The US Brewing Industry

Miller is known for its Miller High Life brand and was the first US brewer to introduce a "lite" version of its beer in 1973. Internationally, Miller promotes its Miller Genuine Draft brand.

For the past two years Miller has watched its market share and its sales decline. Miller relies on most of its sales and profits from domestic sales. Together with South African Breweries (SAB), the new company is known as SABMiller and the acquisition makes the merged company the world's second largest brewer behind Anheuser Busch. Anheuser Busch has outspent Miller on advertising for years, and experts argue that SABMiller must fashion Miller's marketing campaign in order to revitalize sales of signature brands. SAB also plans to market its beers like Pilsner Urquell in the US while simultaneously pumping up Miller's international sales.

Despite these strategies, Miller's sales have been declining, in part fueled by the loss of sales on Miller Lite in the brand's biggest market, Texas. According to one executive; "A brewery closing could occur if Miller doesn't experience a sales volume increase of at least 2% among its core brands" (Miller merger 6). More than any aspect of the business, increasing sales and market share in the US is a primary goal of SABMiller. Long behind the advertising campaign budget of Anheuser Busch, even though Miller was first to use TV advertising to sell beer, SABMiller CEO Graham MacKay argues increased marketing efforts are a must to achieve these goals: "The fortunes of Miller are tied to its ability to reach the consumer through better, more extensive marketing programs. We're looking to support improving advertising" (Miller to 4).

Such social forces as public opinion propel such efforts by Miller, while they are also designed to offset political and legal forces in an effort to increase economic prospects. Beer Institute has been working aggressively with its more than 195 members to achieve a sharp rollback on federal excise beer tax which could benefit industry players. Known as H. R. 1305, the proposed legislation would rollback federal excise taxes to pre-1991 levels (Annual 2). The Institute is angry because federal excise taxes on beer were part of huge luxury taxes imposed by Congress in the early 1990s on items like yachts, private planes, jewelry and expensive cars, noting that all of the luxury taxes have been repealed except for the ones on beer. In Fiscal Year 2000, the federal Bureau of Alcohol, Tobacco and Firearms collected $3.5 billion in excise taxes alone from domestic brewers (Annual 4). Ironically, beer is the one item on the list that poor people can purchase, while the other tax repeals only benefit the wealthy.

 

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