By the late 1960s, beer marketing was limited to brewery reps and wholesaler supervisors calling on bars and buying rounds of beer. Add in hanging p-o-s and you have marketing covered. Outside of AB, no one really advertised much on TV. In fact, even price promotions were rare and Coors did not even do them until the mid-1970s!
Then came Philip Morris. When they bought Miller Brewing Co. everything changed. Major media buys woke up AB who jumped in after Miller in an attempt to stem Miller’s growth. This included more and deeper price promotions and themed holiday programs. The regional breweries were caught in between and slowly died or sold out.
By the 1980s, the industry knew that any brewery needed to do one or both of the following to compete: advertise with media or price promote. The next evolution came when Jim Koch put “feet on the street,” a practice which endures to this day. It was not much later that the internet came into existence, closely followed by social media.
Social media, anchored by Facebook and Twitter, is used by everyone in the industry especially crafts, who have benefitted more than anyone in the beer industry by using this technique.
For decades the industry was focused on market share and revenue growth. This all changed in 2008 when InBev got its hands on AB. ROI and margin growth became the focus for AB, soon MC followed AB’s lead. This benefited both crafts and wholesalers. Consumers still flocked to the craft segment with no push back on price points. Crafts grew double digits annually while AB and MC lost millions of barrels.
By 1980, Coors had AB down to only a few draft accounts in Wichita, so AB decided to rollout Busch Beer in Kansas. Busch at that time used the tagline, “Head for the Mountains” in their advertising, which played against Coors “Rocky Mountain Spring Water” marketing. AB targeted the college accounts around Wichita State, all of which were exclusively Coors accounts. Their plan? Price half bbls. $2.00 less than Coors. Since we had just introduced Coors Light, it was decided to match the Busch price with Coors Light.
Busch never got off the ground, but since all the accounts were exclusively Coors, the bar owners all put in Coors Light! It was not long before Coors Light took off like a rocket. The rest is history.
What should be to no one’s surprise, AB is now heavily discounting their craft beers and some import beers in what we all know to be, an attempt to buy back market share. This started at AB-owned distributorships which makes sense. Will an independent AB wholesaler with a large multi-craft portfolio drop their AB craft prices to steal taps from their own in-house craft brands? It is safe to say, probably not, but remember, AB is the largest wholesaler in the US with branches from coast to coast.
The question now becomes, just how long will AB continue this discounting? Will crafts follow or will the consumer/retailer switch brands based on pricing? Or, if this discounting has little effect on ABs success in gaining tap handles, will we see even deeper discounting?
The deep pockets that AB has will force many crafts into decisions they are not prepared to make and the results could be dramatic in the industry. We might just find out if Eisenhower’s statement is true: “There is not victory at bargain basement prices.”
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