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March 02, 2014 01:00 AM

MillerCoors lightens up with plastic bottles

Lorene Yue
CRAIN'S CHICAGO BUSINESS
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    MillerCoors LLC is putting its economy beers on a diet.

    The Chicago-based brewer last month began swapping in plastic for glass in some 32- and 40-ounce beers, a move that shaves 1 pound from each bottle of its 10 least-expensive brews. There's a financial incentive for MillerCoors, which, like other brewers, has experienced slowing sales of its biggest brands.

    Lighter bottles save on transportation costs, but they also give consumers a new way of looking at stalwart brands Miller High Life, Olde English 800 and Milwaukee's Best. The rollout of plastic bottles in three of MillerCoors' five sales regions is the biggest for any brewer.

    "There's a dearth of innovation in economy brands," says Anna Tsurkis, marketing manager of MillerCoors' economy brands.

    MillerCoors' biggest competitor, Anheuser-Busch InBev SA of Belgium, also is gunning for the price-minded consumer as it unleashes Busch Signature Copper Lager.

    The larger-format beers were singled out for the change because MillerCoors sells "a fairly large" amount in those sizes, Tsurkis says.

    Consumers in Los Angeles; Cleveland; El Paso, Texas; and Charlotte, N.C., liked the new look and were four times more likely to buy the plastic bottles, which retain the retail price of $1.50 to $2.30 each, in a 2012 test. Retailers and distributors were happy, too, as shatterproof plastic means less loss to damage.

    "It's a defensive move," says Bump Williams, president and CEO of Bump Williams Consulting Co., a Stratford, Conn.-based beverage consulting firm. "MillerCoors has to come up with new packaging to put on the shelf to protect its [retail] shelf space. The brands that take up about two-thirds of shelf space are in decline."

    Beer sales, particularly in the premium and economy categories, continue to slide as consumers gravitate toward spirits and wine. Sales of cases of domestic economy beers, such as Busch and Miller High Life, have fallen 12 percent since 2009, according to figures from Bump Williams Consulting. Domestic premium beers, such as Coors and Budweiser, lost 1.6 percent of volume in the same period.

    MillerCoors reported that 2013 revenue grew 0.5 percent to $7.8 billion, with its premium light beers falling in the mid-single digits.

    Plastic bottles, freely adopted in the soft drink and spirits industries, are still fairly uncommon among brewers despite their use at stadiums. While MillerCoors' move is novel, Williams says the move to plastic can give economy beer buyers the perception of further trading down.

    "Consumers associate plastic with inexpensive beer," he says. "It damages the image of beer. Glass is quality."

    Purists can breathe easier as MillerCoors says it has no immediate plans to convert any of its other brands or economy beer sizes to plastic.

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