Stoke, Protect and Exploit?

Miller to “exploit” specialty segment

Although Miller accounts for nearly half its sales volume, Miller Brewing is focusing more on some smaller brands that offer high growth potential along with strong profit margins.

Miller President Tom Long calls the strategy “stoke, protect and exploit.”

Miller is stoking Miller Lite, which Long said is again showing sales growth after a lag in 2006. Miller is protecting its vulnerable older brands, chiefly Miller High Life, Miller Genuine Draft and Milwaukee’s Best.

Finally, Miller seeks to better exploit its higher-margin import and specialty brands. They include Foster’s Lager, Pilsner Urquell and Peroni. The “exploit” segment also features the Leinenkugel’s product line, as well as the new Chill, billed as a Mexican-style “chelada” beer, with hints of lime and salt.

Miller owns several other smaller sub-premium brands, and over one-third of the company’s sales come from that segment, said Benj Steinman, publisher of Beer Marketer’s Insights. Anheuser-Busch Inc. draws less than 25% of its sales from sub-premium beers, while Coors Brewing Co.’s sub-premium sales are less than 15% of that company’s overall business, Steinman said.

That’s a tough circumstance for Miller, Steinman said. So it makes sense that Long would take steps to “reinvent” Miller’s portfolio by focusing more resources on the higher-priced specialty brands and imports, he said.

Miller’s track record in selling such high-end brands “hasn’t been terrific,” Steinman said. For years, Foster’s Lager has seen lagging sales despite a boom in imported beers. Miller owns the U.S. marketing rights for Foster’s, which is brewed in Canada.

Also, Miller’s Leinenkugel unit, an independent operating subsidiary, last year saw its sales soar around 12%, thanks largely to its popular new Sunset Wheat brand. That brand continues to enter new markets throughout the nation.