Miller Fortune versus Bud Platinum?
Is SLOW the operative term for brewing behemoths? It has taken MillerCoors, the number two brewer in the U.S., a full two years to answer Bud Light Platinum with its own more alcoholorific line extension called Miller Fortune. Miller Fortune’s alcohol content is to be a bit higher than its competitor’s, although both are aimed at "millennial males" (those born after 1980) and hope to steal share from fast-growing liquor brands.
Miller Fortune, which is to debut early next year, will have 6.9 percent ABV compared with 6 percent ABV for Platinum, it was reported. Fortune will be priced similarly to Platinum, whose average price is USD 26.17 per case compared with USD 20.11 for regular Bud Light, according to IRI.
MillerCoors confirmed the launch in a memo to distributors in August 2013. The beer will come in an all-black bottle with an embossed design. Bud Platinum is sold in cobalt blue bottles.
MillerCoors will also launch a new cider brand called Smith & Forge Hard Cider with an alcohol content of 6 percent ABV, above the average cider alcohol content, thus hoping to cash in on the growing cider trend, while exploiting what the brewer described as a "massive unmet need" for ciders that target males.
MillerCoors and Bud Light-owner AB-InBev are experimenting with new beers in order to keep pace with the changing tastes and drinking patterns of Americans, who are increasingly buying craft beers and spirits. Also drinkers seem more willing to pay higher prices for premium- and often higher-alcohol-brands.
Up until now, MillerCoors’ innovation strategy has avoided big line extensions. Rather, the brewer has poured money into new brands such as Redd’s Apple Ale, an apple-flavoured malt beverage, and Third Shift, a lager beer positioned to compete with craft beers.
As a line extension, Fortune will help breathe some life into the Miller family of brands. While brands like Coors and Coors Light have performed solidly in recent years, Miller Lite, Miller 64 and Miller High Life have consistently posted declining sales.
According to Beer Marketers Insights, a trade publication, Miller Lite will lose 1 million barrels in sales this year, and will have lost over 4 million barrels or nearly one fourth of its volume since MillerCoors’ birth in 2008.
AB-InBev has experienced similar declines of its core brands, Budweiser and Bud Light. But analysts have credited the brewer’s line-extension strategy with improving the prospects of the overall Bud franchise. In addition to Platinum and Black Crown, A-B InBev has launched Bud Light Lime Straw-Ber-Rita and Bud Light Lime Lime-A-Rita. All of the extensions came with higher price tags.
That’s probably one of the reasons why AB-InBev has managed to grow profits in the U.S. despite declining volume sales.
Still, after rocketing in early 2012, Platinum’s sales have slowed. The beer controlled 1.15 percent of the beer category as of mid-July 2013, compared with 1.21 percent in mid-May, according to IRI, whose figures do not include bar and restaurant sales.
For the six months 2013, Miller Coors in August reported revenues down USD 60 million to USD 4.54 billion and operating income down USD 31 million to USD 692 million.
Since its 2008 inception, Miller Coors has more than doubled operating income to over USD 1.2 billion in 2012. Revenues went up USD 300 million, or 4 percent to USD 7.5 billion, even though volumes declined every year.
But those kind of strong financial results may be jeopardised in 2013, says Beer Marketers Insights, because of steeper volume declines. The pressure is on Miller Coors to find big savings, and/or to better allocate resources.
