Less Thrilling

Along with lack of growth in real incomes, lost manufacturing jobs and rising household expenses, beer companies are feeling the effect of consumers "trading up."

Across many consumer product industries, manufacturers are finding that people want better things: richer coffee, tastier food, bigger houses, silkier sheets, extra amenities in cars, higher design in their home furnishings and more luxurious bathrooms. Manufacturers and designers are scrambling to bring what's often called "a higher taste profile" to the masses. Kmart linked up with Martha Stewart. Target promotes designers Michael Graves, Isaac Mizrahi and Todd Oldham, among others. Design catalogues stream through people's mailboxes, and home remodeling shows proliferate on cable.

That is playing out in the beer industry, too, experts say.

"If you look at what's growing in the beer industry, it's import and craft beers. They're higher priced and perceived as luxury products," said Harry Schuhmacher, publisher of Beer Business Daily, an industry newsletter. "And so if you look at the whole alcohol category, people perceive wine and spirits as high-end, so there's some trading up between beer and wine and spirits."

One of the ways the beer industry has tried to counteract the slide in sales is by cutting prices. After regularly increasing the price of a six-pack through much of the 1990s, in the past two years the price of mass-market beer has been sliding. Just last month, Anheuser-Busch announced it would again forgo the traditional autumn price hike for its beer.

Industry observers worry that such an approach only makes the brewers' problems worse in the long run.

"If you fight on price, it's not necessarily helping the brand image of beer," said analyst Herzog. "It could be hurting the brand equity."

Beyond pricing, though, the nation's two biggest brewers have taken markedly different approaches to tackling the industry's woes. For Anheuser-Busch, the defense is built largely around new products -- innovative malt-based beverages that company executives believe will increase the number of occasions that people drink beer or any other Anheuser-Busch product. At SABMiller PLC, the focus is on marketing to improve the image of beer, thereby making it a more acceptable choice for more consumers in a wider variety of settings.

Miller Takes a Chance

It has been hard to miss the new ad campaign from Miller on television these days. The company has chosen high-profile shows to run its new campaign for subpremium Miller High Life beer, including a debut on the season premieres of "Survivor: Guatemala" and "The Apprentice."

The commercial is a highly evocative series of historic and sophisticated images that tout the American heritage of Miller and the good times and good feelings that are so, well, American (notwithstanding the fact that Miller is now owned by a British conglomerate).

In its softness and approach, the ad is clearly aimed at a more educated and more female audience than the traditional sports-centered beer commercials so familiar to viewers.

Not only are versions of Miller's new commercial airing at an unheard-of length of 90 seconds, they have even popped up on morning cable news programming. That's gotten the company a lot of buzz in the industry.