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The Huge Story for the Beer Business in 2008 Is the Broad Range of New Choices and the Exceptional Pressure Put on Pricing

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The Huge Story for the Beer Business in 2008 Is the Broad Range of New Choices and the Exceptional Pressure Put on Pricing ANHEUSER-BUSCH The leading brewer in the U.S. – and number one or two in the world – is Anheuser-Busch, with almost 50-percent of the U.S. market. In 2006 and 2007, A-B added a huge number of brands to its portfolio, both those that it brews and imports. The addition of most of InBev USA’s portfolio in 2007 was a big move for both breweries. At the same time, A-B’s core brands didn’t perform brilliantly in 2007, even though A-B’s overall shipments to U.S. wholesalers last year were up by two percent from 2006, coming in at approximately 104 million barrels. “A-B will have to work hard to maintain share because of losses on Bud Select and Budweiser,” Williams said. Keith Levy, A-B vice president of sales and retail marketing, said 2008 is “the year of the consumer who wants variety. It will be a supply and demand equation, and for the last two years we’ve been responding to demand.” New products for A-B early in 2008 include Chelada, a beer made with clamato juice, which went he huge story for the beer business in 2008 national on January 14th after staggered tests in one-third of the country last year. Chelada is the broad range of new choices and the is available in 16- and 24-ounce cans. Shock Top Belgian White, originally exceptional pressure put on pricing. introduced as a seasonal beer in February T 2006 with the name Spring Heat Spiced Wheat, became available year-round last Industry analysts have described what has packaging are also up, sometimes as much as November in bottles and on draft. Shock happened in the international beer business 30-percent. Price increases of $1 to $2 per Top is a beer brewed in the Belgian White from last fall until now as a “perfect storm.” six-pack have already occurred. (or wit) style, an unfiltered wheat beer spiced Barley, the basic agricultural ingredient “We’ve yet to see how our consumers will in beer, has soared in price as much as 70- react to these price increases,” said Mitchell percent. And there is less barley being grown Ancona of Ancona’s Wines & Liquors in as farmers worldwide plant corn for ethanol Ridgefield, CT. “Will they stay with the more production. There is a worldwide shortage expensive six-packs they’ve been buying or of hops – especially the varieties used for fall back to something less expensive?” aroma and flavor, as opposed to bitterness. Bump Williams, a senior analyst with There were bad hop crops last year (up to 25- Information Resources, Inc., said that the percent below normal in some areas) and less number one item affecting the U.S. beer acreage planted than in the past. Many hops business this year is pricing on segments and are now completely unavailable for brewers, brands. And with the increase in costs for especially those without long-term contracts. beer at the retail level, he said, “A growth The prices of some hops that are available of one-half share points in the sub-premium are five times what they were a year ago. Fuel category is astonishing. I’ve never seen that prices and the costs of glass, aluminum and before.” BEERS OF 2008 with orange peel and U.S. as part of the Miller sales last year. “The marketing was good coriander. Land Shark Lite Brewers Collection. and the Cold Activated Bottle that changes Lager finished testing News items include Amber, colors when it’s cold was a plus,” he said. and is now another year- Blonde Ale and Wheat, all round beer as of February have 110 calories and 6.2 HEINEKEN USA 12th, available in 12-ounce carbs. “Heineken did a great job with Heineken bottles. Wild Blue, a “Miller is seeking to Premium Light in the last two years,” blueberry-infused lager, again establish a whole Williams said, “especially with the slim can was tested in 2007 and is new category for the beer and bottle and the home keg. Heineken is now a year-round brand in industry — craft-style-light,” looking healthy, and the FEMSA brands 12-ounce bottles as of March. said Miller chief marketing officer Randy seem strong, especially with Hispanic “We don’t expect huge volumes with Ransom. “The brewer who can provide a workers if Corona becomes too expensive.” these beers,” Levy said, “but they will more refreshing and drinkable craft style can To promote the release of two new beers sell well at the right places with the right stake out a whole new niche in the market. from Hacker-Pschorr Brauerei, Star Imports consumers.” A-B may also extend the That’s what we intend to do.” has created a new 2008 Octoberfest Bacardi Silver Mojito line this year because Miller is also testing a new Miller promotion, which will import benches of its huge success. Genuine Draft Light (64 and tables from the Hacker-Pschorr The line of regional beers A-B brewed calories) in Midwest markets. Oktoberfest tent in Munich and last year has ended its run. These were beers Jacob Leinenkugel Brewing in make them available to U.S. designed and brewed by brewmasters at A-B’s Wisconsin, a Miller subsidiary, is wholesalers. “The tables in these breweries around the country. The Specialty rolling out nationally with new Oktoberfest tents are replaced Seasonal Draught Program will continue, beers and a push on its existing every year,” Sloane said. “We however, in bottles and on draft. These are portfolio. Seeing the success of decided to brand them. Retailers four beers released with the changing of Blue Moon Belgian White can build displays around them the seasons. They include Sun Dog Amber in their home market, the and raffle them off.” Wheat for the spring, Beach Bum Blonde brewery has developed Star will continue Ale for the summer, Jack’s Pumpkin Spice beers such as Honey Weiss, promoting beers from other in the fall and Winter Bourbon Cask Ale. Berry Weiss, Sunset Wheat European breweries in its A-B’s two organic beers will probably be and Summer Shandy (a portfolio: Paulaner, Moretti, reduced to one selection and Redbridge, the lemonade-flavored light- Murphy’s, Zywiec, Edelweiss, gluten-free beer brewed with sorghum, will bodied beer with a bit of Fischer and Starobrno. stay on the shelves. Wisconsin honey and citrus Sloane is looking to use the “Our focus will still be on our core flavors). Star portfolio to compete with brands,” Levy said. “It’s not an ‘either/or’ with craft beers. “The consumer must realize the specialty brands, but both.” And A-B is COORS that these European beers are handcrafted,” putting its money to that claim, spending Coors has no new entries planned as of Sloane said. “We need to position ourselves $70 million more this summer than last year now for 2008, but will continue with the as crafts.” on advertising for Bud Light and Budweiser, success of its Blue Moon “craft” line, which including an increase in Latino-focused ads. now consists of Belgian White, Harvest CROWN A major promotion for A-B in 2008 is the Moon Pumpkin Ale, Full Moon Corona is the power brand for Crown Bud Light Party Cruise, a summer event. Winter Ale and Honey Moon Imports, and the country’s largest-selling There will be 4,500 winners who will Summer Ale. import beer. Crown also sells Corona Extra, participate in Caribbean cruises this At year-end, IRI named Corona Light, Modelo Especial, Negra fall on two ships. Blue Moon Belgian White Modelo and Pacifico — as well as the St. As to A-B’s large number of as the Power Brand for Pauli Girl and Tsingtao brands. imports, Levy said the goal for 2007. “This beer rounds out “Corona had a tough year in 2007,” 2008 is “integrating all these the Coors portfolio,” Williams Williams said. “Has the brand matured? brands with our wholesalers.” said. It’s also a popular craft-style Draft Corona might be a huge opportunity beer that other brewers set their for Crown.” MILLER sights on for competition, such as Miller Brewing, part of the A-B’s Shock Top Belgian White and DIAGEO global brewer SABMiller, Leinenkugel’s specialty beers. No new beers have been mentioned by is testing three new low Williams noted that Coors Light Diageo, but Guinness has introduced a new calorie/low carb beers in the and Keystone Light were both up in gizmo in the U.S. that uses, according to the BEERS OF 2008 company, “groundbreaking, state-of-the-art six-pack, how will consumers react? technology to pour a perfect pint every time, On the positive side, Gatza said that everywhere.” The Guinness Surger uses maybe consumers will regard expensive small sound vibrations to release nitrogen craft beers as an alternative to more gas in the beer and cause a cascading effect, expensive wine and spirits. also referred to as “the surge and settle.” IRI’s Williams said that perhaps there will be a new definition of price DISTINGUISHED BRANDS tiers for craft beers, which he defined as INTERNATIONAL a national competition of homebrewers) standard, premium and super luxury (750-ml Specialty importer Distinguished Brands have been released in a six-pack of three bottles of small volume brands). International (DBI) continues, year after bottles each of two winners from last year’s “I think we’ll see more ‘extreme’ beers,” year, to introduce new beers. At the end of competition: Rodney Kibzey’s (Illinois) said DipakTopiwala of Whip-In in Austin, 2007 came a limited U.S.
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