Beer Executives Address Dwindling Market Share at NBWA Convention

Less than three months after MillerCoors CEO Gavin Hattersley implored beer executives to come together and fight back against the continued pressure from wine and spirits companies, two more beer CEOs have joined the conversation and are echoing his thoughts.

During this week’s National Beer Wholesalers Association convention in Las Vegas, Heineken USA CEO Ronald den Elzen and Anheuser-Busch CEO João Castro Neves made the case for an industry-wide offensive aimed at reclaiming market share that has been lost to wine and spirits brands — companies they believe have done a better job of branding, marketing and pricing their products for an evolving consumer demographic.

According to den Elzen, who addressed thousands of beer distributors during Monday morning’s general session, the beer industry has lost 35 million barrels — or 11 billion servings of beer — to wine and spirits over the last 20 years. He added that beer’s so-called “share of throat,” compared to wine and spirits, had dropped from 62 percent to “a mere 50 percent” during that same period.

“If this is not a wakeup call that we need to do something, I don’t know what is,” he said.

Castro Neves made similar comments during Tuesday’s general session and traced share losses back to the mid-1990s while citing three reasons for the decline:

  • demographic and societal changes as younger consumers are exposed to wine and spirits when they turn legal drinking age;
  • innovation by wine and spirits into flavors, experiences and better packaging;
  • the loss of traditional beer occasions, such as sporting events.

According to den Elzen, approximately 2.5 million Americans turn 21 each year, and he argued that the beer industry was not getting its “fair share” of drinking occasions.

“If this trend continues on the pace that it is today, by 2030 beer will no longer have the largest share in the alcohol category,” Castro Neves also warned.

Much of their comments centered around how brewers and wholesalers could work together to regain share, and Castro Neves challenged leaders from all three tiers to find solutions for growing beer’s slice of the alcoholic beverage pie, even if that means compromising “for the greater good.” To start the conversation, he put forth four ideas:

  • Elevate the beer experience and make beer more sophisticated and aspirational, through food pairings, glassware, and events;
  • Compete for more occasions and “do to wine and spirits what they did to us” by broadening “the appeal of beer;”
  • Capitalize on emerging trends such as consumer health consciousness. Taking a page from the Love Beer campaign, A-B’s Michelob Ultra brand has started an ad aimed at female consumers that highlights the beer has “55 percent fewer carbs than a glass of white wine.”
  • Reinforce quality and consistency of beer

“I stand here confident that we have the opportunity to turn it around,” he said.

Developing a creative solution for recapturing market share is something den Elzen and Heineken have experience with in Europe. During his presentation, den Elzen described how European brewers came together five years ago to produce the “Love Beer” advertising campaign in order to recapture share from wine and spirits. Love Beer set out to change the perception of beer as unhealthy compared to cocktails and red wine; to change the notion that it is an “unsophisticated” drink; and to win over female consumers.

Den Elzen said the ads, which showed female beer drinkers having fun while also featuring an educational component, had “great results.” He added that a similar work needs to be done in the U.S.

“We need to invest in the category,” he said. “We need to do that with the small brewers, the big brewers, the wholesalers, the retailers because we’re not going to crack this if we don’t do it together.”

His comments also followed a presentation by CM Profit Group partner Tom Fox and NBWA chief economist Lester Jones, who both noted that beer volumes failed to increase despite a growing economy. Jones argued that millennial consumers have yet to become brand loyal due to the number of product choices available.

“They’ve just arrived,” he said. “We need to find these guys and convince them that beer is the better beverage.”

Winning back share was also a theme of incoming NBWA chairman Jim Matesich’s speech, who addressed attendees on Tuesday and admitted that the industry needs a “recharge.”

“All beer needs a jolt to convince the consumer that it should be their beverage of choice,” he said. “We need to focus more of our competitive energy on rival products, including wine and liquor. Instead of working against each other, we should work with trading partners to improve the beer category.”

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