Where's the BEER?

Ever notice how after the Budweiser frogs had their 15 minutes of Superbowl fame, beer commercials seemed to taper off (save for the occasional clydesdales playing football)? When one thinks of the main corporations sued during civil lawsuits that deal with alcohol 'problems' and violations, what comes to mind? Anheuser-Busch and the Miller Brewing Copmany is the correct answer. It is the beer industry that is always targeted for lawsuits, but could this have had regulatory effects on how much this industry could advertise? I don't personally know enough about the issues offhand to know whether there were ramifications from lawsuits that constituted more than monetary issues.

Alright, you're at a concert long before the gates open, presently tailgating in the parking lot. What do you picture 90% of everyone there drinking, if indeed they are consuming alcohol? Beer, that's right. The beer industry has a problem though, believe it or not, it's losing its market share in the U.S. In 1995 the beer industry constituted 59.5% of all alcohol sales in the U.S., while by 2003 that percentage had slowly slipped to 56.7%.

What could cause this possible slip in market share? It is that the government imposed advertising limitations on the industry, or perhaps the beer industry had crutched too much on past sales and past market shares and saved money on advertising solely by its own decision. Maybe demand has just tapered off with all of the 'diet crazy' of the 1990's, or beer might have just lost it's appeal, or could it be competition?

Depending on how widely you define the relevant market, spirits and wine could act as perfect susbtitute for beer. If this were the case, and beer prices were to increase, then consumers would exit the beer market, lowering demand and price, while entering the markets for spirits and wine, increasing demand and driving up price in both of the latter markets. In 1999 the spirits market grabbed a mere 28.6% of the U.S. alcohol market, but by 2003 it had edged its way up to 29.7% The percentages for both the beer and spirits industries may seem marginal, but it could be a hint into future trends.

Another issue perhaps we should consider is advertising. The spirits industry unloaded a cool $100 million out of its pocket to be spent on broadcast advertising alone in 2004. A huge chunk of this change is focused on the younger demographic as well, capturing the market of the 'new drinkers'. Also, by far the biggest consumers of beer are the Baby Boomers. But as the Boomers age, they tend to prefer the 'finer' things in life and switch from beer to wine or mixed drinks, something that's said to be more cultured. It could be this shift in preference that is driving down the demand for beer slowly over time. As noted in the Yahoo! article, it could also be a rebelling of Generation X to drink wine coolers, mixed drinks and other items in an attempt to stay away from the traditional beer consumption of their parents and other elders. Only time will tell if this trend will continue.

Can the beer industry gain back its lost ground? I believe so, but in order to accomplish the said task, it will have to start becoming active 'recruiters' versus passive producers. Anheuser-Busch has already started to allocate more for advertising in 2005 as has Miller Brewing, so let the games begin!