Dec 19, 2011
MillerCoors' Focus Turns to Struggling Miller Lite
CHICAGO -- MillerCoors still enjoys a spot of prominence in the U.S. beer market, but despite controlling nearly 80 percent of the domestic beer market with Anheuser-Busch InBev, the company is trying to find a way to right its struggling Miller Lite brand.
Charged with that task is MillerCoors CEO Tom Long, who took the helm six months ago. According to the Wall Street Journal, Miller Lite represents about a quarter of the company's total volume of 50.3 million barrels as of Sept. 30. Its market-share losses have accelerated in recent months and the brand has less than half the market share of Anheuser's Bud Light, the country's top-selling beer. Fast-growing Coors Light became an in-house rival after SABMiller plc and Molson Coors Brewing Co. formed the MillerCoors joint venture in 2008.
Even with Miller Lite's troubles, profit at MillerCoors has climbed each year as the combined company cut costs and raised prices on many of its beers in response to higher commodity expenses. Long told the WSJ that the three-year-old joint venture will book a record profit in 2011.
He explained that Coors has benefited the most from the combined distribution of the new company. "There were much bigger distribution gaps in Coors. Miller Lite is a little bit victimized by our significant success in Coors Light, but that's no excuse. We've got a job to do on Miller Lite," he said.
Part of that job includes going to its distributors this coming March with new advertising and packaging. In addition, the company is debuting a new Miller Lite taste-flow can in late spring, according to the report.
MillerCoors is also working on separating Coors and Miller Lite in retailer's coolers, Long said, explaining that retailers and the company sell more when there are separated. "Sameness kills value in all marketing. What [we] want to do is create separateness and give those brands bigger, clearer identities," he said.
Beer, in general, has been losing ground to other alcohol beverages such as wine and hard liquor. Part of the problem is that the Millennials drink different products for different occasions. "You've also got some changes in drinking patterns, for instance the decline in carbonated soft drinks. Still, drinks are more important and that's why we see a rise in the consumption of ales in the U.S., because ales are less carbonated," Long said.
MillerCoors also needs to contend with the rise of the craft beer segment. According to Long, the company currently has the single-biggest craft beer (Blue Moon) and the fourth largest (Leinenkugel's). In addition, the company's craft business division, Tenth and Blake, plans to grow about 60 percent over the next three years.
"If we can play really hard in the fastest sector right now, which is craft, which we are doing, and we can do well with Miller Lite, Coors Light and Miller 64, then our company will do quite well," said Long.
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