Insight - US: MillerCoors plans brand spend to lift beer sales
US beer sales remain weak
MillerCoors is planning to formally launch draft-beer kegs of Miller Lite and Coors Light in the US off-trade as it looks to boost beer sales in a depressed market by targeting home drinkers.
Draft-beer systems for the lager brands have been on trial in a handful of US cities for nearly six months. Leo Kiely, MillerCoors CEO, said today (9 February) that the systems will be fully launched in the spring.
The move is part of a series of brand investments planned by the brewer, which is a 50-50 joint venture between SABMiller and Molson Coors, in order to combat sluggish demand on the US beer market.
MillerCoors today reported a slip in sales for the three months to the end of December, the group's fiscal fourth quarter. Volume sales to wholesalers and retailers fell by nearly 2% for the year.
"Since the summer we've seen a retrenching," Kiely told analysts in the group's results conference call today. The on-premise, in particular, has seen "pretty radical declines", he said.
He blamed soft demand for beer on a weakened US economy. "There is a strong correlation between employment breaking the 9% threshold and declining beer sales," he said.
Unemployment in the US has been at around 10% for most of the last year, according to Government figures.
"I don't have a crystal ball, but in general, until the economy shows some money in the pocket of our key beer drinkers, we've got a challenge," said Kiely.
MillerCoors plans to spend to gain "traction" on brands that have shown promise in the last 12 months, he said.
Alongside the draft-beer systems, the group will relaunch the bottle for Miller Lite this spring. It is also planning variety packs for the Blue Moon brand, which was one of the firm's highest performers in 2009. There will also be activity - as yet unspecified - around MGD64 and lesser price brand Keystone Light.
"Nielsen data shows MillerCoors declining slightly slower than Anheuser-Busch InBev, with Budweiser and Bud Light as a major drag," analyst group Sanford C Bernstein said in a note on US beer sales in January.
MillerCoors said today that it continues to make strong progress on synergies of SABMiller and Molson Coors operations in the US. It is on-track to reach $750m in savings by the end of 2012.
Molson Coors has detailed its next dividend payment....
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