For the last several years, the two topics that dominate the beer industry are: why are the domestic light beers losing share and why are crafts growing at warp speed? In every form of communication including, industry publications, social media, beer conventions, and main stream media, not a day goes by without either one or both of these hot topics being discussed.
A large part of the negative trends of the domestic light beers has been attributed to their advertising. Much of the advertising is deemed ineffective, lacking in any clear message, and basically does not develop any equity in the brand. Note the recent AB ads during the Super Bowl game. Two of the ads were ranked in second and fifth place in overall effectiveness by ad industry experts, yet the ads had little to no effect on the negative sales trends of Budweiser. These results, once again, support what the industry believes is the overall issue of ineffective messaging for the brands.
Soon after I had signed a letter of intent to buy the Schlitz distributorship in South Texas, the seller retained the law firm, Fulbright and Jaworsky, a large, politically connected firm. We had to counter that selection with Vinson and Elkins. The result of those decisions meant it took months to execute a simple buy/sell asset purchase agreement. The lawyer handling our side had a number of trophies in his office commemorating his clients’ successful deals. I asked if there would be another trophy for the Texas Beers agreement and he indicated there would be. For him, it was all about the number of trophies on his desk.
Until the last decade, it was highly unusual for a brewery to be owned by a corporation. Breweries, like wholesalers, were usually family-owned or headed by someone whose family had a long history with the brewery. Even with Philip Morris’ purchase of Miller Brewing Co. the head of the brewery, John Murphy, became the face of Miller and turned into a great beer man. He had a real passion for Miller.
Regardless of their management style, the Busch family was the face of AB for decades. AB’s success was attributed to the leadership of that family. The corporate world today is focused on shareholder equity, families focus on brands and their family of wholesalers. Coors, even with some troubles, continues to do better than industry trends. Pete Coors remains involved as do other Coors family members.
Craft Breweries are owned by individuals who care about their brands. Jim Koch is the personification of this principle as are the owners of New Belgium, Sierra Nevada, Lagunitas, Founders, and others. Their passion is their beer.
In the corporate world today, shareholders are the focus for senior management. For marketing and advertising executives, it is all about awards, trophies, and padding their resumes. It is not about brand equity, family, or wholesalers. Until the corporate beer world changes, to these executives it is all about the envelope please.
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