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Warren Dunn, Miller president & CEO, speaks out about the industry.

MBA: Mr. Dunn, how would you gauge Miller Brewing Co.'s performance thus far in 1992?

WD: Our performance is strong despite the continued effects of the FET, the overall economic slowdown and the adverse weather conditions during this year's peak beer selling season. While our shipments are down slightly year-to-date, they're off in a planned fashion, as we've reduced them to lower inventories in our distributors' warehouses. Shipments fluctuate when you're adjusting inventories. At retail, the industry is essentially flat, so everyone is fighting for market share.

For Miller, our retail sales trends for Miller Lite continue to improve; Miller Genuine Draft and Miller Genuine Draft Light continue to show impressive growth: and Sharp's is doing very well in the fast-growing non-alcohol segment.

We've also introduced Colders to take advantage of the growth in the popular-priced category. In the above-premium segment, we've just begun a national roll-out of our Miller Reserve and Reserve Light, cold-filtered, all-barley draft beer.

Overall, Miller is posting a solid performance in what generally has been a challenging year for brewers.

MBA: What is your view of the rampant price-promoting seeing? Will these promotions help boost volume?

WD: Price promotions may temporarily boost volume but do little to build brand loyalty. Our success in this ever-competitive industry has come as a result of our consistent emphasis on innovation and providing brands that consumers are calling for.

For the long haul, we believe the industry's future lies in cultivating a strong portfolio of premium brands. It's absolutely essential to build strong relationships with the premium beer drinker, because that's where brand loyalty starts. In this industry, the profit is in the premium category. Premium brands represent nearly two-thirds of barrel volume and represent four-fifths of operating profit. This segment drives the business.

MBA: Is there a danger that excessive promotions will erode brand imagery? What other tactics are available?

WD: Price promotion is one element in the marketing mix, but doesn't replace advertising, retail promotions and packaging which help energize the market. Advertising helps adult beer drinkers understand what's in the bottle or can, why it's special and why it fits into their lifestyles. People relate to a beer brand in terms of who they are and how they socialize. By effectively promoting the unique attributes and personalities of our brands, particularly our premium brands, we enable adult beer drinkers to accept them as their own. And that's what building brand imagery and brand loyalty is all about.

MBA: Are changing demographic trends dooming the industry to years of flat sales?

WD: I'm very optimistic about the future of Miller Brewing Co. and the future of the industry. However., the industry always has been a competitive business and there's no reason to believe this will change.

For Miller, we will leverage existing trademarks through brand extensions in growing categories and continue to develop and evaluate new opportunities. Most importantly, we will continue to listen to beer drinkers and provide products they want. This strategy has helped us create proven winners such as Miller Lite, Miller Genuine Draft and Sharp's. As the industry innovator, we have numerous new ideas currently in research.

Beer is the beverage of moderation and the overwhelming alcoholic beverage of choice among adults. The adult beer-drinking population will increase by about 20 million by mid-decade. Significant opportunity will continue for brewers who are consumer focused, and innovative, and who create and execute efficient and effective marketing campaigns.

MBA: How can brewers work to broaden the consumer base to include older audiences and women? Will Miller attempt to broaden its base with new promotional strategies or products?

WD: Adult beer drinkers represent a wide and diverse range of consumer audiences. In today's market, we're all competing for the same drinkers and the competition is fierce. To succeed in reaching a wider consumer base, it's essential to understand the needs of each consumer audience and to offer the appropriate products that invite new drinkers into the franchise.

Appropriate marketing tools can help a brewer reach specific audiences. One such tool is market segmentation, which has been used by consumer product companies for several years. It enables us to direct relevant messages to key audiences efficiently and effectively.

For example, you specifically mentioned women, who represent a significant portion of the adult beer-drinking audience. Our research has shown that when it comes to beer preferences, more women are drinking low-calorie brands and are concerned about taste.

We have a specific print advertising effort, designed to work in concert with our general-market advertising, to speak directly to adult women. In 1991, we unveiled print ads communicating that Miller Lite has fewer calories than other leading light beers and Miller Lite is the best beer for them. This year, we debuted Miller Genuine Draft Light ads in women's publications that address the unique and varied interests of today's women of legal drinking age and reinforce the low-calorie brand's rich, smooth, draft-beer taste.

We're always looking at new opportunities for broadening the appeal of our products to adult beer drinkers. That will help ensure our position as the industry's innovator and change leader. At Miller, we're staying close to the consumer, because that approach offers the only real secret of success in this business.

MBA: There has been talk from distributors that Miller is putting greater pressure on its wholesalers to perform. Any comment?

WD: We enjoy a very good relationship with our distributors and work in partnership with them to deliver a standard of excellence across the board. In a competitive industry, we all have to perform at our peak and strive to be the very best. We're constantly seeking to increase visibility and distribution of product and to be as creative and dynamic as possible in executing our marketing efforts.

To succeed, Miller and our distributors need to continue to listen to adult beer drinkers. We need to build and maintain strong relationships with retailers. We also know that our focus must remain on providing the right products at the right prices for today's adult beer drinkers. These are performance standards that both Miller and our distributors have committed to meet. By doing so, we will remain profitable and continue to grow our market share.

MBA: In a climate in which flagship brands are down, what will become of Miller High Life? Will it remain a premium-priced product?

WD: Miller High Life has played an integral part of Miller Brewing Company's success for 135 years. It has a high-quality image and is a leading brand in key markets. We're supporting it with comprehensive marketing programs in its core markets.

We have price-promoted Miller High Life in select markets on select packages as a way to generate trial and sampling and will continue to do so as specific market situations demand. Miller High Life is a premium-priced brand nationally and plans are to keep it so.

MBA: Can you gauge whether marketing efforts to rejuvenate Miller Lite are proving successful?

WD: Miller Lite sales trends continue to show improvement. We're pleased the brand is moving in the right direction in a tough year for the industry and one where the on-going recession is causing many beer drinkers to trade down from premium to popular-priced brands.

Additionally, we're very pleased with the direction of the brand's best-beer positioning and advertising campaign. Our best-beer positioning provides adult beer drinkers with broad appeal, establishing Miller Lite as not only the best light beer, but also the best beer for beer drinkers today. The new TV spots,"Visitors" and "Styling," dramatically and creatively reinforce Miller Lite's best-beer positioning.

Consumer measurements are up significantly for Miller Lite on key attributes such as popularity, leadership, ad awareness, product quality and taste, and brand imagery. Our marketing efforts are on track. Consumers are telling us we're doing things right. Miller Lite is the second-largest beer in the country and continues to dominate the low-calorie category, the fastest growing segment in the industry.

MBA: What is the status of Lite Ultra? What was the consumer reaction in the test markets?

WD: As your know, we completed our successful initial test marketing of Lite Ultra earlier in the year. In supermarkets. Lite Ultra outperformed several new products introduced by competitors during the test period. We obtained the information we needed and we're doing more research. Future decisions will be based on a review of the information obtained during the test.

MBA: Thank you for your time, Mr. Dunn.
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Title Annotation:Miller Brewing Co.
Publication:Modern Brewery Age
Article Type:Interview
Date:Sep 14, 1992
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