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MillerCoors Seeks Spirits Fans With Bourbon-Like Lager

January 27, 2014

MillerCoors Seeks Spirits Fans With Bourbon-Like Lager: Retail

The bottling area of the Coors brewery. Photographer: Joe Amon/The Denver Post via Getty Images

At MillerCoors LLC headquarters in Chicago, brewmaster Manny Manuele pulls a black bottle of the company’s newest beer from an icy bucket.

He pops the cap with a showy reverence honed by countless tastings during a 35-year career. This time, rather than tilt the brew into a tall pint glass, he pours the amber brew into a stubby rocks glass usually reserved for whiskey neat.

If MillerCoors has its way, bartenders across the U.S. will repeat Manuele’s ritual after it unveils the beer, Miller Fortune, over the next two months. The brew, with a more malty, complex flavor hinting at bourbon, will be distributed wider and faster than any MillerCoors’ introduction since the Molson Coors Brewing Co. (TAP:US) and SABMiller Plc (SAB) joint venture formed in 2008.

The rocks glass is intended to set Miller Fortune apart the same way the orange slice has made Blue Moon one of the company’s fastest-growing brews and its answer to the craft-beer juggernaut. Miller Fortune is the most overt expression yet of the $30 billion beer industry’s preoccupation with spirits makers that have relentlessly siphoned off young drinkers, taking 6 percentage points of market share from suds since 1999.

“We asked, ’How would Jack Daniels or Maker’s Mark do a beer and why?’” said David Kroll, who was brought to MillerCoors from Dyson in 2012 to shake things up as its head of innovation. “We tortured every aspect to say, ’Are we falling back on what beer would do?’ Because this brand is intended to play in a spirits occasion.”

One obvious way to compete with liquor is to boost the alcohol content, in Fortune’s case to 6.9 percent. That compares with 4 percent to 5 percent for most regular beers, while less than many crafts.

Cascade Hops

The other way is taste. Fortune is a golden lager brewed in part with Cascade hops to give it a citrusy bite and caramel malt to impart an amber hue. Bloomberg got an exclusive early tasting. Developed with guys aged 21 to 27 in mind, the flavor is moderately bitter with hints of sweetness, resting somewhere between a craft beer and a light lager. The flavors will emerge even more as the rocks glass warms in the hand, Manuele said.

“They are going to hold a beer glass in a way they haven’t held a beer glass before,” he said.

The innovation may not be enough. With younger generations preferring to tie one on with Bulleit Bourbon and Tito’s Handmade Vodka, the $21 billion spirits industry has reached 34 percent of the alcohol beverage market, according to the Distilled Spirits Council of the United States, its primary trade group.

Beer Bloat

Laura Berkobin, 26, prefers vodka and water, or Jameson Irish Whiskey neat during nights out with her boyfriend, Jesse Wellner, 36, who favors martinis and bourbon.

“Beer is very filling,” said Berkobin, who lives in Atlanta and recently accepted a job as marketing director for a finance company. “I get bloated and it ruins my night.”

While Wellner, managing director for Atlanta-based TowerPoint Capital, adds that cocktails offer a sophistication not found with beer, he leaves the opening MillerCoors wants to exploit. When Wellner does drink beer, he prefers Miller High Life to craft brews, he says.

Spirits have beaten beer with a relentless stream of new flavors, such as Jack Daniel’s Tennessee Honey whiskey, while Miller Lite and Bud Light taste the same as they did decades ago, said Brian Yarbrough, an analyst with Edward Jones & Co. in St. Louis. While he applauds the effort, he doubts Miller Fortune will be big enough to meaningfully close the gap.

Losing Share

“They’ve got to try,” Yarbrough said. “If they just sit back and do nothing, they’re going to continue to lose share, so they are trying to stem the bleeding.”

SABMiller Chief Executive Officer Alan Clark, speaking today from the sidelines of the Beer Summit conference in Scottsdale, Arizona, said Fortune will be the lead brand in the brewer’s efforts to figure out how to combat spirits.

“It is a very interesting and the right experiment,” he said. “The fight back against spirits is going to be a long road.”

Molson Coors rose 0.8 percent to $54.25 at 1:37 p.m. in New York. SABMiller fell 0.3 percent to 2,879 pence in London. Molson Coors gained 31 percent last year while SABMiller advanced 9.8 percent.

Miller Fortune follows Anheuser-Busch InBev NV (ABI)’s introduction of Bud Light Platinum 2012 and Budweiser Black Crown last year, both containing 6 percent alcohol. The beers, along with the company’s Bud Light Lime “Ritas” line of malt beverages, were developed in part to go after spirits drinkers, although less pointedly so than Fortune. Miller’s marketers looked to leapfrog Budweiser, rather than simply respond, Kroll said.

Black Crown

Black Crown has helped stem overall Budweiser brand declines, the brewer has said. It, along with Platinum and Straw-Ber-Rita, contributed to a 3.2 percent increase in U.S. beer revenue in the third quarter, even as total market share declined by 0.8 percentage point, the company has said. The beers are sold at a 15 percent premium or more.

Miller Fortune will sell at a 15 percent premium to Miller Lite, with a six-pack costing about $6.99 depending on the market, the company said.

Miller Fortune’s homage to spirits may end with a rocks glass, but it starts with the bottle. During its 18-month development period, the brand’s marketers shunned the traditional rounded beer bottle shape for a more angular design, which resembles a Smirnoff vodka bottle. The marketers say it evokes a guy in a tapered, athletic-cut suit -- designed to stand out among other bottles on a store shelf or busy bar.

‘Let’s Not’

“Let’s be proud to be a beer, but if another beer is doing it, then let’s not,” said Ben Feeney, Fortune’s brand manager. “If a spirit’s doing it, let’s consider it.”

At times, that was easier said than done. Feeney himself argued initially that the marketing benefit of the unique shape might not justify the additional molding complexity and costs. He changed his mind after tests showed that bartenders and consumers overwhelmingly said the bottle stood out in a crowd.

Equally unusual is Miller Fortune’s jet-black bottle, achieved with a second oven heating. The label is black, too, and accented with battleship gray. A bright red scripted “M” for Miller provides a single splash of color.

Members of MillerCoors’s senior leadership team questioned the black-on-black label, which almost disappears into the bottle, especially in a dark bar. Conventional beer marketing wisdom holds that bright, flashy labels are the way to get attention in a bar and on the shelf, Feeney said.

“The lack of overt branding on this brand is the branding,” Kroll said.

‘The Motivator’

Television ads for the beer will feature a sophisticated, suited mentor known internally as “the motivator.” He challenges one drinker to walk through a nightclub door marked “authorized access only.” He tells another to sink a shot to beat a woman at pool rather than scratch on purpose. “Fortune always follows the bold,” he advises in that spot.

Miller Fortune’s bottle cap reinforces the notion with a white spade on the top and a black spade on the bottom, so drinkers can flip on what to do next, Feeney said.

Back at MillerCoors headquarters, during a conversation about alcohol content, Kroll suddenly wonders out loud why they didn’t reinforce the spirits motif with the word “proof” on the bottle. Fortune was developed through about a dozen brewing trials at various alcohol levels before they settled on just the right strength.

Tax laws might get in the way, and proofs are expressed by doubling the alcohol content number, which could be confusing, Feeney reminded him.

After all, beer is still beer.

To contact the reporter on this story: Duane D. Stanford in Atlanta at dstanford2@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net


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