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ST. LOUIS - If you sometimes find yourself ordering a glass of wine or a mixed drink when you used to order a beer, you're not alone.
Wines and distilled spirits continue to gain a bigger share of the alcoholic beverage market, at the expense of the beer industry.
It's a trend that has been going on since the late 1990s and continued in 2004. Analysts who follow the alcoholic beverage industry don't see it stopping anytime soon.
"We believe there is an overall image crisis with beer," Smith Barney Citicorp analyst Bonnie Herzog said.
As baby boomers age, they are more willing to buy wine and spirits instead of beer. And the wine and spirit companies are successfully targeting younger drinkers with advertising and promotions.
"Our wholesaler contacts have told us through a survey we conducted recently that beer has lost its 'sexiness' and 'appeal to young consumers,'" Herzog said. "We continue to believe the road ahead is a long one for the beer industry."
Beer remains, by far, the most popular alcoholic beverage in the United States. But its share of the alcohol market has slipped.
Beer Marketer's Insights, a trade publication, estimates that beer accounted for 59.5 percent of the absolute alcohol content sold in its peak year, 1995. That had fallen to 56.7 percent in 2003.
The spirits industry began its big push in 1999, when it had 28.6 percent of the market. In 2003, its share had risen to 29.7 percent. Wine went from 12.6 percent to 13.6 percent.
The totals for 2004 aren't in, but it was "more of the same," said Benj Steinman, president of Beer Marketer's Insights.
The spirits industry spent almost $100 million on broadcast advertising in 2004, compared with "almost zero" in 1999, said Frank Coleman, a senior vice president at the Distilled Spirits Council of the U.S. in Washington.
August Busch IV, president of Anheuser-Busch Cos. brewing unit, has said that wine and spirits represent "a threat" to his company and the rest of the beer industry.
Miller Brewing Co. President Norman Adami said, "The single biggest threat facing the American beer business today is the possibility that we will allow the American consumer to get bored with beer."
So what are the brewers doing about it?
For one thing, they are spending more money on promotions, including what they call on-premise spending. That means mostly bars and restaurants, but also hotels, clubs, and concession stands.
On-premise sales, as opposed to store sales, account for only 25 percent of all beer volume in the United States, but 48 percent of all beer retail dollars, making it an important battleground.
Wine and spirits companies have promoted themselves aggressively in bars and restaurants, increasing their sales, Legg Mason analyst Mark Swartzberg said.
Anheuser-Busch, the brewer of Budweiser and Bud Light, has said it plans to spend an additional $30 million for on-premise promotions in fiscal 2005, a 150 percent increase.
Milwaukee-based Miller Brewing also has increased spending.
"Miller is spending about 40 percent more on advertising and promotion than 18 months ago," Swartzberg said.
And a little generational rebellion must be overcome, as well, Swartzberg said. Younger drinkers may choose wine and cocktails because their parents chose beer.
"Any given generation wants to be different than its parents," he said. "It's the natural ebb and flow."
http://story.news.yahoo.com/news?tm...e=41&u=/ap/20050111/ap_on_bi_ge/beer_vs__wine
Wines and distilled spirits continue to gain a bigger share of the alcoholic beverage market, at the expense of the beer industry.
It's a trend that has been going on since the late 1990s and continued in 2004. Analysts who follow the alcoholic beverage industry don't see it stopping anytime soon.
"We believe there is an overall image crisis with beer," Smith Barney Citicorp analyst Bonnie Herzog said.
As baby boomers age, they are more willing to buy wine and spirits instead of beer. And the wine and spirit companies are successfully targeting younger drinkers with advertising and promotions.
"Our wholesaler contacts have told us through a survey we conducted recently that beer has lost its 'sexiness' and 'appeal to young consumers,'" Herzog said. "We continue to believe the road ahead is a long one for the beer industry."
Beer remains, by far, the most popular alcoholic beverage in the United States. But its share of the alcohol market has slipped.
Beer Marketer's Insights, a trade publication, estimates that beer accounted for 59.5 percent of the absolute alcohol content sold in its peak year, 1995. That had fallen to 56.7 percent in 2003.
The spirits industry began its big push in 1999, when it had 28.6 percent of the market. In 2003, its share had risen to 29.7 percent. Wine went from 12.6 percent to 13.6 percent.
The totals for 2004 aren't in, but it was "more of the same," said Benj Steinman, president of Beer Marketer's Insights.
The spirits industry spent almost $100 million on broadcast advertising in 2004, compared with "almost zero" in 1999, said Frank Coleman, a senior vice president at the Distilled Spirits Council of the U.S. in Washington.
August Busch IV, president of Anheuser-Busch Cos. brewing unit, has said that wine and spirits represent "a threat" to his company and the rest of the beer industry.
Miller Brewing Co. President Norman Adami said, "The single biggest threat facing the American beer business today is the possibility that we will allow the American consumer to get bored with beer."
So what are the brewers doing about it?
For one thing, they are spending more money on promotions, including what they call on-premise spending. That means mostly bars and restaurants, but also hotels, clubs, and concession stands.
On-premise sales, as opposed to store sales, account for only 25 percent of all beer volume in the United States, but 48 percent of all beer retail dollars, making it an important battleground.
Wine and spirits companies have promoted themselves aggressively in bars and restaurants, increasing their sales, Legg Mason analyst Mark Swartzberg said.
Anheuser-Busch, the brewer of Budweiser and Bud Light, has said it plans to spend an additional $30 million for on-premise promotions in fiscal 2005, a 150 percent increase.
Milwaukee-based Miller Brewing also has increased spending.
"Miller is spending about 40 percent more on advertising and promotion than 18 months ago," Swartzberg said.
And a little generational rebellion must be overcome, as well, Swartzberg said. Younger drinkers may choose wine and cocktails because their parents chose beer.
"Any given generation wants to be different than its parents," he said. "It's the natural ebb and flow."
http://story.news.yahoo.com/news?tm...e=41&u=/ap/20050111/ap_on_bi_ge/beer_vs__wine
