A Brand Bowl Scorecard: Part I -- Beer Battle
John is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Another Super Bowl is in the books, folks. A game that featured a retiring legend getting his second title, a 34 minute power outage, the return of Destiny’s Child, and commercials--so many commercials. It’s no surprise that the commercials during the Super Bowl are almost as looked forward to as the game itself. After all, it’s the most expensive 30 seconds a company can buy. This got me thinking: what do you get out of a $4 million ad nowadays? For this series of posts, I’ll be examining some of the Super Bowl commercials from this year, to look for clues as to what companies are planning for the year ahead, as well as trying to see how the markets will react to such changes. This part looks at the ads of various beer companies that advertised (or didn’t advertise), and the potential role they may play in the year of beer.
Currently, most big name beer makers are facing a growing trend. More and more Americans are going off mass produced beers, and shifting towards higher alcohol alternatives. Beer drinking has dropped 11% over the last decade, with more customers opting for either bottled water, or boozier drinks like wine and spirits. Also, the taste for more alcohol has meant that the beers people are deciding to drink are small batch, locally made, craft beers, which have higher alcohol content. This has been picked up by beer companies like Boston Beer Company (NYSE: SAM), the makers of Sam Adams. While not the locally made craft beer diehards crave, it’s a happy middle between the mass produced beers from AB and MolsonCoors and the specialty brews found in top-notch liquor stores. Posting a 50% gain in two years and a 90 IBD composite rating (meaning that it does better than 90% of all stocks), it’s an indicator that strong beers also create strong investments. With owners predicting that 2013 will see even further growth of the craft brew giant, the trend is likely to continue into 2013.
However, Anheuser-Busch (NYSE: BUD) isn’t about to let that get them down. The demand for craft-style beer has been picked up by AB, starting with the release of Bud Light Platinum during the 2012 Super Bowl. This beer, a more upscale version of Bud Light, had a 6% ABV measure, nearly double the standard Bud Light. It’s not a craft beer by any stretch, but it did the trick for the company. Platinum sold over one million barrels in just seven months, pushing the stock to rise 42.9% over the course of the year. It also helped portray Bud Light in a better light, as a beer that can be enjoyed, rather than guzzled for the quick buzz.
This year, Budweiser rolled out Black Crown, a golden amber lager with the same 6% ABV as Platinum. This is more relatable to original Budweiser in terms of brewing style and heaviness, which probably makes it riskier than Platinum due to the beer’s strength. The two Super Bowl ads (here and here) featuring the beer seem to play it off as a classy, sexy, sophisticated beer, rather than Platinum’s hip, cool vibe. AB posted a great 2012 after Platinum’s release, so it could be worth investing in the company if Black Crown proves tasty to beer drinkers, which given Americans’ desire for higher octane beer should not be a problem.
Competing with AB in the beer wars was Molson Coors (NYSE: TAP), which did not air a special commercial this year. Instead, the company tried to reach out to Super Bowl viewers with mobile ads on various football apps. The idea being that since so many people have smartphones now, they may be more plugged into their phones than the television and it would be a cost-effective way of getting the company's name out there. Molson grew by only 3.28% over the year, though the 3rd quarter for 2012 saw a 25.3% increase in sales, and the 4th quarter earnings report is due for Valentine’s Day. The company is on an upswing currently, so the earnings report may give it a boost in the short term, and news that their UK and Ireland division will be getting into the craft beer market should help them stake out a place in that vibrant sector, something AB hasn’t jumped into head first. Given Molson’s relatively flat year, it seems like a risk worth taking to jumpstart the company, especially after seeing a drop in their IBD composite to 81, a full ten points behind Boston and AB.
What shocked me about the Super Bowl this year though is that Miller didn’t feature an ad this time, nor did it have that huge of a mobile or internet presence. This is worrying news for a company that has been hit pretty hard by sales drops of its Genuine Draft, Milwaukee’s Best, and High Life (over a 35% drop in sales over the last three years). Miller won 9 awards at the 2012 World Beer Cup, so it isn’t quality that is a problem, but not advertising during the Super Bowl has to be seen as a sign of weakness, and an earnings report that is probably not going to impress very much.
Given the fact that only AB had TV ads during the Super Bowl, I have to go ahead and say AB was the winner of the beer ad wars. By rolling out a new lager as well, they are clearly gunning for a share of the high-end craft beer market, hoping to challenge Boston Beer. Why wouldn’t they? Platinum was a top notch seller, and with Golden Crown upping the sophistication of AB’s beer, it could be a big move for the American giant going forward.
jmckenna15 has no position in any stocks mentioned. The Motley Fool recommends Boston Beer and Molson Coors Brewing Company. The Motley Fool owns shares of Boston Beer. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!