Yuengling's Success Story

AdAge has a headline that reads: D.G. Yuengling & Son Becomes America's Largest Brewer. Of course, once you get into the meat of the article you see that it's technically true because all the major beer conglomerates have now all been acquired by even bigger foreign conglomerates, not because of some ridiculous growth trend in Central Pennsylvania.

(from stevegarfield on Flickr)

Still, I was struck by this quote:
Yuengling's growth -- which was fueled by a huge launch in Ohio last year -- is remarkable considering that the overall beer industry remains in a funk. Total beer shipments fell by 1.4%, according to Beer Marketer's Insights, continuing a multi-year slump.
I don't find Yuengling's growth especially remarkable at all, and unless you're only judging the company from it's income statement and balance sheet, I think many people who enjoy anything other than light beer feel similarly.

Yuengling has a unique market position. When you go into a bar, it's often lumped into the "domestics" category, along with Bud Light, Miller Light, Coors Light, etc. So when a bar runs a happy hour special, like $2 domestic bottles, you essentially have your choice of Yuengling or light beer; and plenty of people feel that Yuengling is a superior quality beer.

Craft beer snobs may still be the minority of beer consumers, but there are enough of them to matter, and their numbers are growing. For all the talk about how the beer market has been shrinking in recent years, the numbers clearly show that it's at the expense of the conglomerates, not the small craft brewers.

Yuengling is a great compromise beer in this respect. People who wouldn't be caught dead holding a Coors Light might be perfectly willing to have a Yuengling if it's part of a happy hour special or it's what their friends have in the fridge.

I think the ratings over at Beer Advocate cement my case. As of today, Yuengling comes in at 79 out of 100. In school, that would be a high C - not a score worth hanging on the fridge, but not an unacceptable failure either. Bud Light, Coors Light and Miller Light score 49, 51 and 56 respectively - all of which would earn a big fat F.

As long as Yuengling can continue to hang around in the "domestics" category, I think it will continue to do well. If it ever gets bumped anywhere near the "craft" category and starts getting priced as such, I think that momentum will grind to a halt.

2 comments:

    On January 20, 2012 Anonymous said...

    I wouldn't be surprised if Yuengling tried to move from a compromise to high end position. I think Negra Modelo managed it. I happen to think Negra Modelo tastes better than Yuengling, but I hear there's no accounting for that.

     

    People who drink craft beer exclusively are still a small fraction of the market; many do include it as part of their total beer consumption, though. But Yuengling wins on other factors, the craft compromise you propose is a minor one. People buy Yuengling because of the story and history as a family-owned business that is America's oldest brewery; they buy it because it's darker in the glass than light beer but doesn't taste a lot fuller; they buy it because it's NOT a mega-corporation beer; they buy it because it's something you can't get outside of the 14 states where it's currently sold. And yeah, some of us buy it simply because we like it.
    The truly surprising thing is that Yuengling Lager, while firmly in the price/appearance category of a mainstream lager, is growing as a "full calorie" beer. That makes it almost unique. Budweiser has slipped from a high of 50 million barrels to current annual sales of 17.7 million barrels, Coors Banquet has all but disappeared, Miller High Life and MGD dwindle. Pabst is holding its own, and largely for the same reason Yuengling is doing well, I believe: a lack of manipulative marketing and ads. People don't want that. And they're buying that way.