Clashes of Beer
Twisted commercials by "creative genius" Dick -- a man strolling pants-less through a field of tall grass, cowpokes who fondly sing adieu to their downed beers as they meander off to the men's room, feathers that sprout magically from the armpits of a prestidigitator's comely assistant -- are examples of what's wrong with the beer industry: exponentially multiplying marketing award shows have created a Jurassic amount of "Spielbergs" who are more interested in providing their version of entertainment than in selling products. Such is the view of Philip Van Munching, grandson of the man who came to the United States in 1933 with 50 cases of Heineken and author of the recently published Beer Blast : The Inside Story Of The Brewing Industry's Bizarre Battles For Your Money. Van Munching, who for 10 years represented the third generation of his family in the Heineken import business, takes the industry to task for handing its reins to marketers, and for allowing non-beer men and women to chart the course of their businesses. Frogs in turbo-charged speedboats don't have much pull for Van Munching. Frogs jockeying an alligator to a reggae rhythm isn't music to his ears. And possibly worse still, in Van Munching's view, is the series of new spots for Miller Genuine Draft, an appeal to "reverse snobbery" that, by Van Munching's read, says, "'You really should be Billy Bob sucking back a long neck.'" Van Munching traces the start of a new era in the brewing industry to the takeover of Miller in 1970 by conglomerate Philip Morris, creating an era in which the marketer would play a role as large as that of the brewmaster and the sales manager. In Van Munching's book, the 200-million-barrel-a-year U.S. beer industry is a bizarre game in which mistaken moves are on display as publicly, embarrassingly obvious. (Clear Beer, anyone? How about a Zima?) "If most businesses are Monopoly or Stratego," Van Munching writes, "the beer business is Twister. It's goofier than any board game, and it's more ecumenical in its appeal, because the rules are simple. It demands odd, often comical, often sexy contortions. And everyone who plays it ends up falling on their ass from time to time." According to Van Munching, the mistake nearly everyone is making, with the possible exception of Jim Koch (Chapter 11, "Sam Adams: Brewer, Patriot, Pain In The Ass"), is by ignoring a product's history and by not retaining reverence for product quality. For Van Munching, the error is plainly revealed by the fact that in 1975 America's breweries spent $140 million to advertise the 147 million barrels of beer they produced, and 19 years later, although beer production had increased about 37 percent, ad spending had climbed 500 percent, to a whopping $700 million. "It's no wonder 'Bud Bowl' seems inescapable," Van Munching writes. In his book, Van Munching scores the gambits of The Big Three -- Anheuser-Busch, Miller and Coors -- as well as smaller regional brewers such as Pabst and Schlitz, imports, and specialty and micro-breweries. He presents his list of 11 basic laws of beer marketing and cites cases in which they were violated with disastrous results. Beware of small changes in quality (Schlitz, incrementally totaling a huge change). Don't be seduced by the other guy's market (Van Munching & Company's Amstel Light had a sophisticated, defined market, changed its ads to appeal to the ill-defined fun-loving set and sales suffered). Use research sparingly (especially focus groups, the members of which tend to lie). Don't change for the sake of change, and know who your customers are and speak to them directly. According to Van Munching, the current state of beer marketing is analogous to 1996's crop of movies. "Hollywood gave us Twister, Independence Day, Mission Impossible -- crap all aimed at fifteen-year-old boys," Van Munching told City Edition. "Who came in but a bunch of little independents with movies that got people excited about them."Take Dick, please. Van Munching calls the current spots for Miller High Life "smarmy," in no small part based on the title character's name. "I'm sort of fascinated by how they've thrown up their hands and used a bunch of different ideas," says Van Munching. "'Miller Time' was the smartest slogan ever written for a Miller brand. Singing 'Adios, amigos' and walking off to the men's room -- how does that sell beer? "They're sort of gilding the lily when they start talking about Dick 'the creative genius.' It's like the whole world is watching 'thirtysomething' with Michael and Elliot at the ad agency." The author's chief criticisms of marketing are that new hires want to change campaigns solely to imprint their styles and haven't a clue concerning their raison d'etre. Compounding the problem, newcomers to beer don't want to spend even six months just learning about the business, he says. "Advertising is becoming extremely masturbatory," says Van Munching. "People are advertising about advertising, saying, 'Gee, you're also aware of our ads. Let's talk about our ads.' But they only have thirty seconds. They should talk about the product." Van Munching, a freelance writer who left the Heineken importer shortly after his father, Leo Jr., sold off the firm, was advertising director for Van Munching & Company, participating in what he considers to be one of the most effective campaigns for beer in recent history with Heineken's "no blimps, no jocks, no women in bikinis," "just America's number one-selling imported beer" spots. But Van Munching's biggest claim to fame might have been instigating three successive nights of favorable publicity on "Late Show With David Letterman" following the comedian's joke about a bottling problem at a foreign Heineken plant that resulted in tiny pieces of glass getting into the beer. Letterman said the product was being repackaged as "Heineken's Chunky Style." Van Munching earned a clarification and mock/earnest Letterman-style praise on subsequent shows. Though he pointedly recounts the blunders of his competitors throughout Beer Blast , Van Munching does so even-handedly, slapping down Van Munching & Company (which became, to Van Munching's chagrin, Heineken USA) when he deems it appropriate. The book even gets a favorable review from Jim Koch (pronounced "Cook"), referred to in Beer Blast as a "pain in the ass" and "a scoundrel," and more affectionately as playing the part of "Toto" in pulling back the curtain and revealing the Wizard ["the hype of the beer industry's cynical marketing machine"] for "the foolish old man...that he really is." "I thought it was a terrific book, well-written and highly entertaining," Koch told City Edition. "He [Van Munching] sometimes takes a storyteller's liberty with the full facts, but a good storyteller sometimes sacrifices total truthfulness for a good story." Pressed to cite specific errors or personal grievances with Beer Blast , Koch, well-known for his bravura, says it's "nothing glaring, just things that are a little shaded." Though the author is quite critical of some of Koch's methods in Beer Blast -- Koch correctly accused Heineken of using corn at one time in its brewing process, a violation of an obscure German law that would have made it illegal to sell Heineken in Germany had the law not been struck down in 1987, a fact Koch omitted from his verbal assaults on his competitor in the media -- Van Munching clearly adores Toto, whom he calls a "great salesman" who built Sam Adams by going "barstool to barstool in Boston," the same tactic Leo Van Munching Sr., Philip's grandfather, used to establish Heineken in the U.S. And the grandson clearly despises marketing. "When light beer came along, it was an honest-to-God revolution in the brewing industry. It was a new product with a distinct and coveted selling proposition -- two or three, even," Van Munching writes. "Unfortunately, its makers mistook the sizzle for the steak and believed that -- more than just cleverly launching and then supporting a product people desired -- they had manufactured that desire themselves." "If I read the book right, he's sort of conferred a mantel on me," Koch says. "It used to be Heineken's uniqueness, and he sort of conferred that on Samuel Adams as the brewer who has taken up the commitment to quality and heritage, instead of gimmicks. I'm flattered."It's the industry's un-ending search for the next big thing that elicits most of the laughs, and no doubt, grimaces, from Beer Blast 's readers and observers of the industry. "I think Pete Coors may be the nicest man in the beer business," Van Munching says. "Unfortunately, he put his business in the hands of marketing guys and that explains Zima." In 1993, Coors hired as his new president W. Leo Kiely III, formerly of Frito Lay, and Kiely, according to Van Munching, brought with him a reverence for gimmicks. Zima Clearmalt was born of the belief that some beer drinkers didn't really like the taste of beer. Considering the success of light beers, that wasn't an illogical belief to hold, writes Van Munching. The advertising called it "Zomething Different" (mutated to "Zima zucks" by one industry observer), but in actually it's just another malt-based cooler. "However different Coors wanted people to believe Zima may have been, the reality was that the company -- at a time when it most needed to focus on its Coors Banquet and Coors Light brands -- was putting its efforts behind a return to a small-volume category that had been at best stagnant for over half a decade," Van Munching writes. "That has been a criticism of Coors and I would say that there is some validity to that statement," Dave Taylor, of Coors corporate communication department, told City Edition. "We learned a lot with Zima, and it is still a product in the marketplace and it still makes money for Coors." According to Taylor, the number-three ranked Golden, CO brewer has refocused its attention on Coors Banquet, its original beer, and Coors Lite, which continued to do well during Zima's introduction. "Zima maxed out at six percent of their volume," says Van Munching, "but that's what happens when marketers come in and say, 'There are a lot of people out there who don't like beer, so let's have something in the beer category that's not beer.' What kind of sense does that make?"It's the glaring mistakes such as Zima, and Miller's "fiasco," Miller Clear Beer, that ultimately can set a brewer headed in the right direction, Van Munching contends. Miller president Jack MacDonough, who in Van Munching's opinion might be tied with August Busch III for the title of "smartest man in the beer business," may have lost points in that contest due to the company's early '90s plans to introduce in selected test markets a beer with no color. An estimated $12 to $15 million was spent by Miller to test the brand and its advertising. "You'd go into a test market and walk into a bar and watch people drinking Miller Clear -- and they'd all try it -- and then the person who likes the taste of Clear gets laughed at by his buddy," MacDonough, who defected from Anheuser-Busch to run Miller, is quoted as saying in Beer Blast . "[So] he says, 'I like the taste, but I can't stand the ridicule from my buddy here.'" "They [Miller] came out to me as the most fascinating company in their business right now," Van Munching says. "In the early '90s they learned a lesson, which no other company had, with Miller Clear, that you don't have to blow that kind of money to realize you have a disaster on your hand." Miller's second disaster, Van Munching claims, was to launch, at an estimated cost of $50 to $80 million, Miller Beer. "What fascinated me is that this is a very smart company and they should have realized flagship beers are not doing very well," says Van Munching. The lessons learned by Miller resulted in the formation of Plank Road Brewery, in essence just a name under which Miller could test products via a new concept called "momentum marketing," which meant finding out if consumers were interested in a product independent of marketing hype. Van Munching uses another term for the approach -- common sense. Successful launches included Icehouse and Red Dog. Lime-flavored Citro beer never made it out of testing. "They developed a microbrewery and spent very little money to test brands," says Van Munching. "Even if it doesn't lead to huge amounts, it makes profits, and they're not throwing it out there for everyone to see. It's the best move they've made since they introduced Miller Lite in 1975." According to industry monitor Impact Databank, though most of Miller's major brands were down in 1994, new products helped boost its overall volume by 2.6 percent. A similar strategy has been employed by Coors with its Blue Moon line of specialty ales, originally tested at Coors Field, home of the big-draw Colorado Rockies club, of which Coors is part-owner, and now available nationally. "We opened the first brewery in a ballpark, The Sandlot, and what we have besides just operating a restaurant has proven to be a wonderful development and testing ground, particularly for specialty beers," says Coors' Taylor. Though specialty beers comprise a mere 4 percent of the industry, Coors has been able to achieve some success with minimal marketing. Van Munching rates Coors as a "conservative" company that lost out in the mid-'70s by failing to counter Miller Lite's introduction, confined as it was in 11 western states. "In the early '80s, Bill Coors, Pete's uncle, saw that the major breweries were putting a lot of smaller and regional breweries out of business," says Taylor, who concedes the conservative tag was somewhat warranted. "He decided that if we didn't start expanding out of the eleven states, we were going to be putting a noose around our necks." Inexplicably, Coors missed out again, by Van Munching's assessment, in the early '90s by not explaining effectively to the public, as its response to new Miller Genuine Draft, that bottled "draft beer" was what Coors had been making all along.Controlling roughly 45 percent of the beer industry, nearly double number-two Miller's share, giant and oft-viewed bully Anheuser-Busch isn't likely to relinquish the top spot, according to Van Munching. "Even [Miller's] MacDonough has said the gulf is so great that Anheuser-Busch would have to make a major mistake, and Anheuser-Busch doesn't make major mistakes," says Van Munching. The author characterizes Anheuser-Busch's frequent, nearly ingrained, response to successful innovations in the industry -- light, draft, dry, ice beers -- as "denigrate, regulate, replicate," though at times it has skipped directly to imitation. If A-B has an Achilles' heel, in Van Munching's read, it's August Busch IV (a.k.a. "the Fourth"), apparent heir to the Bud throne and the man responsible for introducing a humorous approach to selling the King of Beers, an extension of Bud Light's marketing, thereby replacing "For all you do, this Bud's for you" with partying ants and frolicking frogs. Van Munching quotes a former Anheuser-Busch executive as having said, only half-jokingly, "Auggie surrounded himself with [Wharton professor Russell] Ackoff and a bunch of MBAs; his kid's closest advisor is a guy he met at a bar night." "That, more than anything else, might explain the ants and bullfrogs," Van Munching writes. "It would also explain the trepidation so many Anheuser-Busch wholesalers feel about the day August III decides to retire." The author doesn't consider the use of bullfrogs (to be succeeded by Larry the Lizard) as an attempt to sell beer to kids, though it very well might be a byproduct. "I think it's atrocious advertising," says Van Munching. "Budweiser itself is selling off. It's always been this macho brand. What do bullfrogs have to do with reward beer and a minor sense of masculinity? "And I think it's arrogant of them to say that since it was not our intention [to reach kids], we don't want to deal with the subject." Anheuser-Busch and others who take that course risk another episode of the Spuds MacKenzie-inspired, neo-prohibitionist backlash encountered by the industry in the 1980s, Van Munching muses. "Typically, we won't respond to something as general as this," a spokesman for Anheuser-Busch said when given a brief account of Van Munching's pertinent insights in Beer Blast . "If there's a specific question or charge, you have a better chance of getting a response.""Twenty years after a few wildly successful brewers put dozens of their old, tiny brethren out of business, dozens of their new, tiny brethren have them more than a little bit edgy," writes Van Munching. "This is not nearly as ironic as it is inevitable, considering the way in which Anheuser-Busch, Miller and Coors have handled their respective successes." By Van Munching's analysis, specialty beers have reached their peak, though clever Koch, who produces a "terrific" beer, could continue to do well, microbreweries will wane similarly and pub brewers are an affront. "It's really hard to brew beer, and they have to run restaurants, too," says Van Munching. "Half the stuff that comes out of brew pubs is swill, but people sit there and don't want to look stupid, so they say, 'This is really interesting.'" The number of breweries in the U.S. has more than doubled in the past five years and now totals 1,200. Many observers predict there will be a constriction of the number of brands on the market due to recent proliferation. Enter Sam Adams and Jim Koch, who, as a contract brewer (Sam Adams actually is brewed in Pittsburgh, a point Van Munching and Koch's competitors are all too happy to point out) grew his beer so that it holds .5 percent of the market at 1 million barrels a year. The advertising for Sam Adams, on radio featuring Koch talking about ingredients, the brewing process and taste, on TV featuring the appealing lines "Do you like beer?", "Do you know the difference between a lager and an ale?", "When everyone else is trying to decide between red or white wine, do you order a beer?" seem to address Van Munching's directives to stress heritage and quality. "We take beer seriously and the people who love beer seriously," says Koch, "and that's not necessarily better than what everybody else does, it's just consistent with who we are." Chippewa Falls-based Leinenkugel, bought by Miller in 1988, represents another trend in the industry, The Big Three acquiring smaller and regional breweries, in Leinenkugel's case allowing the family, three brothers, to continue its operation as it has for more than a century. Recently having celebrated 130 years of brewing, Leinenkugel, with its 13 beers (five of which are seasonal) available in up to 25 states, predominantly in the Midwest, ranks as the nation's eighth largest brewery. "Personally, I think there's still a lot of opportunity for brewers our size or even quite a bit smaller than us," says Jake Leinenkugel, company president, who describes the firm's marketing approach as "friendly and folksy," with emphasis on its north woods' birthplace and robust formula that remains unchanged since it was developed by his great great-grandfather to sell to several hundred lumberjacks in northern Wisconsin. "Every message point we do is going to really highlight the product, and secondly, the history, heritage message," says Leinenkugel. Exactly by the book.