USA: Traditional beers facing new challenge from craft lagers

Traditional mass US beers face a new challenge from a growing category of craft, premium and light lagers: brands like Michelob Ultra and Corona lead the pack of alternative light lagers and pilsners that have swung back into favor among US consumers, BeverageDaily.com reported on October 9.

The average US beer drinker is all about convenience and affordability, making AB InBev and MillerCoors two of the biggest beer brewers in the world. Bud Light, Coors Light and Miller Lite have decades of history and reputation as the ‘default’ American beers - they are affordable, well-known and readily available.

But with the rise of craft beer in the twenty-first century their leading status has been threatened; and now a new wave of premium, aspirational lagers are adding a new challenge.

According to Jim Watson, senior beverage analyst at Rabobank, there’s room for craft brewers to take some of the mainstream lager beer segment for their own. Bud, Miller and Coors are still plenty visible with global advertising and sponsorships, but the effect is beginning to wane.

“They’re supported by heavy advertising, massive distributor push and a little bit of legacy. That’s why they still have that volume, but I don’t think that their market share reflects consumer interest in those brands,” Watson told BeverageDaily.

It’s particularly difficult, though not impossible, to maintain a winning brand over multiple generations, Watson says, and the big beer brands have had trouble getting advertising campaigns to stick in the last few years.

Bud Light’s 2017 ‘dilly dilly’ ads haven’t nearly had the cultural penetration that its ‘wassup’ ads did in the early 2000s. MillerCoors recently resurrected its jingle for Miller High Life from the 1970s, a strategy that evokes nostalgia from older beer drinkers, rather than enticing them with something new.

In contrast, Watson praised Corona for its ‘Find your beach’ ads, calling it one of the best, sustaining ad campaigns in all of beer. Michelob Ultra also has a defined identity, playing to athletic imagery and the beer’s low-carb content, suggesting a positive, healthy lifestyle.

Michelob Ultra is owned by AB InBev, suggesting the beer giant is taking cues from market demand and investing in its alternative portfolio. MillerCoors has fewer brands in this ‘new mainstream’ and hasn’t been as aggressive in picking up craft brands as AB InBev has: leading to its announcement of a corporate restructuring last month and a new light lager launch set for early next year.

Saint Archer Gold, described as a 'craft light lager' from San Diego-based brewer Saint Archer that MillerCoors acquired in 2015, will have similar ‘healthy’ imagery and pricing as Michelob Ultra.

Saint Archer Gold is a natural next step for MillerCoors into the craft beer market, catering to consumer demand for light beers from craft brands with a lower ABV.

According to Watson, there’s also a significant market for small, existing craft breweries to develop their own light lagers alongside heavier, flavored IPAs. Founders, Firestone Walker and Night Shift are all craft brands that have recently added lighter options to their beer lists.

Many beer drinkers choose craft-style beers for the identity and to be a part of the larger craft movement, supporting a local brewery rather than a global corporation. Watson says that consumers would drink craft lagers if more were available to them, but doesn’t expect every small brewery to develop a light lager.

“Craft beer may be able to successfully move into the mainstream whitespace, especially if AB InBev and Molson Coors don’t do so aggressively, by taking advantage of the local trend. Extending the craft quality halo to easier-drinking, entry-level beers, especially lagers, will certainly have consumer appeal if the price point is right,” he said.

E-malt.com, the global information source for the brewing and malting industry professionals. The bi-weekly E-malt.com Newsletters feature latest industry news, statistics in graphs and tables, world barley and malt prices, and other relevant information. Click here to get full access to E-malt.com. If you are a Castle Malting client, you can get free access to E-malt.com website and publications. Contact us for more information at marketing@castlemalting.com .