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(Lawrence Jackson)
(Lawrence Jackson)

Beer industry

'In the end, what pays the bills is Budweiser' Add to ...

In the market-share grudge match that is the Canadian beer industry, change often takes a long time to brew. Still, 2009 was full of news, especially during the summer beer wars, which included the Canadian introduction of Bud Light Lime and a series of trademark lawsuits. We sat down with Richard Musson, the vice-president of marketing for Labatt Breweries of Canada, for a look back at the year in beer.

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Not to begin by putting you on the ropes, but in October Molson rolled out a 67-calorie light beer. Why doesn't Labatt have a competitor?

When we first heard about them introducing it in Canada, we did research, and it was very clear that Canadian beer drinkers at this time were not interested in a very low-alcohol beer that they perceived didn't taste particularly good. I'm not saying theirs doesn't taste good, I'm saying we tasted ours, which I guess is similar. ... I admire Molson, who have gone in very heavily. They're doing a good job - we'll see if they create a market and, of course, if there's a market, then I'm going to have to play in that market. But I'd rather someone else spends the money to create the market.

You guys had one new market almost all to yourself, with Bud Light Lime.

It really is the atomic bomb in the marketplace, where there's a whole bunch of non-beer drinkers who like it. We're seeing 20 per cent, 25 per cent of drinkers who would otherwise be drinking white wine, vodka and tonic, coolers, or Perrier.

With its launch, you capitalized on demand from consumers who had done things like created Facebook groups asking for the beer to come to Canada. Social media is becoming enormously important for marketers like Labatt.

Consumers don't go on websites any more, they go Facebook-to-Facebook and consumer-to-consumer. A website is inherently a big company talking to consumers, and it seems to me anyone under the age of 30 rejects that as a form of communication. In the old days we'd put the web page on every label and every case. I think it's a question of a few months before we replace that all with Facebook pages.

Was it consumers who suggested the double mountain peak for Kokanee, and when you redesigned it, did you anticipate being sued by Molson for infringing on their Coors Light mountain design?

No, we had no idea there would be trouble. It was just a thing we put on, it wasn't particularly important or strategic. I mean, from my point of view, consumers associate brands with what they associate them with, and Kokanee is associated with mountains, so it's fairly normal to put a mountain on there. To be honest, from a consumer point of view, I don't particularly like all that stuff and that coverage. As long as it's in the business pages, it's okay. I think when you see big companies slugging it out in the consumer pages, that could be harmful to the brand. But on the other hand, we spend a lot of money on the brands, we care about them passionately, and if other people try and mess with our brand, or they think we're messing with their brand, then I support us defending ourselves.

As in the case of you guys suing Red Baron for the packaging of their new lime beer.

Yeah. I mean, it was very similar [to Bud Light Lime] So my brand manager came and said "Have you seen this? It looks like ours." So then, our view to legal is, we're unhappy from a marketing point of view, consumers are going to be confused.

What's funny is, one moment Red Baron was saying they're David and you're Goliath, and a couple of weeks later you guys were saying Kokanee was David and Molson Coors was Goliath. And now we're seeing Boxer Lager, a new brand in Ontario, position themselves as David against your Goliath. Do they concern you?

Their pricing is extremely low. Of course that concerns me, because the differential is big, and at times of recession it could be dangerous. The answer to Boxer is to reinforce Budweiser and make it stronger. So: "It's the King of Beers." "It's The Beer. How could you possibly drink Boxer? Even if it's $15 cheaper, or $20 cheaper." We're not going to launch a beer at the price of Boxer. So what we have to do is defend ourselves. And when you look at other markets - yogurt, or soft drinks, or whatever - the differential between the own label or the cheap stuff and the brands can be hugely different. Sometimes it's a 5-per-cent, sometimes it's a 200-per-cent difference. And the reason for that is how strong the brands are.

I think one thing I've tried to do here with everyone at Labatt is to say, marketing is about price premium and not about sales. So don't think about marketing as driving the volume, think about getting a price premium. Was there anything you wanted to talk about that we didn't touch on?

No, we talked about Bud Light Lime. It's funny, when I came here two years ago, no one talked about Bud. They said, "Oh, it sells itself." I said, If you think that, in a few years' time, it'll stop selling itself. So I made a rule that, every presentation, we start with Budweiser. Otherwise you talk about the glamorous stuff, like Stella Artois - and in the end, what pays the bills is Budweiser.

Follow on Twitter: @simonhoupt

 

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