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US Beer Business Continues Decline

US Beer Business Continues Decline. Written by: James B. Anrndorfer, Adage.com Presented by: Adrianne Johnson. A Shift From Beer to Spirits. Beer sales down from 56% of alcoholic beverage market in 1999 to 53.2% in 2004 Spirits segment up from 28.2% to 31.3% of the market.

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US Beer Business Continues Decline

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  1. US Beer Business Continues Decline Written by: James B. Anrndorfer, Adage.com Presented by: Adrianne Johnson

  2. A Shift From Beer to Spirits • Beer sales down from 56% of alcoholic beverage market in 1999 to 53.2% in 2004 • Spirits segment up from 28.2% to 31.3% of the market

  3. Factors Driving Change • Blurred image for beer brands • Distiller moves • Consumer affection for luxury goods • Decrease in blue collar jobs

  4. Marketers Fighting Back • More bar promotions • Sweeter drinks – cocktails taking away beer business • Want to emphasize that beer is “America’s favorite beverage” • Brewer’s, however, cannot do much but adjust

  5. Generational Dynamics • Baby boomers’ parents  wine/spirits • Their kids  Beer • New trend  Other way around • Sprits most popular drink (40%) for 21-27 year olds • Stronger image with this group than beer; 44.4% of males drank beer in Fall 2004, down from 48.8% in Fall 1999 • Increase of 5% sales in the top 25 spirits brands in 2004

  6. Reversal of Expected Growth • Publicly traded brewers hurt by decline in sales • Beer volume expected to grow less (0.50%) than all alcoholic beverages (0.90%) annually for 2004 – 2009. • Spirits growth 2.0% • Wine growth 3.50% • Reversal of what beer industry is accustomed to • 1970s – sales grew 3 to 4% annually • Dominated through 1980s • Didn’t see the spirits surge coming

  7. Brand Differentiation Issues • Humorous ads done by everyone • No effort to differentiate each brand • Advertised like water and soft drinks • Only emulation of Anheuser-Busch ads • Spirits marketers enter radio/cable in early 1990s • Marketing up 12% from 2003 to 2004 • Beer only up 7%

  8. Societal Factors • “Sex and the City” • Make products more fun, mainstream • Many consumers in different markets traded up • Appeals to women

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