What’s the problem with Miller’s legacy brands?
Industry observers have been whispering it for some time: “Miller’s clearly having problems. Brands, ahem, well, not doing well. Gotta do something about that.”
Beer Marketers Insights finally reported at the end of June 2010 that MillerCoors’ quandary as to what to do with Miller’s legacy brands was only increasing as time goes on. In the year to date to 13 June 2010 Miller Legacy brands were down 7.9 percent, while Coors’ Legacy brands gained 2 percent.
Sadly, there is no easy answer as to why Coors’ legacy brands are doing better than Miller’s. It is not simply a case of light beers outdoing full-bodied beers or Coors Light would be afflicted by the same plight as Miller Lite. And it isn’t a case of bad marketing versus good marketing either, or sales of Coors Light should have hit the skids years ago when they first introduced those tacky pneumatic twins.
Perhaps the answer lies with demographics. If you were to compare the U.S. with Australia, which your commentator happens to be visiting right now, you could observe a similar development. Foster’s major brand VB is losing in volumes and there is nothing they can do about it.
By all accounts, Foster’s VB fails to address the needs of the younger male drinker. Aussi males do not drink less beer than their fathers, it is just that they happen to be less brand loyal. They want choice, variety, and a good price.
If, in Australia, international beer brands are becoming more popular with the next generation of beer drinkers, it is because during promotions they are now priced similarly to domestic brands. And they taste differently (or better).
I think that it is somewhat premature to write off mega-brands. Yet, there is no denying that they are under pressure. See Budweiser, see Miller Lite.
My guess is that brands are in the throes of fashion. Fashions come and go. In the brewing industry the swings of fashion may take longer than elsewhere but they do happen.
Miller’s executives should be aware of that. Fortunately, they have emerging markets to get volume growth and the U.S. for a steady stream of profits.
Alas, for how much longer will the analysts be content with this explanation while they contemplate Miller Lite’s and Budweiser’s declining sales figures?
