Outside the Beltway

Beer Has an ‘Image Crisis;’ Wine and Spirits Gain

James Joyner · Tuesday, January 11, 2005 · 2 comments

Beer has an ‘image crisis;’ wine and spirits gain (USA Today – AP)

Beer, the most popular alcoholic beverage in the United States, has an image crisis, analysts say. While it is still the nation’s favorite alcoholic beverage, it continues to lose ground to wine and spirits. Beer Marketer’s Insights, a trade publication, estimates beer accounted for 59.5% of the alcohol market in its peak year, 1995. That had fallen to 56.7% in 2003. In 1999, the spirits industry had 28.6% of the market. In 2003, its share had risen to 29.7%. Wine went from 12.6% to 13.6%. Final figuress for 2004 aren’t in, but it was “more of the same,” says Benj Steinman, president of Beer Marketer’s Insights.

Analysts who follow the alcoholic beverage industry don’t see it stopping soon. “We believe there is an overall image crisis with beer,” says Smith Barney Citicorp analyst Bonnie Herzog. As baby boomers age, they are more willing to buy wine and spirits. And wine and spirit companies are successfully targeting younger drinkers with advertising and promotions. “Our wholesaler contacts have told us through a survey we conducted recently that beer has lost its ‘sexiness’ and ‘appeal to young consumers,'” Herzog says. “We continue to believe the road ahead is a long one for the beer industry.”

The spirits industry spent almost $100 million on broadcast advertising in 2004, compared with “almost zero” in 1999, says Frank Coleman, a senior vice president at the Distilled Spirits Council of the U.S. in Washington. August Busch IV, president of Anheuser-Busch Cos. brewing unit, has said wine and spirits represent a threat to his company and the entire beer industry. Miller Brewing President Norman Adami said, “The single biggest threat facing the American beer business today is the possibility that we will allow the American consumer to get bored with beer.”

Interesting.