Blog: Chris Brook-CarterSharing throat

Chris Brook-Carter | 30 March 2005

Last week, just-drinks was asked by one of its clients to put together some research on ‘share of throat’ – the idea that beverages don’t just compete within the confines of their own category boundaries, but across the whole drinks industry.

As choice on the supermarket shelf expands and the consumer becomes ever more sophisticated, it is a premise that is becoming increasingly important to grasp when it comes to understanding the end consumer. Every time a consumer reaches to purchase a drink these days he or she is making a choice that spans from water to wine and Bourbon to beer.

It is no coincidence that this view of the market place has been understood by the industry’s most successful companies over the last few years. It needn’t mean the company has to offer a broad range of beverages, although Constellation Brands has taken this route successfully. In fact I always thought the idea was well summed up in Interbrew UK’s slogan “Making Beer Great”.

Perhaps the US beer industry would do well to adopt a similar mantra, because while its two leading protagonists – SABMiller and Anheuser-Busch - fight it out in court over each other’s advertising, beer is continuing to lose favour with US drinkers to other drinks.

On Thursday, The Beer Institute reported that estimated February domestic beer shipments decreased 2.2% to 13.25m barrels.

“We consider the news unsurprising given recent news by SABMiller and general trade commentary indicating a weak start to the year,” said Mark Swartzburg of equity analyst Legg Mason. “The news is also consistent with market-leader Anheuser-Busch starting the year with excess trade inventories.”

The figures follow a survey of US drinkers by Morgan Stanley that concluded that wine and spirits will continue their raids on beer’s market share. William Pecoriello, an analyst with Morgan Stanley, said: “Beer (is) likely to continue to lose share to wine and spirits due to health and demographic trends.

“Spirits have built strong image and share among 21- to 27-year-olds, which bodes well for future growth,” he added. “Wine is the main beneficiary of health and aging trends (as) wine consumption actually increases for people on a diet.”

Beer has been losing market share in the US for years now, but there are signs that the industry is starting to act on warning signs - although clearly not radically enough to present a united front to the drinking public. Innovations like Brutal Fruit by SABMiller and Budweiser Select by A-B are sure to be only the start of things to come as the beer giants attempt to claw back market share amongst 20-something drinkers.


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