Events

Bringing Back the Gusto -Beer Business Daily April 7, 2008

Pabst Brewing Company is extending its slow-burn strategy of rolling out Schlitz in bottles on-premise at premium pricing. That's right, Pabst is introducing a 1960s-era recipe of Schlitz in select markets where Schlitz historically had strongholds, targeting older boomers who remember Schlitz in from its glory days. Last year they quietly seeded the brands into bars in Minneapolis-St. Paul and Tampa Bay (where the old Schlitz brewery was, now Yuengling).

And today it's moving Schlitz into select Chicago bars, says the Chicago Tribune. "These are the guys who remember how great the brand was and what it means," said Kyle Wortham, Pabst's senior brand manager for Schlitz, to the Trib. "It's guys who were drinking this beer back in the day."

In this age of Bud-Miller-Coors-import-craft prominence, it's hard to remember just how big Schlitz use to be, particularly for our younger readers. And it's remarkable to remember just how spectacularly fast it fell.

In 1973, Schlitz had 98% production capacity, selling 22 million barrels of beer. It was the number two brewery at 15.4% market share (that's incredible in itself). In 1974, Gross sales reached $1 billion for the first time in the company's history, a 13.8% increase.

Then, in 1976, disaster strikes. Schlitz decision to shorten the fermentation time and use cheaper ingredients comes back to bite it. Schlitz dumps ten million bottles and cans of its Memphis and Tampa beer due to haze. It makes national news. Then in 1978, a federal grand jury brought 747 indictments against the Schlitz brewery for illegal trade practices, and in 1981 its workers go on strike. Schlitz never recovered, and Stroh bought it in 1982.

SO WILL PABST STRATEGY WORK? Stressing the 1960s era recipe and sense of nostalgia, I can see it appealing to a select group of boomers. As illustrated above, Schlitz was huge, and still has remarkable brand recognition. And if you look at today's Old Spice ads mock-celebrating hairy-chested manliness, and Bud Light ads featuring a 70s clad Will Ferrell, I can also see the possibility of the beer of gusto appealing to the 21 to 27 hipster set, who are always on the lookout for opportunities for irony.

Pabst is not above cashing in on hipster's sense of irony. The brewer was smart to foster PBRs organic buzz one bar at a time with a slow burn, a technique used successfully by New Belgium, Yuengling, Shiner, and others when opening new markets. That's the way to work Schlitz (and Lone Star, Old Style, Ranier, etc). Will it work long-term? Let's wait and see.

DAVE ON A-B's MEGA BRAND STRATEGY

In an wide ranging interview with BrandWeek's Mike Beirne, Anheuser-Busch vp marketing Dave Peacock riffs on their new mega-brand strategy, where "A-B is moving away a little bit from creating brands to creating extensions of existing brands or megabrands. That's really what this whole thing is rooted in-a mega-brand strategy. We've got two megabrands in Bud and Bud Light, and we're seeing that we can go different directions with those megabrands because we can appeal to two different consumers," as in Bud Light Lime and Budweiser Ale. There will also be "new packaging coming over the next couple of months, and a draught program where we'll be doing a lot to enhance the availability of Budweiser draught beer within the on-premise," says Dave.

For Bud Light, Dave says it will still be all about humor, but with added communications on drinkability. "When you think about Bud Light-we do a lot of research here-it does hit a sweet spot for light beer consumers. It is not heavy tasting and not too watered down. It's right where you want to be, and we need to communicate that in a positive way."

What about at retail? Will Bud and Bud Light still be displayed and promoted together? Yes, says Dave, but perhaps now with a "side stack of Bud Light Lime and Bud Ale."

This seems like a good plan. There are worries, however, that BL Lime and Bud Ale could break the super steady buying patterns of loyalists, and once that pattern is broken, other beer brands could break in. We'll see more of A-B's plans later this week as I don my Cardinals cap and A and Eagle lapel pin to sneak into Big Red's meeting.

AD AGE ASKS: "IS MILLER GENUINELY DAFT?"

Meanwhile, over at rival AdAge, Jeremy Mullman takes Miller to task for changing yet again its focus for MGD, (with the clever title, "Is Miller Genuinely Daft?" -- wish I had thought of that one). Writes Jeremy: "Since 1991, the long-declining brand has burned through four agencies and is about to break at least its eighth tagline in almost as many years. During that time, it has centered its pitch on both juvenile sexual humor and the maturity of the people who drink it."

He then notes that MGD sales have dropped to nearly half its early-'90s peak due to too many ad campaigns changed too frequently. He quotes Dennis Ryan, who worked on both A-B and Miller brands: "I worked on Anheuser-Busch brands for 13 years, and once they made a decision, they supported it. They committed to it. To A-B, their business is personal. That was never my experience in Milwaukee."

As reported last week, Miller will be testing two concepts for MGD. Stay tuned on which one wins out.

SILVER BULLET UNSTOPPABLE, BUD LIGHT ALSO ON FIRE

I hate to sound like a broken record, but Coors Light continues to defy gravity (and tough comps) and is continuing to post volume and share gains which are, if anything, accelerating. In IRI supermarket scans for the four weeks ending March 23, Coors Light gained 0.4 share points and its volume was up nearly 9%. Miller Lite volumes were flat and Bud Light was up nearly 6%.

Bud Light was clearly also a March winner, gaining half a share point. An early Easter would benefit Bud Light, we surmise, as Easter as a beer consumption holiday skews Hispanic as does Bud Light. But Coors Light? Seems like an early Easter would hurt the silver bullet from a market share perspective if anything, but there you go. Total Coors Brewing share gained 0.7 points with Blue Moon and Key Light adding to Coors Light's share gains. In fact, the only CBC share loser to register in March to a tenth of a point was Killian's (losing 0.1 share point).

HAPPY REPEAL DAY

Speaking of A-B, it's hard to believe that it was 75 years ago today that Gussie Busch stepped up to a KMOX microphone and said, "April the seventh is here, and it is a real occasion for thankfulness. Happy, grateful men are back at work after what seemed an endless idleness."

Repeal brought back beer, but it also brought back a system of state-based regulation that endures today, despite various attacks from a variety of interests.

So join me in raising a glass of your favorite lager or ale, and toast to another 75 years of legal, regulated, taxed, and advertised beer consumption.

Until Monday, Harry

"I think this would be a good time for a beer."

-Franklin Roosevelt, upon signing the Cullen-Harrison Act which allowed consumption of 3.2 beer, the precursor toward total Repeal.

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