Miller Shifts to Smaller Brands

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Miller Shifts to Smaller Brands

MILWAUKEE -- While Miller Lite remains the high performer for Miller Brewing Co., making up nearly half of its sales volume, the company is taking a strategic turn to focus on smaller brands that offer high growth potential and strong profit margins, the Journal Sentinel reported.

The strategy, dubbed by Miller President Tom Long as "stoke, protect and exploit," calls for stoking Miller Lite, which he said is again showing sales growth after a lag in 2006. Vulnerable older brands, specifically Miller High Life, Miller Genuine Draft and Milwaukee's Best -- the three are full-calorie, mainstream beers -- will be protected, as the segment has been losing market share for years to lower-calorie beers, the report stated.

Lastly, higher-margin import and specialty beers -- including Foster's Lager from Australia, Czech brew Pilsner Urquell, and Italian beer Peroni Nastro Azzurro -- will be exploited. This segment also includes the Leinenkugel's product line, as well as the new Chill, a Mexican-style "chelada" beer with hints of lime and salt.

Chill is already seeing a healthy rate of repeat buys, Long told the Journal Sentinel, an indication that drinkers view it as more than a one-time novelty. Chill taps into both the consumer preference for specialty beers and the "latinization" of the U.S., said Long.

"They like a touch of exoticism," he said, adding that the goal for Chill is to sell 400,000 barrels its first year -- putting it on par with Foster’s Lager, the company’s biggest import.

Together, Chill, Leinenkugel, imports and other specialty drinks, including Sparks, a caffeinated malt beverage purchased by Miller last year, make up around 5 percent of Miller's U.S. sales volume, the report stated. With the new strategy focusing on its specialty beers, though, that number will grow.

"It's the only way to go, really," said Alexandra Oldroyd, a beverage industry analyst at the London office of Morgan Stanley.