US-Miller Brewing sees imports gaining traction

19:16 06Mar2006 Reuters Summit-

By Anupama Chandrasekaran

CHICAGO (Reuters) - Mass market U.S. beer brands may be seeing dark days but Miller Brewing Co, the No. 2 U.S. brewer, is confident that its high-end imported brands like Peroni Nastro Azzurro and Pilsner Urquell will shine, outpacing the U.S. super premium category.

While domestic beers are suffering in the United States, premium imported beers are a fast growing category. In 2005, domestic beer shipments fell 0.2 percent, while shipments of imports rose 7 percent, according to Beer Marketer's Insights.

"Everyone is saying beer is flat, beer is dead, beer isn't growing. And that is true in the United States," said Tom Cardella, senior vice president of international brands of Miller Brewing, a fully-owned subsidiary of London-based brewer SABMiller (SAB.L: Quote, Profile, Research, Stock Buzz)(SABJ.J: Quote, Profile, Research, Stock Buzz).

"The interesting thing is imported beer is growing," Cardella said speaking at the Reuters Food Summit in Chicago.

Cardella said imported beers are growing at a 10-year compounded rate of 8 percent in the United States but Miller sees its brands growing at a higher rate than that.

In 2005, imports comprised 12.5 percent of the 205 million barrel U.S. beer market. Miller has a 3 percent share of the imports market in the United States.

But that share is expected to grow slowly as the company hikes advertising spends on the brands to position them in the higher end of the 'worth-more' or above-premium category.

London-based SABMiller -- which bought No. 2 U.S. brewer Miller in 2002 -- said last week that it would invest $50 million over the next 18 months in a new global brand campaign for its Peroni beer.

Rival Anheuser-Busch Cos Inc. (BUD.N: Quote, Profile, Research, Stock Buzz), which initially said it will exclusively import and distribute Dutch brewer Grolsch NV's GROLc.AS beers from 2007, now plans to do it starting this April itself.

"It is competitive and it is expensive," Cardella said. "We are overinvesting behind these brands in the United States but it is an opportunity in the mid to long term."

With Peroni, Miller is targeting an audience that fits the profile of wine and spirits consumers with an equal emphasis on men and women, unlike beer, which is highly skewed toward men.

The U.S. beer industry has suffered largely because consumer tastes have shifted toward cocktails and wine.