Sorry Bud . . . Wine is King.

Friday night dinner inner monologue: Hmm, MillerLite or House Pinot Grigio?  The MillerLite might make me feel full, but it would be delicious when paired with the forthcoming enchiladas.  The Pinot Grigio would be lighter, but I think I’d prefer savory over sweet.  Not to mention I like my Pinot Grigio’s very dry, and I’m guessing that the paper tablecloth is a fair indicator that my preferences won’t be met.  Nevertheless, I don’t want to be full. Sigh, quasi-dry Pinto Grigio it is.  The beer and wine categories couldn’t be farther apart, but it appears that in consumer’s minds they are substitutable products.  Hence the plight of the beer industry.  U.S. beer industry volumes have slipped for a third straight year as consumers shift to wine and liquor.

Bud why?  For me, the choice to drink wine over beer hinges primarily on weight management.  But is that what is driving most consumers away from the beer category?   Given that the beer category caters to a 70% male constituent, I think there is more to the story than weight management.  True, the beer industry’s heavy investment into health oriented advertising has given credence to the notion that consumers have become increasingly health conscious when it comes to consuming alcohol.  Or perhaps Americans have become increasingly obese and therefore more aware of their obesity, but I digress.  Perhaps the low carb trend really helped facilitate the move away from beer.  Beer marketers certainly capitalized on this notion in advertising lower carb brews, despite the irony that beers are not particularly carb heavy in the first place.  But regardless, it is clear that Americans made a big push toward lower calorie, lower carb drinks in the early 2000’s. http://www.beveragedynamics.com.  In fact, light brews account for approximately half of all category sales.  

While health consciousness cannot be discounted, my hypothesis is that the declining beer industry also stems from morphing social drinking patterns.  I think the MillerCoor’s CEO, Tom Long, hit the nail on the head with a recent comment in the Wall Street Journal.  “The [millennials] drink different products for different occasions. It used to be in our father's generation, a scotch drinker was a scotch drinker and a beer drinker was a beer drinker.”  http://online.wsj.com/article/BT-CO-20111218-704581.html.  Long indicates that the older generation of core beer drinkers has been replaced by the millennials who still enjoy beer but also delve into the wine and spirits categories.   In my paper, I want to flesh out what is driving consumers into drinking more non-beer beverages in order to satiate my own curiosity and better prepare me for my internship with MillerCoors this summer.  Needless to say, Tom and I will have some great elevator discussions about these insights this summer.

On a number of levels, the beer industry is fascinating to me.  My mother is off the boat Irish, and I spent a good portion of my childhood in Ireland.  Every single afternoon, no matter how busy my grandfather was with his law practice, he made time in his day to go to the local pub for [insert stereotype here] at least a pint of Guinness . . . no, he was not rosy cheeked and did not get into bar brawls . . . ok, he was a little rosy cheeked.  The pub culture is very pervasive in Ireland, and particularly in my grandfather’s small town of Tralee.  It was about the experience, end of the work day bonding.  As a young lass, I was fascinated by the pub culture.  And frankly, I’ve always loved the taste of beer.  My father was grilling out in our backyard one day when I was 7, and before he knew it, his Silver Bullet was gone.  He feign scorned me, but I could see the twinkle in his eye.

Gathering insights in the alcohol industry is particularly segment specific.  I think that we can all recognize that our parent’s drinking habits are much different than our own.  For my dad, going shopping for alcohol can only lead to two outcomes: Silver Bullets or Miller High Life.  In contrast, one day my cart might have MillerLite.  The next, Conundrum Table Wine.  The next, Tito’s.  These decisions would be dependent on what sort of dinner party I might be hosting or simply on what mood captured my fancy at the point of sale. My theory, which perhaps is consistent with Tom Long’s insight, is that the older generation’s alcoholic beverage choices were more simple than the millenial’s choices. 

Thus, in order to design a valuable customer alcoholic beverage experience, market researchers must understand the generational shift in alcohol purchasing decisions and the vast dichotomy in market segments, both from an age perspective and a multi-cultural perspective.  In the latter regard, one only need to go shopping in a different region to understand how region specific consumer alcohol preferences really are.  Having moved from South Carolina to Texas, I have seen this concept come to light as I have witnessed how different the grocery store beer aisle is.  On a sidebar, I’m intrigued that more places don’t sell Corona Light, as they do in the Carolina’s.

In order for beer marketers to design a valuable customer experience, they must be in touch with regional preferences, as well as with multi-cultural purchasing behavior distinctions.  They must really dive into the field.  In this regard, one of the key issues my paper will address is if and how regional/multicultural alcohol purchasing behavior has impacted the move away from the beer category.  In addition to the sources cited herein, I intend to inform my research with a variety of reputable beer blogs, including Beer Fathers, and CEO blogs (See, e.g., http://www.scionadvisors.com/blog/article/14/february-food-and-beverage-sector-insights-.php) to more scholarly publications, including Mintel data, The Beverage Industry magazine and Beverage World Magazine.  While my topic is something that merits a very complex analysis of generational purchasing behavior shifts and multicultural behaviors, I hope to at least get a pulse for the beer industries outlook going forward so that ultimately, I can be in a position to enhance the consumer beer experience.