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USA: Miller Lite's continuing turnaround -- and the latest response from archrival Anheuser-Busch Inc. -- has some in the beer world buzzing. For the first time in several years, St. Louis-based Anheuser-Busch, the nation's largest brewer, will launch a major marketing campaign that appears to be provoked by its smaller rival, Milwaukee-based Miller Brewing Co., Milwaukee Journal Sentinel revealed on September 21.

Anheuser-Busch recently announced plans to do extensive consumer sampling of Bud Light and Budweiser, its two largest brands. That sampling campaign, targeting millions of consumers, will be coupled with new ads that tout the freshness of Bud Light and Budweiser.

Brewing industry observers say Miller is forcing Anheuser-Busch to market its products on Miller's terms, with a greater focus on taste. That's a switch from the traditional method of selling beer based on its image, with ads that rely more on humor than on pitching the brew's qualities.

Those steps come after a year of strong sales growth by Miller Lite, Miller's No. 1 brand. As of the 12 months ended Aug. 8, Miller Lite sales volume in supermarkets and drug stores increased 10.4 percent over August 2003, according to Chicago-based data tracker Information Resources Inc.; meanwhile, Bud Light sales dropped 1.4 percent, and Coors Light sales dropped 4.3 percent, according to the data.

"Yeah, it does sound like they're sort of copying Miller," said Todd Brachman, a former Miller promotions manager who's now a Glendale-based business consultant.

"I think A-B is playing the 'me too' game with Miller," said Yolanda Holtzee, an industry observer who is co-manager of the ALCAP hedge fund in Seattle. The fund includes shares of SABMiller Plc, the London-based brewing conglomerate that owns Miller. "Our game plan has been working, so they need to react," said Tom Bick, Miller Lite brand manager.

Anheuser-Busch officials declined to comment on details of their upcoming campaign, and whether it's a direct reaction to Miller's taste tests. Bob Lachky, an Anheuser-Busch marketing executive, discussed freshness when he announced a recent promotion that shipped Budweiser and Bud Light to 200 cities the same day that beer was packaged at the company's breweries.

That promotion occurred a day after company President August Busch IV announced new initiatives to increase sales and market share. Among them was a plan to promote what Anheuser-Busch calls its "freshness advantage" through a new marketing campaign. The campaign, Busch said, will include samplings of Budweiser and Bud Light that will eventually reach 3 million beer drinkers at taverns and nightclubs.

Anheuser-Busch has been pushing the freshness message in TV spots that began running earlier this year. The brewer says its large-scale and efficient shipping system means a typical Budweiser or Bud Light bottle or can is 35 days old when bought by a consumer from a retailer.

Other brands are on the shelf a lot longer before they're purchased, according to a study conducted for Anheuser-Busch by New York-based research firm Audits and Surveys Worldwide Inc. Anheuser-Busch says Budweiser and Bud Light are best consumed within 110 days of being packaged. Anheuser-Busch's new plans for consumer sampling come after a year of taste-test promotions by Miller. Miller last summer started conducting blind taste-test promotions, comparing Miller Lite to Bud Light and Miller Genuine Draft to Budweiser.

Those promotions so far have reached more than 250,000 people at clubs and taverns. Miller said the taste tests have resulted in a majority of Bud Light and Budweiser drinkers saying they prefer Miller products.

Also, Miller hired the Institute for Perception, a research firm based in Richmond, Va., to conduct taste tests in a controlled setting. Miller began running TV ads in June that said those tests found a majority of Bud Light drinkers said Miller Lite has more taste than Bud Light. It's all part of Miller's strategy to convince consumers that differences in taste do exist between its beers and those brewed by Anheuser-Busch.

Miller executives said crafting the sense of distinction is crucial for Miller. If beer drinkers believe all beers taste the same, they will likely buy the dominant brands -- which are owned by Anheuser-Busch. Miller has an 18 percent market share, compared with Anheuser-Busch's 50 percent share. Miller's strategy has helped Miller Lite's sales, Bick said.

The recent announcements by Anheuser-Busch may have been partially motivated by Miller Lite's sales performance, said Harry Schumacher, editor and publisher of Beer Business Daily, an industry newsletter. Schumacher said it marked the first time in his 15 years in the beer business that he's seen Anheuser-Busch react so strongly to Miller.

Anheuser-Busch apparently sees the Miller taste tests as a threat, said Brachman, a lecturer at the University of Wisconsin-Milwaukee's School of Business Administration. "So they're going to squash it," said Brachman. He said Anheuser-Busch's greater resources would give it the ability to outspend Miller on sampling promotions. Industry observer Mara "Mitch" Meyers said Anheuser-Busch's plans are proof that the brewer is feeling some heat from Miller. Meyers is the retired chief executive officer of Zipatoni Co., a St. Louis-based promotions firm that includes Miller among its clients. "For many years, it seems like Anheuser-Busch was just steamrolling Miller Brewing," said Meyers, a former Anheuser-Busch marketing executive. "I'm just happy to see that there's better competition."

Beer has long been marketed with ads that focus on humor and image, Meyers said. The conventional wisdom has been that taste differences among beers are not significant enough to sell the product, she said. Miller's focus on Miller Lite's low carb count, and the taste test campaign, argues otherwise, Meyers said. And Anheuser-Busch's increased focus on the freshness of its beer take a similar approach, she said. Bick said Miller already has some ideas, which he declined to share, on how the company might counter Anheuser-Busch's campaign.

Bick also said Anheuser-Busch's consumer sampling effort might backfire if consumers focus on the taste differences between Miller Lite and Bud Light -- and continue to choose Miller Lite. "We have better beers," Bick said. "Possibly, they're just going to sample 3 million people for us.".


22 September, 2004