By Jim Edwards

In 2009, flat beer might actually be a good thing, at least when it comes to sales.  Anheuser-Busch InBev’s Bud Light saw flat sales at 42 million barrels last year and flagship Budweiser’s sales declined 5.7 percent to 23 million barrels, per Beer Marketer’s Insights. While that presages a bleak year for A-B, the company may actually be well positioned to weather the downturn.
The real damage is occurring among the more expensive import and craft brands. Corona Extra was down 4.6 percent and Heineken’s sales fell 5.5 percent.
Cheaper brands like A-B’s Busch Light—which rose 4.8 percent in 2008—are benefitting. Busch was up 4.1 percent and Coors’ Keystone Light increased 16 percent. “Quite simply it’s trading down. We’re seeing the strongest trends for below premium brands that we’ve seen in many, many years,” says Benj Steinman, editor, Beer Marketer’s Insights.
The changes in consumers spending habits come at a time when rivals attempt to take advantage of turmoil at A-B, which still dominates U.S. beer sales. Following its merger with Belgium’s InBev, the company is undergoing a top-to-bottom reorganization. Payments to some marketing vendors are being delayed and 6 percent of its was staff laid off. Longtime agencies such as Goodby, Silverstein & Partners have been let go, and its once-sacrosanct sports sponsorships are being questioned. The company has halved its commitment to the 2012 Olympics, for instance.
The beer category’s chief competitors, wine and spirits, are faced with their own challenges. Part of the battle will be whether liquor and wine brands can keep customers—many of whom are downshifting within the category to discount brands—rather than see them leave the category altogether in favor of beer.
In time to counter the drift, Gallo Family Vineyards returned to TV advertising in late 2008 for the first time in 10 years, for its Twin Valley line. Gallo will be hoping to pick up share, if not sales, as consumers forgo experimenting with Argentinean Merlots and the like in favor of Gallo, Yellowtail, Sutter Home and other brands that are priced lower and execute consistently. Like Gallo, the spirits brands are getting more aggressive in terms of media spending on TV. Both Absolut and Crown Royal have returned to TV in recent months. There is an opportunity for spirits brands whose budgets have not been slashed in the downturn: Cable and network operators are struggling too. This has led network TV to break the taboo of advertising hard alcohol on the small screen.

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