It’s no secret 2018 has been unkind to the beer business, and MillerCoors has not been spared. The company is looking to turn the page on what turned out to be a more challenging than expected year.
“We’re not happy that we didn’t hit our targets,” MillerCoors Chief Communications Officer Pete Marino told Behind The Beer. “But I think we have a much better understanding of what kind of action is required. You’re going to see a quicker sense of accountability in the organization, including making sure we have the right people in key jobs.”
Marino, who also leads the company’s craft and import division, Tenth and Blake, laid out the MillerCoors blueprint to get on a path back to growth today at the Beer Insights seminar in New York.
He reaffirmed the brewer’s commitment to fixing Coors Light and growing share in American light lagers; to put more focus and resources behind fortifying the company’s portfolio and growing sales in the above-premium segment; and hold market share with its economy portfolio.
Here are some other highlights from his time on stage and in an interview with Behind The Beer:
On what happened in 2018
Three factors held back MillerCoors from reaching its volume goals for the year. The company assumed the industry would grow as it traditionally has, instead of slowing. Second, it suffered from self-inflicted logistical issues, specifically related to the implementation of a new ordering system for its Golden, Colo., brewery. Third, and most important: “The bright spots in the MillerCoors portfolio were not big or numerous enough to overcome our portfolio struggles,” Marino said.
On whether the company can get to growth
“Yes. First of all, we have a lot to gain by simply eliminating self-inflicted setbacks like we had in Golden last year. Our formula for growth is pretty simple,” he said. The three-pronged strategy: Accelerate growth in the above-premium segment, continue to grow share of segment with premium lights — which means stabilizing Coors Light and capitalizing on momentum for Miller Lite — and continue to hold share in economy.
On the future of core American light lagers
Despite chatter that American light lagers are passé, consumers still crave light lagers — to the tune of 50 million barrels every year. But what they are looking for in their brands has changed significantly since the 1980s and 1990s.
While the segment overall is declining, “I don’t think light lagers are the problem. Brands that don’t stand for something unique are a problem,” he said. The challenge and the opportunity then is for marketers to ensure brands are interesting and relevant for drinkers.
He pointed to Miller Lite. “We’ve learned a lot from the progress we’ve made with Miller Lite, which has focused on restoring consumer respect based on the superiority of the beer. As a result, the brand has stabilized, consistently taking share of segment for several years now,” Marino said. With Miller Lite, “we’re taking the next step by challenging Michelob Ultra. While we still view Bud Light as our biggest source of volume, we view Ultra as our biggest competitor because it is growing and resonating with consumers.”
Coors Light is trying to make a similar shift by focusing on what makes it unique,” he said. Over the last two years, “we think it’s been focused too much on the Rocky Mountain lifestyle at the expense of what makes Coors Light unique as the world’s most refreshing beer.”
Why Tenth and Blake is outpacing the craft segment
Former Tenth and Blake president Scott Whitley “bought four unbelievable companies,” Marino said. “They are all great companies, with great beer and great people. What I’m particularly proud of is that most of the people who started those companies are still there today. We do not govern by mandate. We have helped teach them a few things, and they’ve certainly taught us a lot. Overall, we have great relationships.”
What MillerCoors has learned from its craft partners
“Speed. How to more quickly come up with an interesting proposition and get it to market. And nobody does that better than craft brewers,” Marino said.
On the importance of speed to market
While in the past it has taken MillerCoors up to 24 months to get a new product to market, its forthcoming flavored alcohol beverage, Cape Line, will get there in about eight months. “That’s moving fast for us, but we can go faster,” Marino said. “We’re aware we need to move with more speed.”
On the future of craft
“I think craft has a lot of runway. It has created a lot of interesting brands, expanded the taste profile of beer drinkers and brought a lot of people back into beer,” Marino said. “The ability to touch and feel the local brewers is generally very appealing.”
Still, he said, “we are at another inflection point for craft.” Marino argues there are too many breweries today and expects to see a reversion to the mean that will accelerate in coming months. “Over the past two years, incremental items at retail have flattened, led by craft. There’s only so much room on tap lines and shelves, and brewers that planned for rapid growth through distribution will likely feel some pain.”
The pullback isn’t likely to be as damaging as the shakeout of the 1990s, and the segment will probably continue to grow, just more slowly than during the boom.
On the above-premium brands MillerCoors plans to invest behind in 2019
◙ Arnold Palmer Spiked “has a ton of potential. The brand blew past our year one expectations and we think it has tremendous upside in 2019.”
◙ Blue Moon will get more investment in 2019.
◙ Cape Line “plays right into the sweet spot of an FMB for those seeking a more-active lifestyle.”
◙ Henry’s Hard Sparkling Water, which will get new packaging and a new variety pack next year, “is a hidden gem because it has a clear product point of difference with zero sugar and only 88 calories. We have not fully capitalized on it yet.”
◙ Sol “was always a great beer that needed some refreshed graphics and some TLC.” And in 2019 it’s coming out with Sol Chelada, which is inspired by the top-selling chelada in Mexico.
◙ Peroni will have “new packaging, new glassware, new advertising and a bold ambition next year. We’re taking it national … and distributors agree there is a lot of room to run with Peroni.”
◙ Saint Archer Gold, a craft light lager set to launch in four test markets next year, enters as the first craft competitor to Michelob Ultra and Corona Premier.
Martin Maloney contributed to this report.