sweeter alcoholic beverages like cider.
Could it be that mainstream beers in Australia find themselves in a bit of a squeeze?
