Beer Industry

Jordan Dowiak, Dani Freedman, Sarah Knee, Marshall Peters

Agenda● History● Industry Analysis● Advertising Strategies● Raw Data Analysis● Final Recommendations

“A fine beer may be judged with only one sip, but it’s better to be thoroughly sure” - Czech Proverb

Why the Beer Industry?● Popular drink amongst college students

○ Incentive to understand the industry

● Niche markets being introduced○ Craft Beers

● Highly competitive● Unique advertising strategies

○ Advertising spending up 400% over last four decades

Brief History● Unclear of exactly who discovered beer or how the process

was discovered● 3900 years ago in Mesopotamia

○ “Gift from God”

● Egyptians, Greeks, and Romans followed● Beer was an extremely common beverage

○ Safer than water

● Catholic Church got involved and was instrumental○ Monks were master brewers

● 1800s brought advancement - 3200 breweries in US by 1880

Prohibition● 18th Amendment brought

into effect prohibition in 1920

● Ended in 1933● By 1935 there were only

about 160 breweries in operation in the US○ Over 3,000 operating

a mere 5 decades before

Brief History (cont.)● WW2 lead to the brewing of “lighter” beers● Women found it more appealing ● After WW2 ended, both heavy and light beers stayed

popular● Breweries were quick to exploit this new market● New “craft beer” market

○ 12.3% volume of total beer market

● Today’s beer drinkers are spoiled with options

Supply Chain

Who are the Major Players?

Market Share

Perceptual Map

Low Quality

High Quality

Affordable

Expensive

Competition● HHI = 2050

● CR4 = 75%

● Top companies take up most of the market share

● Barriers to entry high

US MarketAB/InBev Brands

● Budweiser● Bud Light● Becks● Stella Artois

MillerCoors Brands● Miller ● Coors● Keystone● Blue Moon

Constellation Brands

● Corona● Modelo

Heineken USA● Heineken ● Dos Equis● Tecate

US Market● Bud Light is the most popular

beer in the US

● Light beer is significantly more popular in the US than other parts of the world

● According to beer connoisseurs, the US has a “bad” taste in beer

Advertising Restrictions● Highly regulated● 70% of audience must be of legal drinking age (USA)

○ Based on reliable audience data

● Ad content should not attempt to appeal to people under 21

● Beer cannot actually be consumed in advertisement● Not allowed whatsoever in some countries

Advertising Restrictions● Shall not create impression beer leads to social or

sexual success● Shall not claim that beer has any therapeutic qualities● Shall not encourage excessive drinking ● Cannot place emphasis on higher alcohol content

Advertising Strategies

Target Market● Men ages 21-49 drink the

most○ 55% of men say beer is

their alcohol of choice

○ 52% of women prefer wine○ White men drink the most

● Sports fans

Craft Beer Target Market● Older market (35-49 year

olds)● White male● Organic foods● Higher education levels● Passionate about beer

taste○ Drink in moderation

Persuasive Advertising

Product Placement● Becoming

increasingly popular

● People can be seen drinking in movies/TV

● Reach a large audience

Fast and Furious

Celebrity Advertisements & Humor Appeals2016 “Bud Light Party”

Comparative Advertising● MillerCoors and

Anheuser-Busch○ Fierce

competitors● Miller Lite vs. Bud

Light

Miller Lite vs. Bud Light2008 2016

“Why not raise the right one, miller lite has more taste and half carbs”

Informative Advertising

● Calorie Content ○ Light Beer○ Healthy○ Active

Sponsorships

Activation Campaigns - BudweiserMusic - Anheuser busch has 29% of Music Sponsorships

2016 Advertising Spending AD to Sales:

Ab/InBev: 3.57%SAbMIller:5.39%Heineken: 10.14%

INdustry Wide: 3.7%

Data Analysis

OVerview1. Analysis of Total Advertising Data in 2008-09 and

Prime-time Advertising Data in 2014○ Industry Trends

2. Investigation of Two Major Players○ Anheuser-Busch○ SABmiller

Type of Program Distribution

● Majority of advertising is focused on sports, especially professional football

TIME OF DAY Distribution

● Advertising is focused primarily on prime-time, late fringe, and overnight time periods

Day of Week distribution

● Advertising is focused primarily on weekends during sporting events

Monthly Distribution

● Majority of ads are during college and pro football seasons● June ads are during NBA Finals

Total Ad Expenditure per Parent companyTwo Major Players

1. Anheuser-Buscha. Budweiserb. Bud Light

2. SABMillera. Coors Lightb. Miller Fortune

Top Advertisers by Dollars Spent

Spending by Brand and beer quality

● Anheuser-Busch and SABMiller both spend more on lighter quality beers relative to heavier quality

Miller Fortune: Beer for Spirited Nights

● Persuasive, emotional appeal of being cool, fashionable

● Stylish Celebrity: Mark Strong● Dialogue in night time setting● Aim: Miller Fortune is the

fashionable beer to drink while out at night

Top Creatives Aired: Heavier Quality BeersBudweiser: Hero’s Welcome

● Persuasive, emotional appeal● Very little dialogue● Heart-warming music in background● Aim: Budweiser is the ultimate

American beer for the hard-working middle class American

Coors Light: Cold Refreshment Calls

● Persuasive and Informative advertising● “When cool refreshment calls” slogan● Exaggerated cool refreshment, straight

from an avalanche● Celebrity appearance: Jason Aldean● Aim: When you’re thirsty and want a

beer, drink cold Coors Light

Top Creatives Aired: Lighter Quality BeersBud Light: Alex Loves Buccaneers

● Humor and fan engagement● Persuasive Advertising● “Up for whatever” slogan● Explosion of cannons, laughing, fun● Aim: Bud Light is the beer to drink

on game day

Recommendations: Competition with Craft Beer How can bigger brands be more competitive with craft beer?

- Use informative & persuasive- Appeal to qualities of the target market most (i.e.

taste)- Celebrity may not work as well

RecommendationsHow can advertisers better reach college-aged adults who are watching less TV?

Recommendations: Increased Social Media● Advertisers should increase social

media engagement○ More ads on Facebook, Instagram, Twitter

● Should focus on lighter beers in social media engagement to tailor to college-aged demographic

○ Cost: want inexpensive beer○ Taste: want relatively good-tasting for

price○ Appeal: want to seem cool drinking it

Recommendations: Anheuser-Busch-Miller merger ● The two recently merged companies should take advantage

of their newly combined market share● Ads should be more informative than combative

Thank you FOr ListeningQuestions?