By Mike Esterl
This week is crunchtime for the U.S. beer industry, which could badly use a summer pick-me-up.
Roughly a third of beer sales in the U.S. take place between Memorial Day and Labor Day, often making or breaking the year. The most critical week is that of July Fourth, when sales traditionally are 30% to 40% higher than the average week, according to industry estimates.
High temperatures are a bigger deal for brewers than distillers, which have been converting beer drinkers to cocktails for more than a decade, and are partly responsible for the decline in American beer consumption in four of the past five years.
Beer sales are typically 13% higher during summer months than the yearly average, compared with liquor sales, which only get a 6% bump on average, says market researcher Nielsen.
Domestic beer shipments are down just 0.1% this year through May, according to the Beer Institute, an industry group, after declining more sharply in recent years. That number would be even worse if Anheuser-Busch InBev NV, which sells nearly one in two beers in the U.S., hadn't accelerated shipments to distributors earlier this year before reaching a labor deal with Teamsters.
AB InBev and the second-largest brewer in the U.S., MillerCoors LLC, also are having a tough time winning back drinkers who have defected to small, regional "craft" brewers. Sales of craft beer surged nearly 20% last year, and upstart brewers are expanding capacity. Earlier this month craft brewer Lagunitas opened a 300,000-square-foot facility in Chicago, roughly twice the size of its first brewery in California.
Belgium's AB InBev is wrapping the American flag around flagship Budweiser this summer, rolling out limited-edition cans in red, white and blue last month and delivering scholarships to families of injured or killed U.S. soldiers with Clydesdale horses.
It also recently launched Bud Light Mang-O-Rita and Raz-Ber-Rita that taste more like margaritas than beer, part of its bid to win back market share from spirits.
The official beer sponsor of the World Cup tournament is spending heavily on soccer-themed TV ads during matches aired on ESPN, hoping to ride a wave of enthusiasm for the U.S. team. It is hosting game-viewing parties around the U.S., taking over an entire Las Vegas hotel July 12-13 for the finals.
MillerCoors in May launched the first seasonal extension of Coors Light, citrus-flavored Coors Light Summer Brew, trying to reverse a recent slide in the No. 2-selling U.S. beer. Earlier this year it rolled out Miller Fortune, which has a higher, 6.9% alcohol content and is being marketed to be served in a rocks glass, like bourbon. MillerCoors expects to derive 7% of its sales this year from new products, up from 5% last year and 1% in 2012.
The joint venture between the U.K.'s SABMiller PLC and Denver-based Molson Coors Brewing Co. is also banking on a lift from improving fortunes among American men in their 20s, who tend to be big beer drinkers. The jobless rate in that age group is falling after spiking during the recession.
"We are confident the U.S. economy is improving. As that economy improves, we do believe consumers will come back to beer," said Molson Coors Chief Executive Peter Swinburn in an interview with The Wall Street Journal.
Amsterdam-based Heineken NV hopes two products it recently launched, lemon-flavored Amstel Radler and agave-sweetened Dos-A-Rita, are a popular alternative to lemonade and margaritas at July Fourth picnics. Heineken also is rolling out a smaller 8.5-ounce "slim can" for its namesake lager as it tries to revive the former top import, whose U.S. volumes have shrunk 11.7% over the past decade and 3.5% in 2013 alone, according to data service Beer Marketer's Insights.
Victor, N.Y.-based Constellation Brands Inc. is spending heavily this summer. trying to capitalize on Americans' growing thirst for Mexican beers. The company, which owns the U.S. rights to top-selling import Corona, says its volumes are up 12.5% at stores this year through June 15, citing IRI scanner data. It says it has increased Corona's summertime TV spending by roughly 30% for the second year in a row. It is also running a TV ad for its Modelo Especial brand featuring Clint Dempsey, the captain of the U.S. soccer team.
Write to Mike Esterl at email@example.com
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