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Tapping into beer drinkers' desires

Melissa Melchior was in a Manhattan deli the other night, standing before a refrigerator case filled with beer _ everything from Miller and Dos Equis to Pete's Bohemian Pilsner and Samuel Adams Cranberry Lambic. "Actually, I've been meaning to try it," she said of the Cranberry Lambic, which would mean branching out from her usual Corona or Sapporo.

Melchior, a 24-year-old sales clerk, does not pay attention to beer ads on television, does not worry much about price and drinks beer "once in a while, because it has natural stuff in it that flushes you out."

A few minutes later, in came stockbroker Abel Quintana, 22, who drinks Coors Light and Michelob Light. If he sees an appealing commercial, he might try that beer, as he did recently with Coors Light, he said.

But he scoffed at craft beers _ stronger, often strangely flavored beers, usually made in small batches. "Nobody wants to waste their time," he said. "You drink it once and then, forget it."

It is young people like these whose tastes America's brewers must decipher if they are to bring new life to a business now suffering from the twin terrors of essentially flat volume and abnormally low prices.

While the number of 21- to 27-year-olds has fallen by 3-million since 1990, demographers expect an upturn around 2000 in this group _ historically the biggest beer drinkers. But corralling those younger consumers _ who are both highly brand-conscious and notoriously lacking in brand loyalty _ will be a challenge, to put it mildly.

To do so, beer companies are sifting through demographic research and trying offbeat marketing and promotion ideas, embracing everything from quirky humor to cutting-edge travel offers.

"The brewers are having one heck of a time trying to figure this out," said John Matesich, chief executive for sales and marketing at Matesich Distributing Co., a large beer wholesaler in Newark, Ohio. "There are a lot of conflicting things going on out there that you just can't compartmentalize anymore."

Given their current state of affairs, however, beermakers, whose sales are overwhelmingly domestic, are greeting the challenge with open arms. In 1997, the nation's beer business grew by just 0.4 percent. Volume remains below its level in 1990, before the excise tax of 1991 and when there were still plenty of new, young drinkers every year. In 1990, market shipments totaled 2.3 percent more than they did last year, according to Impact Databank, which tracks beer volume.

Then there is the decline in 21- to 27-year-olds _ from 27.6-million in 1990 to 24.6-million this year, according to Beverage Marketing, which maintains its own data base on beverage sales. Other age groups have not picked up the slack; sales of light beer and imports have grown, but other brands have lost ground.

"Young adult males in that age group are the target audience," said Dave Taylor, a spokesman for Coors Brewing Co., which is trying to win them over with its "Beer Man" commercials and tie-ins to sports events.

These "entry-level drinkers," as they are known in the industry, are supposed to increase 14 percent in the next five years.

But no one can say for certain what this generation will drink. They will have a wider array of choices _ from ubiquitous labels like Budweiser to price-sensitive imports to increasingly specialized craft beers. They are being called the most ad-resistant consumers yet, a description particularly disturbing to the beer industry, whose reliance on marketing is legendary.

"They're not very brand loyal because they see through all the advertising," said Steven A. Grasse, chief executive of Gyro Worldwide, a Philadelphia advertising agency that specializes in marketing to people age 18 to 30.

It is not that they hate advertising _ quite the contrary. "They look at advertising and marketing as almost a spectator sport," Grasse said.

Another question is how much the group will drink. Anheuser-Busch Cos., which has 45 percent of the domestic beer market, appears to be banking on the group drinking at least as much as its predecessors. In the company's latest annual report, chairman August A. Busch III noted the demographic shift as one of "a number of positive developments that further enhance Anheuser-Busch's long-term position as the world's beer company."

But simply having more 21-year-olds in the mix is no guarantee of volume growth, others say. "If these entry-level drinkers drink less, there may not be any great bump," said Benj Steinman, editor of "Beer Marketer's Insights," an industry newsletter, who sees many young people turning away from alcoholic beverages because they think it is bad to drink even moderate amounts. There are still plenty of college students, of course, who engage in binge drinking as a recreational sport.

Beermakers are confounded, Steinman added. "Nobody knows exactly how to talk to these consumers," he said. "It's a combination of their short attention span and the information glut."

Information glut or no, Anheuser-Busch and Philip Morris Cos.' Miller Brewing unit _ No. 1 and No. 2 in the industry, together accounting for two-thirds of domestic sales _ have begun a blitz aimed at this latest demographic target, with a certain amount of anecdotal success.

"It's that "twisted childish humor,' " said Janine Misdom, a partner at Sputnik, a Manhattan marketing firm, who says her under-30 correspondents like the Budweiser commercials in which lizards ruminate enviously on the popularity of some frogs and plot their demise.

"It's funny, it's a little bit nostalgic, and there is a little bit of the bad-boy thing," Misdom said, adding that all this appeals to au courant 21-year-olds. "To get a clue of what's inside their heads, pick up the magazines they read, like Transworld Skateboarding. They've all grown up on this offbeat humor."

Miller has taken its marketing cues from the same kind of humor since repositioning the brand a year ago, with 43 commercials to go on the air this year _ up from just seven in 1996.

"This is a savvy audience," said Mike Johnson, brand director for Miller Lite. "They started shopping earlier, they've had candy marketed to them, they've had Channel One in their classrooms. They've been there, they've done that, they've bought the T-shirt."

To overcome that, Miller's strategy is to have constantly changing television ads, in order to promote the theme of "fun, fresh, unexpected, entertaining."

Miller is even going so far as to incorporate that theme into its Miller Lite cans and bottles. In a campaign unveiled last month, the packaging for the brand is to include witty, somewhat offbeat lines, like "Hi There" and "No Assembly Required." It's what the marketing chief at Miller, Jack Rooney, likes to call "an interactive package."

Miller Lite's image had been in sorry shape before the switch, Rooney added. "The consumer base had grown older. And the worst situation of all for us was that Miller Lite had become viewed as a generic light beer, the default light. It was not as compelling as our competition."

The new packaging will go nationwide in June. The choice of Texas as a launching pad hints at worry within Miller that the Lite brand will be overtaken in Miller's biggest single market by Bud Light, which is made by Anheuser-Busch and has so far come up with amusing ads showing two roommates, one smart and one not so smart, in pursuit of the same beer.

The marketing for Bud Light has been a hit, helping to lift its volume more than any other beer, up 68.2-million gallons, a 10 percent pace. By contrast, Miller Lite, whose Dick-the-creative-superstar campaign over the last year has been controversial, gained just 1.9 percent last year.

"It's a problem market for them, since it's very price-competitive and Bud Light has come on very strong," said Frank Walters, senior vice president and research director for Impact. "Miller can't let anything happen to this brand. It's 38 percent of their volume."

Johnson insisted that Texas had always been competitive. "And we're very much in the lead," he said.

At Genesee Brewing Co., a marketing onslaught is being prepared for summer to push the company's JW Dundee's Honey Brown Lager, which hit the market three years ago and has grown impressively, especially considering that it seems to be neither fish nor fowl.

"We're taking the specialty brand and giving it a more mainstream look," said Mark Holdren, vice president for marketing services at Genesee, the country's sixth-largest brewery. "But we're still maintaining some of its quirkiness. That's what we have to do to be successful in that younger market."

It has sold about 400,000 barrels of the company's total 1.8-million barrels in the current fiscal year, ending April 30. The brand grew 42 percent in fiscal 1997.

Another prong of the effort is bringing in a Santa Monica, Calif., ad agency, Ground Zero, to create commercials and promotions around the brand. Those include a hot line for people to call for what Holdren referred to as "words of wisdom" from a still-secret character who is supposed to embody the brand and a contest in which the prizes are "adventure travel" trips to places like Nepal, Belize and coastal Mexico.

Such hybridization may be what the next generation of beer drinkers ends up with, as corporations try to respond to all their conflicting signals. Of course, beer companies have contributed to the confusion, taking microbrews under their wings and even advertising mass-market brands in terms of their ingredients or heritage, as craft beers often do.

"The microbrews wreaked havoc with the industry and turned it upside down," Grasse said. "People see through the fakeness of the microbrews. They're not really micro. Even if they are, so what? Just give me something that tastes good."