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The key to success in the industry is savvy marketing. Though beer drinkers like to boast of the distinctive flavor of their chosen brands, the truth is, as Donald Rice, an analyst with the investment firm of Blunt Ellis & Loewi points out, the products really do not differ from one another all that much in taste or ingredients. Most breweries focus mainly on the same group of customers, that 20% of American beer drinkers who consume eight out of every ten cans sold. These prime customers are both white-and blue-collar workingmen between the ages of 21 and 40, many of whom drink several cans a day, the prototypical Joe Six-Pack.
For nearly every brewer, the best way to reach these customers is through sporting events. In that contest, Anheuser-Busch appears to be the biggest spender. On radio, the company sponsors 20 of the 26 major league baseball teams, 14 of the 28 pro-football teams, 18 of the 23 basketball teams and twelve of 21 hockey teams. After all those outlays, there is still money for promoting racquetball, running, touch football, fishing, drag racing, softball, horse racing, soccer, rodeos and bowling. Busch also spends millions on the teams themselves. It owns the St. Louis Cardinals baseball team, paid $10 million to become the official beer of the 1984 Olympics and supports the U.S. Davis Cup team.
Busch's advertising clout has paid off. The company has been the No. 1 brewery for 25 years. Over the past decade, sales have soared 124%, from 24.3 million bbl. of beer in 1971 to 54.5 million bbl. last year. The firm's Budweiser brand is the largest-selling premium-priced beer in the U.S., with a typical retail price of $2.40 a sixpack, while Michelob, the company's "superpremium" offering, at about $2.90 a sixpack, leads that market segment as well.
If Anheuser-Busch has traditionally dominated the industry through its sheer size and muscle, Miller Brewing Co. has emerged as a hard-charging No. 2. Its tactics: canny marketing and nimble product development. Miller owner Philip Morris used rough-and-ready cowboy imagery during the 1950s and 1960s to propel its Marlboro brand to the lead in U.S. cigarette sales. Since it took over Miller in 1970, Philip Morris has used the same image-conscious advertising to promote beer. The master marketeers down-played the old Miller High Life slogan, "the champagne of bottled beers," and created a new image through "Miller time" television commercials. These typically feature young men who exercise mightily at such activities as felling trees or building highways and then cool off from their manly labors with golden lager. Says Jeffrey Weingarten, a vice president of Wall Street's Goldman, Sachs & Co. investment banking firm: "Miller actually started the process of selling beer on the basis of image rather than price. People now drink a particular beer not because of what it costs but because of what the brand says about them."