Premiumising the beer market

Beer in a blue bottle? Whatever turns you on. Apparently, AB-InBev’s launch of the higher-alcohol Bud Light Platinum in a blue bottle and Bud Light Lime "Lime-A-Rita," a Margarita cocktail-taste-alike flavoured malt beverage in a can, were the most successful debuts this year in terms of volumes. As AB-InBev reported, in the first six months of 2012, Bud Light Platinum sold over 1.2 million hl.

This shows that brewers are taking their lead from the spirits companies, for whom new product introductions create substantial amounts of business. As a forthcoming BRAUWELT International report "In Fine Spirits" argues, brewers are heeding another lesson from the spirits industry: that to narrow the gap between the subpremium and the premium price segments may lead to a loss of volume, but ultimately benefits brewers’ bottom lines.

Beer Insights, a U.S. trade publication, wrote recently that the subpremium volume was squeezed in the past few years as AB-InBev took larger price increases on subpremium brands than on premium brands.

In the first seven months of this year, all brands in the below premium price range were up 3.3 percent, while premium prices were raised by 1.85 percent. Beer volumes in the subpremium segment are likely to continue dropping. Already, subpremium/malt liquors lost over 4.7 million hl these past two years and is down to 58 million hl, says Beer Insights. Forecasts show that volume in this segment will decline 3 percent or so this year, which translates into a decline of 1.7 million hl.

According to the Beer Institute, an industry body, U.S. beer consumption in 2012 may rise in excess of 1percent this year over 2011.