This week, I received an email from Labatt. They’re launching three new beers. Usually, they’ll put one beer out at a time and get some marketing behind it as an individual property. In this case, they’ve launched a platoon. There’s Blue Dry, a 6.1% version of Blue with a dry finish. There’s Blue Lime which is Blue with a real lime flavour added. They want me to tell you that it’s only available until September 30th. Finally, there’s Blue 55, which, as you may have guessed, is a version of Blue with 55 calories.
Now, It’s fairly obvious to anyone who has been following Canadian macro brewing in even a cursory way, that we’ve reached a state in the industry where MolsonCoors and AB-InBev are pretty much unwilling to let each other take a unique step forward. For two of those beers, it’s pretty clear that Labatt is shoring up their lineup to compete with Molson. Blue 55 is clearly a response to Molson Canadian 67. Blue Lime is pretty clearly a response to Molson Canadian 67 Sublime. I’m sure that Blue Dry is an answer to something, although I’m not sure what. Maybe Coldshots.
I’ve been trying to find something to compare this to, and the only thing I could think of is nuclear detente. Each company seems to be unwilling to allow the other an edge. Development of products is frequently retaliatory, and sometimes the launches are so close together that you realize there must be some corporate espionage going on.
Look at the launches, which occurred within a month of each other, of Rickard’s Blonde and Keith’s Ambrosia Blonde. Some detractors will point out that Rickard’s is a lager and Keith’s is an ale. It seems like a major detail, but in truth what you’ve got is two huge multinational companies with faux-craft subsidiaries launching similarly named products into the same market within four weeks of each other.
The details are meaningless beyond that point for the sake of my argument. I am not, as you will notice, pointing out anything about the quality of the beverages, which for all I know might be quite high.
I suppose that the train of thought must be “We cannot afford a trend gap. If we allow the other company to have a brand that we don’t have, they will develop an edge on us in the market. Their German-trained brewers might be better than our German-trained brewers.” In some ways, it’s a miracle that neither company has launched a dog into space for publicity.
Judging by that set of behaviour, it follows logically that they actually believe that a single brand from the other company making it big with the public could be the turning point that will lead to decreased market share, decreased revenue and eventual collapse.
I disagree. The problem with an arms race is that you’re in an arms race. The structure of the problem is the real issue. Think for a moment about the amount of money that the US and the USSR sank into their respective militaries and think about the cost of developing 7500 megatons of nuclear weaponry. You’ve got to keep it somewhere, after all. There’s so much funding invested in R&D and prolonging the stalemate that it eventually becomes untenable. Not only that, but you’re eventually committed to upkeep.
Between them, Molson and Labatt have enough brands to get us all really drunk several times over. And they’re locked in a stalemate because they seem to think that the best way to succeed is to thwart the movements of the opposition. The problem is that the stalemate is untenable as a corporate strategy for the reason that these are consumer products and not impersonal weapons.
Bob from Bala, Ontario has no preference about nuclear weapons other than that they not go off anywhere near Bala, Ontario. You can’t market various kinds of warheads as being “explodier” than others. There’s no ratenuke.com, although there may be a nukeadvocate.com run by either neo-cons or alternative energy lobbyists.
Bob might have a preference for a kind of beer, though. Let’s say that Bob started drinking Labatt Wildcat in 1994 or whenever it came out. He’s been drinking it for 17 years and it’s now the only thing that Bob will drink, since Bob’s a creature of habit who mows the lawn Friday afternoon and goes to church on Sunday and never puts the lid back on the toothpaste.
If Labatt were to discontinue Wildcat, they might really piss off Bob. And the same goes for all the other people out there like Bob who enjoy that beer. The really bad part is that for each company there is a similar base of customers for each brand. So, while each company can continue to increase the number of beers that they offer, they can’t really remove any without annoying the consumer base. This may go some way to explaining why we still have ice beers 15 years later. New brands don’t actually bring in new customers. They spread out the customer base that already exists. There are not magically more people just because you’ve got a marketing campaign.
If you think I’m exaggerating, I’ve actually done the research. Here’s a spreadsheet including many of the brands that each company has in The Beer Store. I’ve lined each product from each company up with what I feel is the opposite brand from the other company. You may not agree with some of them, but part of my decision making process in this case was to look at price structure. I have listed the prices for 12 bottles and 24 bottles where applicable. I have left out the European Imports that each company represents. I think you’ll be astonished by how little wiggle room there is between companies.
Here’s the thing, though, and it is pretty obvious. Molson’s Six Pints division under Creemore is a quanitity that doesnt exist at Labatt, and it’s Molson’s best chance at gaining an insurmountable advantage. If Labatt doesn’t acquire some craft brands in a desperate bid for Perestroika, the detente will be over within a matter of years. It will not have much immediate effect on the craft beer market, since the brands chosen will be unobjectionable to the majority of consumers and therefore of little interest to craft beer drinkers.
I hope that they acquire some craft properties. The detente is great for craft brewers. While Molson and Labatt fight over turf that no one really wants (55 calorie, 2.3% “beer” vs 67 calorie, 3.0% “beer”) we get to run amok with innovation and educate people who are starting to realize that flavour might be more important than advertising. It would be cynical to suggest that it’s important that Labatt holds a market share similar to that which Molson holds for as long as possible so that the overall market share of both companies can be chipped away at by the craft industry. It would also be pretty objectively accurate.
Something to ponder, anyway.
