The lager market has a nasty hangover

EDITOR'S BLOG: The global industrial beer nexus is in a bad way. But as they peddle bland, barely differentiated products they only have themselves to blame.

by Matthew Gwyther
Last Updated: 04 Feb 2016

The proposed merger between AB InBev and SABMiller shows what desperate times these are for industrial brewers. Consumption is flat across major markets and McKinsey has noted that the industry is facing ‘its biggest crisis in 50 years’. Even in Germany - where they could do with a stiff drink after a long session programming the software on the VW production line - lager consumption has fallen by a third since the 1970s.

Faced with this fall in lager-guzzling the only answer they appear to be able to come up with is mega-mergers, which will bring their own complex regulatory and monopoly issues.  Maybe a return to first principles - i.e some attention to the actual product - might help. When the most you can truthfully say about your product is that it’s cold, wet, bland to the taste and contains alcohol, you really have reached a dire state. Industrial lager is a desperate, unloved thing. It’s a hideous volume business, only differing from making a commodity like cement by the addition of a brand name.

The results of years of product neglect have been disastrous. When you can buy a 12-pack of bog standard lager cans at a supermarket for considerably less than the same volume of mineral water, what does that say about the intrinsic value of beer? By turning water into beer you devalue it. Just get your head around that for a moment.

All something like Heineken is is the marketed brand. It doesn’t even have its mildly amusing ads of old. The product itself is a total irrelevance and has disappeared behind a bloated morass of bombastic operatic stings before Champions League football games and executive hospitality boxes at Twickenham. Lager advertising has grown so tired. Carling, Foster’s, Stella all pump out desperate, witless stuff fighting to persuade 18-24 year olds to pour it down their necks. (And let’s not forget that kids today are drinking less than their forbears, thanks to health concerns and their preference for spending dosh on mobile tech above just about anything else.)

One of the results of this inertia is that ale producers and micro-brewers have been cashing in. The raucous Scots at BrewDog have created the largest crowd-funded company in the world. They produce something that actually has some ‘authentic’ character and occasionally taste. BrewDog is a badge the youth is happy to wear.

Ale is doing rather well after years in the pub wilderness. But, of course, it’s a pain in the neck - as well as the head - to handle for pubs and bars. It’s alive rather than sterile, so it has a limited life in the cask and can go off. It needs a bit of love in a loveless world. But it’s crafted, individual and growing.   

I wrote my first ever article about beer back in the late 1980s. Lager then had only begun its march and was heading towards half the market. It now has around 75%. After a dire 60s world of Watneys Red Barrel all the excited marketing talk was of making women more ‘lager literate,’ ‘premiumisation’ and packing in new Aussie brands. Castlemaine XXXX, anyone? The bearded, farting bores of the Campaign for Real Ale were on the canvas and reduced to making acid comments about interlopers like Miller Lite in the Good Beer Guide - ‘a sort of draught Perrier… it ain’t heavy. It’s the nearest thing to nothing in a glass.’ Now CAMRA membership is almost as sexy as having your own table at Amnesia in Ibiza.      

Way back then I interviewed the legendary ad man Steve Henry who created the amusing Carling Black Label dambusters commercial (and who has subsequently found further gainful employment co-founding Decoded) and he said this: ‘drinkers of throwing lagers think they are OK but that's the most you can hope for. They think all the others are various degrees of shit, either slightly shit or really shit.’

Little has changed. The problem AB InBev and SABMiller face as they put even more money into the pockets of M&A lawyers and Goldman Sachs is that this unacceptable situation of consumer ennui cannot be allowed to continue. Otherwise in just a few years we’ll all be on coconut water and kale smoothies.

Read more: Hoppy days for craft beer

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