The Future is Craft

MillerCoors, seeing the writing on the wall:

Big beer brands have been losing the affinity of core drinkers over the last two years, according to YouGov's BrandIndex, a research firm that tracks brand buzz, loyalty and quality perceptions based on consumer surveys. MillerCoors' Miller Lite and Coors Light and Anheuser-Busch's Bud Light have had negative ratings for most of that period.

Craft beer has posted double-digit sales gains for three of the last five years and is likely to do so again in 2011. Craft brews account for about 5% of consumption, a figure that could rise to 10% in five or six years if industry sales were to remain flat, according to Beer Marketer's Insights.

MillerCoors isn't betting on the Silver Bullet. The article describes a strategy that foresees "craft" beer as an increasingly large part of the portfolio:

"[There] will not always be thousands and thousands of tiny brands," Long said, referring to the 1,700 brewers in the U.S. today. "Big brands will emerge, and they already have: Sam Adams and Fat Tire and others. Certainly Blue Moon fits into that category."

MillerCoors' goal "is to make sure that some of those emerging winners are ours," Long said. To do that, he said, the company will have to be successful in gateway beers that introduce consumers to the craft segment, as well as to other brews for "eclectic palates."

My post yesterday about Goose Island provoked a huge amount of skepticism--not surprisingly. Big breweries have a terrible record of playing it straight with good beer. Some commenters were absolutely certain that A-B will force Goose Island to "cut corners" and water down their product. In fact, the opposite is true. Over the past three decades, the big breweries have watched their share of the beer market slowly erode. It's gotten particularly bad in the last five years.

That trend will continue for the decades to come. It's impossible to say whether bad beer will find a stable floor of support, but even if it does, it will be substantially lower than it is now. To fill in the gaps, they need good beer. The reason A-B bought Goose Island was not for the brand--it was for the beer. Goose Island has what Bud lacks: the reputation as one of America's boldest, most sophisticated breweries. The good beer are (sorry!) the golden eggs. Why would you spend $40 million on a brewery only to turn it into a tiny plant making the same kind of beers you already make?

The future's craft, and the macros know it.