MillerCoors estimates that nine of every 10 shandy beers sold in the United States are from Jacob Leinenkugel Brewing Co., boosting a craft beer brand that has struggled in other parts of its business.
Leinenkugel’s saw sales to retail down in the low-single digits during parent company MillerCoors’ second quarter, but the shandy portfolio grew by low single digits.
The growth was driven by Grapefruit Shandy and MillerCoors is planning a national ad campaign to support the Grapefruit and Summer Shandies through the rest of the peak season.
“For Leinenkugel’s, it’s really a story of two parts,” said Scott Whitley, president and chief beer merchant of Tenth and Blake Beer Co., the craft beer division of MillerCoors.
Both Whitley and MillerCoors chief executive officer Gavin Hattersley said the shandy portfolio has had strong performance.
"The heritage Leinenkugel’s beer brands have been a challenge, admittedly and that’s something we're focused on trying to stabilize," Whitley said.
Whitley and Hattersley noted that sales of seasonal and variety packs have struggled in recent months.
“The seasonal and variety packs have been a big challenge for the industry because of consumers migrating away from those packs,” Whitley said.
Kevin Doyle, MillerCoors president for sales and distributor operations, said retailers have also been reducing the shelf space available for larger regional and national craft brands, opting to carry smaller, local brands.
“For national crafts, it’s been a bit of a tougher go from a growth profile standpoint,” Whitley said.
MillerCoors executives said they are still confident in the potential for their craft and above premium brands. In particular, they highlighted Blue Moon Belgian White, which is part of Blue Moon Brewing Co.
Hattersley said MillerCoors’ Milwaukee brewery has started brewing, packing and shipping Blue Moon Belgian White and other seasonal beers. The company is in the process of closing its Eden, North Carolina brewery and shifting work to other facilities, including Milwaukee.
The company has also grown its presence in the craft beer space with the acquisitions of Terrapin Brewing Co. and Hop Valley Brewing Co. announced during July.
Whitley said the companies have strong brands and styles that complement the company’s portfolio. He said the first step after the acquisitions close later this year is to make sure the proper capacity is in place and then to help the brands take advantage of MillerCoors’ scale.
"The goal is, obviously down the road, for these to be significant contributors to our above premium portfolio and performance," Whitley said.
Overall, the MillerCoors joint venture between SABMiller plc and Molson Coors Brewing Co. reported net income of $429.5 million during the quarter, a drop of 11.8 percent from the previous year. Revenue was down 3.5 percent to $2.13 billion.
Sales to retail for Coors Light and Miller Lite were flat during the quarter. The company credited Miller Lite’s “spelled different because its brewed different" marketing campaign and "Americana" packaging for the brand’s performance. Likewise, Coors Light’s “Climb On” campaign and other programs were credited for performance.
“For the first time in many years, we are in line with our volume expectations through the first half of the year,” said Hattersley. “The second quarter started slow, but we finished strongly in June, driven by our two American light lagers."