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The departure of Miller Brewing President and CEO John Bowlin on Jan. 14 likely signals a broader housecleaning at SABMiller, as the South African-owned company moves to install a "performance management culture" at its $3.6 billion acquisition. Bowlin, a veteran of Philip Morris, Miller's former owner, will be succeeded as president by Norman Adami, chairman and managing director of SABMiller's South African Breweries.
In making the shift, Adami, 48, will be moving from running a brewer with a 98% share of its home market to one that has seen its U.S. share decline in recent years. Today, Miller holds about 19% of the U.S. beer market, vs. 21% in 1999, when Bowlin assumed the top job. It runs a distant second to No. 1 Anheuser-Busch, which has about half of the beer market, but is ahead of No. 3 Coors, with 10%. According to newsletter Beer Marketer's Insights, Miller sold 4 million fewer barrels in 2002 than in 1999. Last week, it announced the closing of a brewery in Tumwater, Wash., to eliminate excess capacity.
SABMiller (SBMRY
) CEO Graham Mackay praised Bowlin for his help in integrating the two operations over the past six months but said it was difficult for a sitting executive to implement the sweeping cultural change SABMiller is seeking. Several of Miller's independent wholesalers said the change was overdue, given a four-year track record that saw Bowlin and his team of Philip Morris veterans -- none with beer-industry experience -- unable to put Miller's core brands on a growth path again.
BELLES, WHISTLES -- AND JEERS. Not that they didn't try. One of the latest efforts to appeal to young adult males, the core beer market, was a TV ad showing two attractive women ripping each other's clothes off as they argue whether Miller Lite "tastes great" or is "less filling." The ad, which ends with the women mud-wrestling, succeeded in generating a lot of talk value but only at the expense of arousing widespread criticism.
Benj Steinman, publisher of Beer Marketer's Insights, gives Bowlin credit for strengthening pricing, reducing inventories, increasing marketing spending, and improving relations with distributors. "Unfortunately," Steinman adds, Bowlin "never got the core equities going in the right direction." The exec also had a tendency to overpromise, Steinman says, with assurances of "world-class marketing," a big bet on the "malternative" beverages, and pronouncements of coming growth that he wasn't able to deliver on.
Brewing executives close to SABMiller say they expect Bowlin's departure, set for Feb. 1, to be followed by an exodus of marketing and sales executives who served under him. "Adami is a professional beer man who's used to working with 40 people, rather than 40,000," said one major wholesaler, with some hyperbole. Outside consultant McKinsey has been poring over operations since shortly after the merger closed last fall. Bowlin couldn't immediately be reached for comment for this story.
SUDS AND DUDS. Miller's key advertising agencies could also be affected. Ogilvy & Mather in New York has managed advertising for the flagship Miller Lite brand, while Young & Rubicam has shared responsibility with O&M for Miller Genuine Draft. Wieden & Kennedy, which handles the Miller High Life account, is considered by ad-industry observers to be most secure. Its advertising has won higher marks from wholesalers and helped revitalize an old brand once considered staid.
Aside from a brief stint at Miller in the early 1990s, Bowlin was relatively new to the beer business when he assumed the CEO post in 1999. He replaced Jack MacDonough, who departed after a new-product spree that yielded initially popular brews like Red Dog and Icehouse. But the strategy was soon criticized for diverting attention from core brands Lite and Genuine Draft. MacDonough also presided over a failed attempt to create a new flagship brand, Miller Beer, that was supposed to aggressively take on Anheuser-Busch (see BW Online, 1/15/03, "Beer Beats Bullets").
Even critics give Bowlin credit for greatly improving Miller's relations with distributors and for avoiding ruinous beer-pricing wars with Anheuser. But some fault Bowlin's team for resurrecting MacDonough's strategy of promoting a flock of flavored alcoholic beverages like Skyy Blue, Sauza Diablo, and Stolichnaya Citrona -- and for doing so at a time when Miller needed to focus on bolstering core brands. The new brands generally have not fared well, with Diablo and Citrona already discontinued.
By Gerry Khermouch in New York Edited by Douglas Harbrecht
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