The company plans to spend heavily to promote its brands and won't charge Ontario bars and restaurants the hefty premium other brewers charge
MONTREAL—A beer war is brewing in Canada as SABMiller seeks to grow its presence following its divorce from partner Molson Coors.
Just four months after forming a Canadian subsidiary, the world’s second-largest brewer is targeting dominant rivals Molson Coors and Inbev’s Labatt.
“To say that we’re going to overtake the two big boys would be a bit of stretch so I would be happy to settle in at No. 3,” said general manager Paul Verdu.
To get there, SABMiller Canada hopes Miller Lite—available in Ontario and Newfoundland until 2010—will steal market share from dominant players Coors Light and Bud Light.
Miller Genuine Draft, previously sold for about 20 years through a partnership with Molson Coors Canada, and premium brands such as Peroni, Pilsner Urquell and Grolsch will also be sold in Canada, though primarily outside Quebec.
All of SABMiller’s products will be imported from the United States or Europe.
Global demand for light beers has been growing. It accounts for about half of total beer sales in the U.S., but less than 30 per cent in Canada.
Beer market specialist Plato Logic estimates light beers account for 20 per cent of total beer volume and have been growing 2.1 per cent annually over the past five years.
Verdu sees opportunities for Miller Lite if only the beermaker can convince Canadian drinkers to give it a try.
The company plans to spend heavily to promote its brands and hopes to get help by not charging Ontario bars and restaurants the hefty premium they face from all other brewers except Brick Brewing’s Waterloo brand.
The move, which will amount to establishments paying the same amount that consumers fork out at the Beer Store, is an incentive for bars and restaurants to carry more SABMiller brands, says James Rilett, Ontario vice-president of industry association Restaurants Canada.
“Miller sees themselves as a new player so they are trying to get market share and if that’s how they want to do it _ give our members a fair price _ then more power to them,” he said in an interview.
He added bars and restaurants will save an average of $10 per case of beer, or almost $75 million annually.
Rilett hopes other brewers will follow SABMiller’s lead, but there is no sign yet of change.
Labatt and Molson Coors said they don’t discuss pricing or marketing strategies.
Verdu said SABMiller is also trying to appeal to Canadian consumers by promoting the taste and features of its products instead of “gimmick marketing” that focuses on lifestyle advertising.
Analyst Brittany Weissman of Edward Jones doesn’t expect Canada’s large brewers will sit back quietly.
Molson Coors recently said it would aggressively step up its advertising efforts as it looks to reverse market share losses and spur volume growth.
Weissman warns that spending alone won’t necessarily offset the loyalty consumers have for their favourite brands.
“Just because Miller has a message out there doesn’t mean that consumers are necessarily going to listen to it,” she said from St. Louis. “But it does increase the competition.”
Tyler Chamberlin, associate professor at University of Ottawa’s Telfer School of Management, said the brewing industry faces global challenges as consumers flock to micro, craft and local brewers and reject “generic flavours” promoted by mega-brewers.
“SABMiller’s focus on flavour would seem to fit better with the current consumer tastes, though whether a mass producer can actually convince the public that this is their authentic approach to business remains to be seen,” he wrote in an email.