Don't Trust Initial Sales as Metric for Beer's Success

Fortune_1We don’t often report on stuff from the big mass market brewers. Our enthusiasm is for craft beer and we figure that if Bug Light comes out with another flavored beer-a-rita sugary mess of a product that you, dear reader, will be aware of it via a relentless advertising campaign. We prefer to focus on news that doesn’t have a marketing arm with a budget that rivals small countries. We prefer to focus on craft beer.

It is interesting if you do pay attention to press releases from the mass market breweries there is often a disjoint between initial positive press at the release of a new product and that products inevitable decline. This is odd given that neither of the two mass market giants has really had large success introducing new beers in response to the craft beer explosion.

Dan Fox over at plzdontletbuddie.com takes the example of Miller Fortune which was marketed as a better beer in the hopes of conflating Miller with craft. Dan notes that

Oddly, in spite of their shared fate as underwhelming sales producers, if not outright bombs, they all enjoyed the rosy glow of early press hailing in-market surprises of “unexpected volume,” “well above-plan results,” and “quick distribution builds.” In the end, however, the rosier the early press reports, the more likely they masked– perhaps intentionally– the beginning of the brand’s demise.

May 7, 2014 Milwaukee Journal Sentinel article

“(The MillerCoors CEO) credits the success of Miller Fortune to its marketing campaigns and getting the product to market quickly with the fastest distribution in MillerCoors’ history.” This strategy paid off as Miller Fortune gained 30 basis points share of total industry volume in March, according to Nielsen.”

The temptation to declare victory well before the key in-market battles are fought is apparently irresistible to the captains of beer. Indeed, this over-bubbly, way-too-early optimism is why we can confidently display the Miller Fortune bottle pointing in the direction we predict sales will soon head, if they aren’t already.

The key here are the metrics that Miller is boasting. This quote above from the Milwaukee Sentinel doesn’t say anything about long-term sales or anything about consumer feedback or rating of the new beer. Instead it is focusing on distribution which is a large part gets blended as Miller has access to national distribution networks where it contains a lot of clout. This isn’t like a local microbrewery releasing bottling hoping to work their way into regional (if not local) distributors based on salesmanship and/or reputation. This is MillerCoors the second biggest brewery in America telling their distributors they have a new product and better start selling it.

While this clout isn’t unique to the big two it is not a privilege that the vast majority of craft brewers get. Sam Adams certainly managed to get Angry Orchard into nearly every place Sam Adams was sold without a lot of hassle but certainly even big, popular craft breweries like Dogfish Head struggle to get their latest creation in every distributor, bar, or restaurant that carries their flagships.

Miller Fortune had all the backing of a major beer brewer with a national distribution channel and a national advertising campaign. News outlet after news outlet reported impressive numbers in the first month of its release touting it as a success. Yet only a few short months later those reports were shown to be the PR fluff that they were as the brand had firmly planted both feet in the grave.

Dan continues,

When it comes to reliable fortune-telling, there are better indications of where a new product is headed. Sometimes, what isn’t said is telling. For example, the MillerCoors CEO professed his pride in the brand’s marketing programs, but chose to omit mention of firing Miller Fortune’s ad agency. What does it say to spend months or years preparing advertising to launch a new brand, only to jettison the agency– and presumably, the ads and all the thinking behind them– when the brand is just a few months old?

Not that someone shouldn’t have paid for approving this work. Maybe the same guy who thought “un-distilled” somehow differentiated a beer.

While Dan goes on to (rightfully) lambast the man who dubbed himself an innovator and then released a beer that nobody wanted the point here isn’t that Miller attempted to shove another uninteresting beer down the throats of a growing percentage of the American population that is becoming more discerning when it comes to beer. The point is that the fate of a beer is not decided in the first few months. The popularity of a beer comes years later when demand is still high despite easy and repeated access to the beer.

Locally we get access to the Imperial Amber, Nugget Nectar from Tröeg’s during the tail end of winter. While this beer is a smashing success for the Hershey based brewery is the demand for this beer more than seasonal? If they were able to sell the beer year round as a flagship would sales of the beer decline? I don’t have access to the internal numbers so I can’t answer that question. The point is though that if Nugget Nectar flies off the shelves in the first four weeks it is released in our area (and trust me that it does) that doesn’t mean that six months later demand is going to be anywhere near as high.

The moral of the story is that while strong initial sales numbers aren’t to be totally ignored they are not a real indicator of the longterm success.

The only metric to trust is, “Do sales stay strong month after month after month?”