Butch Cassidy, the Sundance Kid, and Beer

 

Smart businesspeople know formal research studies aren’t always needed. Sometimes it’s about reading signs, like the trackers in old cowboy movies. According to Butch and Sundance, Lord Baltimore was the very best at following a trail and anticipating the next move his quarry would make.

So what does that have to do with beer?

Quite a lot, actually.

The Beer Institute says beer sales have been declining in stores, restaurants, and bars for more than 20 years, hardly a passing fad.

What were some of the signs beer manufacturers missed?

  • Sales of wine and spirits have been steadily increasing over the same period.
  • After a long self-imposed ban, liquor companies are pouring money into television ads. “We didn’t see liquor as competition,” says Tony Ponturo, a former marketing executive at Anheuser-Busch. “It wasn’t beer.”

Whoa, Tony!

You’re afflicted with The Myopia of Experts, which is defining your product category too narrowly.

Surely you remember what happened to colas? Experts at Coke believed the competition was Pepsi (and vice-versa). This assumption was true for a while, but it ignored the growth of category adjacencies such as bottled waters, flavored waters, sports drinks, and more. Caught flat-footed, Coke and Pepsi ran around buying up manufacturers of non-colas.

What else were the Beer Barons ignoring?

  • Big brands have been losing to small brands in food and beverage, most obvious in the growing dissatisfaction with large mass-market brands like Kellogg’s and Campbell’s, Miller and Bud. 
  • Small-market craft beers have been putting a large dent in mass-market beer sales.
  • Beer sales in their most important market (men 21-27) have been declining at twice the overall rate.

So what has Big Beer done about declining sales?

  • They increased prices.
  • They introduced higher-priced special limited-edition beers.
  • They bought up wine and liquor brands.

Haven’t they made big advertising changes, too?

If you’re thinking about Dilly Dilly, it’s been a huge social success. The new VP of Bud Light says Dilly Dilly is responsible for “a 6 percent improvement in share of organic social media mentions.” More telling is what he did not say – there has been no resultant increase in Bud Light sales, probably a more important metric.

What time is it?

WSJ quoted Heineken’s Ronald den Elzen as saying “Every consumer today drinks on average one bottle of beer less a week than they did 20 years ago. If this is not a wake-up call that we have to do something, I don’t know what is.”

Actually it’s 7,305 wake-up calls, Ron – Heineken’s been hitting the snooze button for the past 20 years.

So what’s next for beer? Are there growth opportunities in category adjacencies?

If the category is social lubricants, one big one stands out. Several business partnerships are creating zero-alcohol, zero-calorie, cannabis drinks. They taste like beer, but that’s all. Our favorite name? Heineken Hi-Fi Hops.

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