Friday, March 9, 2007

Price points and common cents (sense)...

Don't get nervous, this isn't an SAT question: If a 30 pack of Budweiser, Coors Light, or Miller Lite costs around $20 and a 24 bottle case of Ipswich Ale or for you non-locals (any good microbrew) costs about $22, then what the hell are the jackasses that buy those 30 packs thinking. That's 67 cents for a Bud in a can and 92 cents for an excellent hand crafted beer in a bottle. For starters, I think all beer drinkers can agree, the bottle is always better, unless you still crush cans on your head and in that case I am thinking you probably can't read this.

Let me phrase it another way. If a 10 oz serving of ground frozen hamburger was $5 and a juicy t-bone steak was $7 which one would you choose. Ok, so if you are reading this blog, I am probably preaching to the choir. So why is it that Budweiser and Bud Light are the two best selling beers in America and Miller Lite and Coors Light are 3rd and 4th. The stuff really isn't a value and it certainly doesn't taste very good. It is it the advertising or is it some kind of macho peer pressure--are you supposed to drink Bud because it is an All-American working man's beer or will Coors Light keep you looking like the bikini clad women in the commercials. Perhaps it is a combo of both the marketing and the fact that old habits are hard to break. Do your part, help someone break that habit and teach them a little bit of common cents.


Al said...

The answer is simple: Marketing.

A-B, Coors, and Miller,, have spent decades convincing people that their beer is what beer is.

It's like Ouroboros (the snake eating its own tail). People are convinced that this is what beer is supposed to taste like, so that's what they expect, so that's what they buy, so that's what these guys make, make a lot of money at, and pout the money back into marketing to convince people that that's what it's supposed to taste like.

The tide might be turning, though, considering the double-digit growth of craft beers last year vs. the flat growth of the mainstream megabrews.

bostonbeerman said...

I agree with you Alan people do think that the swill that the macros throw down their throats is what "real" beer is supposed to taste like. They think everything else is some kind of aberration or as many of my family membes say "Jimmy drinks fancy beer."

I like the analogy of Ouroboros--that endless cycle of the beer giants marketing their crap and making millions and then having more money to market even more and get more people to drink their koolaid and making even more money. The good news is that micros are starting to put a bit of a scare into to the big boys. A-B's investment in Redhook, their move to acquire Rolling Rock and other "premium" brands, as well as their discussions with InBev to possible merge, and their agreement to distribute Budweiser Budvar (I refuse to call it Czechvar) in the US are all signs that they see a train coming and it is not the Coors Silver Bullet.

Just think of it, if microbreweries eat up just 1-2% of A-B's market share per year, those are huge losses for A-B, whose 102 million barrels per year leads the industry by a long shot. Just think what consistent double digit growth in the micro market will do to the industry.

Sam Adams (Boston Beer Company) produced about 1.2 million barrels in 1996 and this helped get the train rolling. How did they do (full disclosure, their relationship with Miller Brewing Company has certainly helped them with distribution channels - although this relationship will end in 2008).

Let's hope the snake chokes and dies and breaks the cycle!

Jonathan said...

At the root of all of that, though, is marketing. They have the dollars to put behind big media and big ad campaigns in order for them to gain a venue from which to tell us what beer is. Marketing isn't inherently bad, but it IS bad if the product behind the marketing is inherently bad.

And even though the craft beer industry is growing, there is a large segment of the population out there who buys beer on price (or only considers a select few beers based on price). If getting drunk is the chief aim (though it shouldn't be), then you can't really blame them, can you?

bostonbeerman said...

I am not sure that a large segment of the population buys beer on price, I think they buy it on marketing. For example, if it were price, then everyone would be drinking 30 packs of Genesee (which is much better than Bud by the way for half the price). Besides, my point is that it only costs a little bit more than Bud, Coors or Miller Lite to buy something better.

And if getting drunk where the chief aim, going along with price, then malt liquor or ice beers would be selling much better than they are right now. Plus, a good six pack of 7.5% abv beer costs around the same as a 12-pack of macro brew and so people can reach the same level of stupidity and actually taste real beer.

I do blame people for being suckers to marketing, just because we are bombarded does not mean we have to bark like Pavlovian dogs. I see tons of American Idol commercials and I don't watch the show, I have been hammered with tobacco ads all my life and I have never smoked a cigarette. People are smarter than least they should be.

Anonymous said...

Marketing...probably NOT. A small part of it is that the price-points you use are too close. 30 pack of Keystone light= $18($.60 each plus $.05 tax) and case of Sam Adams whatever= $28 ($1.17 each plus $.08 tax or about 2X the price). The bigger part is that Most American do NOT like strong flavors--ever taste Wonderbread?
Check out M. Ogle's "Ambitious Brew." Get over it. Good Beer drinkers are in a minority.

bostonbeerman said...

I won't argue about the price points, I am guessing that things are priced differently throughout the country. However, if price was that important people would drink more Genny and other smaller macros. People drink Bud, Miller, and Coors because they are ubiquitous, you see them everywhere. It is marketing and product channeling. Go into any ballpark and what do you see, watch any game on TV and what do you see, these brewers spend a huge amount of money on very creative and effective ads. I don't blame them for doing it, it is good business for them.

However, I will "never get over it." In my eyes, the more market share micros can take from the big boys, the more choices I will have in the packies and the local bars. My goal is introduce "better quality" beer to as many people as I can, that is why I teach my beer appreciation courses. Good beer drinkers are in the minority, but as Alan points out, this minority is getting larger and larger. The bigger we get the more voice we will have and the more muscle we can flex on the beer market.

You borrow a good analogy from Ogle, macro brew is very much like the Wonderbread of the beer world. I grew up eating it every day and now I eat dark, crusty multi-grain. I want my beer to have those same qualities.

Thanks for the book reference, I am interested in getting Maureen Ogle's take on the industry. According to her I am perpetuating some historical myths, I want to check out her evidence.