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Going light.

Going Light Non-Alcoholic

The following is an interview with Jacques Bobbe, president of J.B. & Associates, Inc., of Orlando, Florida. The company handles distribution and export of Texas Light non-alcoholic beer and imports foreign mineral water. Bobbe is also chief executive officer of an affiliate company, Inter-Floridana Import-Export, Inc., which markets beer, wine coolers and citrus juices here and abroad. The interview was conducted for Modern Brewery Age by Howard Kelly, who served as Editorial Director for MBA until 1987. MBA: What is your estimate of non-alcoholic beer sales in the U.S. for the year 1989 and how does that compare with the previous year? JB: Over 10 million cases were sold in the U.S. in 1989, whereas in 1988 the overall category did about 8.5 million cases. MBA: Now that two major breweries have entered this category, what is your estimate of non-alcoholic beer sales in the U.S. for 1990. JB: Now that Miller and A-B have jumped in with both feet, non-alcoholic beer sales this year will be close to 15 or 16 million cases. MBA: What were sales in this category five years ago? JB: About 4.5 million cases. MBA: Five years from now, how big do you think the overall non-alcoholic beer category will be in the U.S.? JB: If brewers spend their money wisely and improve their products to the extent that the consumer is going to remain happy with the taste, then it will be at least triple what it is today. MBA: Briefly, what has caused the dramatic resurgence in non-alcoholic beer sales in the U.S.? JB: First, the strict drinking and driving laws we have today in this country. Second, people are more health-conscious and more calorie conscious than ever before. Ironically, the near beer that came out during Prohibition way back in the early thirties was not a bad product. However, the public was not nearly as health-conscious then as they are today. In addition to that, the Prohibition connotation plus the name itself and the inferior labeling turned the customer off. If the public had given near beer a chance, it might have caught on, even then. MBA: What immediate impact will the entry of Miller and Anheuser-Busch have on the non-alcoholic beer category as a whole? JB: The introduction of Sharp's by Miller and O'Doul's by A-B will immediately infuse the category with millions of dollars in advertising and promotion. This will cause a sales explosion. The two biggest brewers have now taken the plunge. We took all the chances, tested the waters and plotted the course for them in a category that will not only pay off royally for them, but also for us. They learned from their distributors who carry our product that a quality non-alcoholic beer with a quality image can be very successful, and now they're riding in on our coat-tails. We're very flattered. Like our slogan says, "Always imitated, never duplicated." MBA: Are you getting nervous about losing a lot of Miller and A-B distributors who are presently carrying Texas Light? JB: The breweries might force some of their distributors to take our product out, but those wholesalers who have had Texas Light for a long time have made a name with the product and built a good track record. These are good businessmen and they're going to make a wise decision to maintain our product. I'm sure Anheuser-Busch and Miller will try to strong-arm their distributors into getting rid of Texas Light, but I think today's distributors are too independent to be intimidated, especially when they can see the handwriting on the wall that says Texas Light is a product that's here to stay. MBA: What is the overseas sales picture for non-alcoholic beer? JB: The non-alcoholic beer phenomenon has been even more dramatic in Europe than in the United States, and the growth has been much greater there, too. This is due to the strict drinking and driving laws that are being enforced in most of the European countries. In Scandanavia, for instance, if a driver gets caught with any kind of alcohol on his or her person, they not only lose their license but they can also get an immediate jail sentence. And that applies in Norway, Sweden, Denmark and Finland. Growth of non-alcoholic beer in Europe has been very dramatic - over 35 percent a year - and this has been going on for the last six years. That's why you find all the big European breweries involved today - Guinness, Bass, Lowenbrau, Heineken, the Swiss breweries and most of the French breweries. MBA: It has been claimed that Kingsbury is the number-one selling non-alcoholic malt beverage in the U.S. Is that true? JB: That might be true if you take all of Heileman's non-alcoholic brands and lump them together. However, I would not like to comment on their figures, even though Heileman is always overjoyed to give out mine. I must admit they've come up with some great ones. Maybe I ought to hire their statistician.

In any case, I don't want to get caught up in this numbers game. Let them continue to keep tabs on us all. So far they're doing a miraculous job. I mean, they're taking all sorts of figures out of thin air. More power to them. MBA: What are the leading domestic non-alcoholic beer brands in the U.S. market today? JB: Kingsbury and Texas Light are the top two individual brands. Black Label is number three. But, again, I do not want to play the numbers. Let Heileman play this game if they like. What I would like to say, however, is this: If you take the statement by Heileman Brewing Co. that they are the largest in sales of all non-alcoholic beer in the U.S., I would say they have forgotten General Brewing. I personally believe General is the largest producer of non-alcoholic beers in America - General Brewing including Pabst, Olympia, Pearl and Falstaff. Most of the quality non-alcoholic beers in this country come out of that organization. MBA: Which are the leading imported non-alcoholic beers? JB: Moussy from Switzerland is still the number one non-alcoholic import; Clausthaler from Germany is number two and Kaliber, a Guinness product, is three, followed by an array of other foreign products. Birell from Switzerland, now also produced here, was the leader in the category at one time, but has now all but faded away. They missed a great opportunity.

In the case of Moussy, their parent company, Sibra, made a major investment in Switzerland with a brand-spanking-new brewery based on Moussy's success in America, but it backfired. Here they have this giant facility without having the production to warrant such a plant. It has hurt the company overall. MBA: What happened to Birell? JB: I think the trend was changed by Moussy, which entered with very heavy advertising. Then about two years ago, when the import fad disappeared because of the price fluctuation - the dollar taking a nose dive in Europe - Moussy got hurt and the Americans really took the category apart. MBA: Would you give us some background on your own non-alcoholic product, Texas Light? JB: In 1978 we introduced the product as "Texas Pride" in Canada, and in 1981 we attempted to enter the U.S. with it. However, at that time we were turned down by the BATF because of a conflict arising out of the fact that an alcoholic beer called Texas Pride was already being marketed here. Therefore, we changed the label to Texas Light in 1981, started test marketing it that year, began selling it on a large scale in 1983 and went national with it in 1984. MBA: Since its introduction here, what kind of success have you had with the product/ JB: We've had annual sales increases of 19 to 20 percent. MBA: When Miller announced the introduction of Sharp's, a brewery spokesman stated, "The breakthrough lies in Miller's discovery of a unique new brewing process. Most non-alcoholic brews start out as regular beer and the alcohol is removed along with the real beer taste... Our revolutionary process enables us to brew at lower temperatures, which prevents the production of alcohol in the first place." Would you care to comment on that statement? JB: A good quality beer, whether it's alcoholic or non-alcoholic, needs the alcohol to give it real body and real beer taste. That's why with Texas Light we wait until the end of the brewing process to remove the alcohol. This results in a product with the sensation and flavor of alcoholic beer, but with only 68 calories per 12-oz. serving and without the alcohol.

Miller's so-called revolutionary process of removing the alcohol before brewing the beer is neither new nor does it improve the taste, as they claim. When you abandon the traditional brewing process, as Miller has done with Sharp's, you produce a brew that's the same as the non-alcoholic brews that most European brewers have been producing for many years. These have neither the quality or taste of those brewed the traditional way. In short, Miller and its European counterparts do not go through the necessary brewing stages that we do to give the consumer a full-bodied alcohol-flavored beer right from the start.

Beers like Sharp's, in which the alcohol is removed before brewing, might as well be called "kiddie" beers. They have neither the quality nor the taste of those brewed in the traditional way. In fact, Sharp's is actually malta, which is a malt "soda pop" that has been around for many years in Europe, and is produced by taking the ingredients of beer but then not brewing beer.

Moreover, the taste deteriorates faster in this style of beer. That's what happens to the European beverages made in that same fashion. MBA: How does Anheuser-Busch's new non-alcoholic brand, O'Doul's, fit into the picture? JB: Let me point out that Anheuser-Busch is saying exactly what Texas Light has been saying all along: "We brew a quality beer, and in the process we remove the alcohol." By the very fact that O'Doul's is brewed in just the same way we have been brewing Texas Light since the early 1980's, there's certainly nothing "new" about the product.

Not only that, O'Doul's started way back in 1986 as a low-alcohol beer they named "LA" to tie in with the Los Angeles Olympics. When that brand failed, Anheuser-Busch changed the formulation from a low-alcohol to a no-alcohol product and renamed it "LAX." Anheuser-Busch decided they didn't like that name, and they weren't the only ones. Some wits in the industry called it "X-LAX." So they changed the name to O'Doul's, but then decided they didn't like that formulation, so they changed that around and came up with the O'Doul's that's being promoted to a fare-the-well today. MBA: Why do you think the original LA failed to catch on? JB: It failed for a couple of reasons. First, the low-alcohol category was not fully accepted by the American consumer in the summer of '86. Second, Anheuser-Busch already had a light beer, Bud Light, and Miller had an even more popular light beer. So, as many Anheuser-Busch distributors asked, why introduce still another light beer? Why not take the next step and go all the way - right down to a non-alcoholic beer? So, two-and-a-half years later, Anheuser-Busch transformed the product into the non-alcoholic LAX. The name became a laughing stock of sorts, being associated with the laxative. That's when LAX was re-baptized O'Doul's, a name signifying "regular beer drinker" instead of "regularity." The new name also gives the product the ring of an import.

They happened upon that name because Anheuser-Busch was test-marketing a regular beer called O'Doul's in New England. It failed to make an impression on the market, so the brewery summarily dumped it and slapped the O'Doul's label on their non-alcoholic beer in an attempt to pep up LAX sales, which were living up to the name of the product/sc92/that is, they were lax and irregular. MBA: Heileman's Kingsbury, another of your competitors uses essentially the same brewing process as Texas Light. Is there any significant difference between the two? JB: The big difference is in the brewing ingredients. For one thing, our quality standards are much higher than theirs in terms of the raw materials that we use and also in the brewing process itself. We refuse to cut corners and produce a cheap product that is just a watered-down version of real beer.

Heileman has always priced their product way below the others so as to get a head start on everyone else, which, in many cases, they've done. Maybe that's the reason why today they've got five, maybe even six, non-alcoholic beer labels, versus our one. Kingsbury is priced a dollar below Texas Light, whereas O'Doul's is priced exactly at our level, and Sharp's is maybe only slightly higher. MBA: You distribute Texas Light to all 50 states. Are you marketing it abroad as well? JB: We export Texas Light to a number of countries, including Japan, Taiwan, Norway, Sweden, England, Belgium and Holland. In addition, in January we launched Texas Light in the Middle East, Germany, Austria and Switzerland. MBA: As glutted as foreign markets are with non-alcoholic beers, you have chosen to enter them. Why? JB: The main reason is that research has shown us that the taste of our product is very acceptable over there. As you know, the light beer category was developed here in the U.S. by Miller Brewing Co., and the Europeans have now picked up on that with entries like Amstel Light, which is in reality a copy of Miller Lite, as well as Beck's Light and several British light beers - all copies of Miller Lite. So, in the case of light beer, the Europeans copied us, but now that is reversed, now we are following their lead in the category of non-alcoholic beers by taking our products into their markets, because we feel we have the potential of taking a piece of their action with Texas Light, which we pioneered here as a very fine quality beer with a very strong name. MBA: How long have you been exporting Texas Light and how has it fared abroad? JB: We have been exporting Texas Light for two years and our growth in Europe has been approximately nine to 15 percent per year. The reason we haven't grown even faster than this is because of the regressive tariff laws imposed on U.S. products in the European Common Market. Those countries would like to keep most of the American products out of their market. First of all, the duty is 17 percent, which is based on product plus freight cost. In addition, each European country has a Value Added Tax (VAT), and then some countries have a local tax, which can be levied by the province or the state. And in Scandanavia, they even levy a tax on the can, which for our product amounts to $14 a case - I mean a case of 24 empty cans, mind you, forget about the beer being in them! The reason for this is, basically, to keep American canned products out of the market. Instead of selling a low-priced product, we're selling diamonds over there! But we haven't given up; we are going to continue marketing Texas Light overseas and we're also going to continue to fight this unjust system.
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Title Annotation:1989 Statistical Study; non-alcoholic beer market
Publication:Modern Brewery Age
Article Type:Interview
Date:Mar 12, 1990
Previous Article:A niche in time.
Next Article:Improving sales management.

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