Tipping sales, not scales

16.05.2008 04:01 Home - Source: JS Online

A new, very light version of Miller Genuine Draft, featuring just 64 calories in a 12-ounce serving, could provide some heavy lifting for the faltering brand.

Miller Brewing has advertised MGD 64 in test markets as a guilt-free beer, with the tag line, "As Light As It Gets." It has the fewest calories of any beer sold in the United States, the company says.

By comparison, Genuine Draft has 143 calories, and Genuine Draft Light has 110 calories.

MGD 64 has performed better than expected in recent test marketing, and it could end up as a national brand sooner rather than later, Miller Brewing President Tom Long said Thursday.

"We will seek to roll it out just as fast as we can," Long said during a teleconference discussing financial results posted by London-based SABMiller PLC, Miller Brewing's corporate parent.

Along with fewer calories, MGD 64 also has less of a kick. Its alcohol by volume is 3%, compared with 4.7% for both Genuine Draft and Genuine Draft Light.

The company has promoted the brand with tastings at spas and health clubs to emphasize its low calories and carbs. Some of the marketing focus has been on women, a group of consumers often ignored by beer marketers.

Miller began test marketing MGD 64 last summer in Madison. In March, it expanded the test marketing to other Midwest states, as well as Arizona, San Diego and Sacramento.

"We've really been surprised by the health and growth of MGD 64," Long said.

Long said MGD 64 also has helped spur interest in Genuine Draft, which has seen slumping sales for several years. Bringing MGD 64 to areas where Genuine Draft has only a scant presence would effectively amount to a launch of the Genuine Draft franchise for those markets, he said.

Low-calorie beers proving popular

Bud Light, Miller Lite and other low-calorie beers remain the most popular U.S. brands, while most full-calorie mainstream beers, such as Genuine Draft and Budweiser, have seen long-term declines.

"We want to go where the consumers go," Long said.

But it would be overstating MGD 64's potential to suggest that it might play a big role in reviving the Genuine Draft franchise, said Benj Steinman, publisher of Beer Marketer's Insights.

MGD 64, as its distribution expands, will replace Genuine Draft Light, which Steinman called a relatively minor brand. Genuine Draft Light has annual sales of around 300,000 barrels, or 0.7% of Miller's 2007 sales volume of 40.15 million barrels.

Also, because Genuine Draft has little presence in some markets, MGD 64 "has to start almost from scratch," Steinman said.

Genuine Draft sells around 3 million barrels a year, less than half its peak volume from the early 1990s, Steinman said. The brand's sales volume dropped 10.6% during the year that ended March 31.

Less fattening than a margarita

Genuine Draft has been "hard to turn around," Long said. Miller is testing some marketing approaches that would focus on the brand's core consumers, he said. A similar approach has helped revive Miller High Life, a 105-year-old, full-calorie mainstream brand that has TV spots promoting it as an unpretentious, reasonably priced beer.

Meanwhile, MGD 64 appears to be attracting consumers who have largely avoided beer in favor of other beverages, Long said.

The brand is aimed mainly at health-conscious drinkers, including women, said company spokesman Julian Green. In marketing the brew, Miller has compared its calorie count to other alcoholic drinks, including a 6-ounce glass of red wine, with 128 calories, and a 6.5-ounce margarita, with 246 calories.

Other light beers aimed at the health club crowd include Michelob Ultra, with 95 calories. Anheuser-Busch Cos. initially saw strong sales for Michelob Ultra, which was launched in 2002, but its growth later slowed down.

Overall Miller revenue increases

Miller Brewing Co. earned $477 million before interest, taxes and amortization for the fiscal year that ended March 31, a 27.2% increase from $375 million in the year-earlier period, according to financial results posted Thursday by London-based SABMiller Plc, Miller Brewing's corporate parent.

Miller Brewing revenue was $5.12 billion, a 4.7% increase from $4.89 billion. This year's results included a $33 million payment to Miller from a can supplier to settle a dispute.

Miller's sales volume increased 3.1%, with Miller Lite, the largest brand, reporting a 1.1% sales increase. Miller Genuine Draft's sales dropped 10.6%, and Miller High Life saw its sales increase 1.1% with a new ad campaign.

Sales of the company's higher-priced brands, including the new Chill; the caffeinated malt beverage Sparks; imports, including Peroni Nastro Azzurro; and the Leinenkugel's brands, increased 49%. But Milwaukee's Best saw a sales decline.

Not counting new brands, such as Chill, Miller's sales grew 0.7% during the period.

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