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For further information, call Gary A. Hemphill (212) 688-7640

For Immediate Release

U.S. BEER MARKET STRUGGLES TO GROW IN 2004,
REPORTS BEVERAGE MARKETING CORPORATION

Light Beer Remain a Strong Segment

New York, NY, 17 May 2005: Slight to nonexistent growth rates and declining per capita consumption have characterized the U.S. beer industry lately. More often than not during the last decade, when beer volume growth has occurred, it has usually been at less than 1.0% annually; 2004 marked the fifth year in a row of such tepid growth, according to recently published data from Beverage Marketing Corporation. Even imports, which had been one of the most vibrant segments of the market, performed weakly in 2004. Light beer was the sole bright spot in the business, and Miller Lite’s resurrection was one of the most significant recent developments.

In 2004, U.S. beer volume increased by about 1 million barrels, from 198.3 million in 2003 to 199.3 million. In 2004, U.S. brewers shipped 175.5 million barrels of beer for domestic consumption. An additional 23.8 million barrels were imported. However, the imported segment did not display the vigor that characterized it just a few years ago. Imported volume increased by just 2.0% in 2003 and by only 1.2% in 2004. As recently as 2000, imported beer volume increased at double-digit rates. Nevertheless, imports did account for nearly 12% of beer volume in the U.S. in 2004.

Over the last few years, moves in average intake have tended to be decreases. The decreases have been on the order of one or two tenths of a gallon from one year to the next, but these losses have become a steadily recurring phenomenon. In 1996, per capita beer consumption stood at 22.0 gallons. By 2004, it was 21.6. Average intake slipped by one gallon since 1991 and by two gallons since 1981.

The Major Players

The three leading brewers – Anheuser-Busch (A-B), Miller and Coors – accounted for nearly 81% of the U.S. market in 2004. A-B alone brewed about half the beer consumed in the United States. A-B’s output surpassed the 100 million-barrel mark in 2002 and continued to grow. However, its 0.4% growth in 2004 was slower than the overall market.

In a major turnaround, the Miller Brewing unit of SABMiller not only achieved growth in 2004; it was the best-performing brewer among the top three. Miller, which had been in decline for several years, increased its shipments by 1.7%.

Coors volume growth accelerated throughout the second half of the 1990s, but its streak stopped in 2001, when volume dipped by 1.9%. A smaller decrease followed in 2002. In 2003, when its key brand declined, the company’s volume also declined. In 2004, volume loss for Coors Light was more severe than in the previous year, but growth by some of its smaller brands moderated its volume contraction somewhat. In 2005, the planned merger of Coors with Canada’s Molson to create Molson Coors was finalized.

Lights Shine

Light beers have emerged as the powerhouse for the big three brewers. In 2001, Bud Light surpassed Budweiser to become A-B’s biggest brand, and thus the number-one beer label in the U.S. In 1999, Bud Light made up 30.3% of company volume in the United States, compared to 36.9% for Budweiser. By 2004, Light’s company share reached 39.0%, while Bud’s portion had been reduced to 28.5%.

Michelob Ultra’s exceptional performance in its first full year on the market may have affected other light brands, including Bud Light. Ultra, which in essence is a light beer, immediately became the biggest member of the Michelob family, surpassing Michelob Light, which declined after several years of uninterrupted growth. In 2004, Ultra’s growth slowed, but it remained the fastest-growing major domestic beer brand, picking up more than 1 million barrels – more than the beer market as a whole gained.

Miller began touting Miller Lite’s carb content after Ultra caught fire. Lite volume followed a flat 2000 with accelerating shrinkage in 2001 in 2002. But in 2003, Miller’s biggest brand enlarged by 4.0%. In 2004, the brand rocketed upward by 9.6%, thereby giving the brewer its first positive year since 1999. Coors Light declined for the second consecutive year in 2004. However, it remains the brewer’s biggest brand.

More than half of the 10 leading domestic brands, and four of the top five, were light beers in 2004. The 10 biggest domestic brands accounted for 68.0% of total U.S. beer volume. The leading lights accounted for 45.1% of that volume, leaving about 22.9% for the leading regular beers. Bud Light’s share reached 20.2% in 2004, while the erstwhile market leader, Budweiser, saw its share slide to 14.7%. Miller Lite’s revival boosted its share to 8.9% in 2004. Coors Light, with a share of 7.2%, was the Colorado brewer’s sole representative among the top 10 in 2004, while Miller had two additional brands on the list: High Life and MGD, the eighth and ninth largest brands, respectively. Until recently, Miller had another brand among the top-10 – Milwaukee’s Best – but Michelob Ultra snared the tenth spot in 2003 and retained it in 2004. Thus, A-B increased its dominance, with six of the 10 top-selling brands. In addition to the top two – Bud Light and Budweiser – it had Natural Light, Busch and Busch Light Draft, the respective fifth, sixth and seventh biggest beer brands in the U.S., as well as Ultra.

Based in New York, Beverage Marketing Corporation is the leading research, consulting and financial services firm dedicated to the global beverage industry. It publishes detailed reports on the major beverage categories. It covers beer in its Selected Beverage Category Topline Report, the 2005 edition of which has just been published, as well as in the forthcoming editions of Beer in the U.S., Imported Beer in the U.S., Specialty Beer & Microbreweries Markets in the U.S. and Global Beer Report: A Worldview. For details on all Beverage Marketing reports, visit http://www.beveragemarketing.com/reportcatalog.html. To order reports, or for more information about products and services, contact Charlene Harvey (formerly Salito) at (212) 688-7640 ext. 1962.


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Beverage Marketing Corporation of New York
850 Third Avenue, New York, NY 10022
Tel: 800-275-4630 | Outside U.S.: 212-688-7640 | Fax: 212-826-1255