New brews from Bud, Miller hike the alcohol

They're trying to regain ground lost to stronger craft beers and shed the 'watery' reputation of their light beers.

By Jonathan Berr 

 

If you're Anheuser-Busch In-Bev (BUD -0.64%) and MillerCoors, which have battled stagnant beer demand for years, here's a simple way to create more buzz for your products: ratchet up their alcohol content.

According to Advertising Age, MillerCoors, which is a joint venture between SABMiller and Molson Coors (TAP -1.32%), plans to introduce Miller Fortune next year, which has 6.9% alcohol by volume (ABV). A-B InBev recently began selling Bud Light Platinum and Budweiser Black Crown, which each have about 6% ABV. Most light beers have 4.2% ABV.

The premium-price potent brews helped boost sales at AB-InBev in the most recent quarter even though volumes fell. The brewers are betting that increasing ABV will help blunt the impact of the surging popularity of craft beers and other types of alcoholic drinks that have flattened sales of light beer in recent years.

As I recently noted on moneyNOW, market research by Consumer Edge cited by CNBC found out that 40% of drinkers in the 21-27 age group have grown "tired of the taste" of premium light beers, and 37% described them as "watery."

Miller Fortune will broadly appeal to men born in the 1980s-2000s, "but it's got a sweet spot with Hispanics and African-Americans," MillerCoors VP-innovation David Kroll  told Ad Age. That concerns activist groups such as Alcohol Justice, which are worried that brewers are targeting more potent beverages to minorities.

Booze's harm to the U.S., such as crime and disease, is about $94 billion annually, according to the activists, which works out to about 80 cents per drink. David Jernigan, a professor at the Johns Hopkins Bloomberg School of Public Health, told Ad Age that brewers used code words such as "edge" to get around legal prohibitions against touting the alcoholic strength of their products.

Shares of A-B InBev now trade around $97.50, having surged more than 23% over the past year. Molson Coors is just over $50, rising by 17.5% so far in 2013.

Jonathan Berr does not own shares of the listed stocks