Miller Brewing Company

3939 West Highland Boulevard
Milwaukee, Wisconsin 53201
U.S.A.

Wholly-owned subsidiary of Philip Morris, Inc.
Incorporated: 1888
Employees: 11,000
Sales: $2.92 billion

Between the establishment of the Miller Brewing Company in 1855 and the death of its founder in 1888, the firm’s annual productive capacity increased from 300 barrels to 80,000 barrels of beer. This impressive growth has continued to the present day: Miller now operates six breweries, five can manufacturing plants, four distributorships, a glass bottle production facility, a label and fiber-board factory, and numerous gas wells. Beginning with a staff of 25, Miller now employs some 11,000 people. The company currently produces more than 40 million barrels of beer per year and is the second largest brewery in the U.S.

The founder of the Miller Brewing Company, Frederick Miller, was born in Germany in 1824. As a young man he worked in the Royal Brewing Company at Sigmaringen, Hohenzollern. In 1850, however, at the age of 26, he emigrated to the United States. Miller wanted to start his own brewery and regarded Milwaukee as the most promising site, probably because of the large number of beer-drinking Germans living there.

In 1855 Miller bought the Plank Road Brewery from Charles Lorenz Best and his father. These two men had been slow to modernize their operation, but Miller’s innovative techniques made him successful, indeed famous, in the brewing industry.

The Bests had started a “cave-system” which provided storage for beer in a cool undisturbed place for several months after brewing. Yet these caves were small and in poor condition. Miller improved upon the Best’s system: his caves were built of brick, totaled 600 feet of tunnel, and had a capacity of 12,000 barrels. Miller used these until 1906 when, due to the company’s expansion and the availability of more modern technology, refrigerator facilities were built.

After his death, Miller’s sons Ernest, Emil, and Frederick A., along with their brother-in-law Carl, assumed control of the operation which was incorporated as the Frederick Miller Brewing Company. By 1919 production had increased to 500,000 barrels, but it was halted shortly thereafter by the enactment of Prohibition. The company managed to survive by producing cereal beverages, soft drinks, and malt-related products.

Ernest Miller died in 1922 and was succeeded as president by his brother Frederick A. Miller. Frederick A. remained president and chief executive until 1947 when his nephew, Frederick C., became head of the firm. Frederick C. instituted a program of expansion, and was instrumental in bringing major league baseball (the Braves) to Milwaukee, thus strengthening the relationship between the beer industry and the sporting world. The cultivation of this relationship led to increased sales for Miller. But tragedy struck when Frederick C. was killed in a plane crash in Milwaukee during 1954. At the time of his death, the Miller Brewing Company was ranked ninth among American brewers.

The expansion program initiated in 1947 was continued by Norman Klug who became president following Miller’s death. Under Klug’s management, Miller purchased the A. Gettelman Company in 1961, and four years later bought the General Brewing Corporation of Azusa, California. That same year, the firm purchased a Carling O’Keefe brewery in Fort Worth, Texas. By this time Miller had formed a can manufacturing company in Milwaukee with the Carnation Corporation. The plant produced approximately 150 million beer cans a year.

Just before Klug’s death, arrangements had been made for a diversified shipping firm, W.R. Grace, to acquire 53% of the brewing company. The Miller stock was owned at that time by Mrs. Lorraine Mulberger and her family, descendents of Frederick A. Miller. The Mulbergers were paid $36 million but Grace soon discovered that its purchase was significantly undervalued.

Because of its cash reserves and growing importance within the industry, Miller was a prime acquisition target; in 1969 management at Grace decided to sell its interest in Miller to PepsiCo for $120 million. Yet suddenly, and without warning, Grace cancelled the agreement and almost immediately sold its shares to Philip Morris for $130 million. PepsiCo filed suit in federal court to prevent this, but the suit failed.

Philip Morris purchased the remaining shares of Miller’s stock from the De Rance Foundation of Milwaukee in the following year (1970). In 1971 Miller extended its production activities in Fort Worth, obtained a tract of land in Delaware as a possible site for a new brewery, and also acquired Formosa Springs, a Canadian brewery. By 1972 Miller Brewing ranked seventh in the beer industry.

Under the Philip Morris management, Miller’s marketing strategies and advertising campaigns became more important than ever before. Aiming to replace Anheuser-Busch as the nation’s largest brewer, the company expanded its range of brands and penetrated all segments of the market. As a result, production rose from seven million barrels in 1973 to 31 million barrels in 1978.

Led by John Murphy, a Philip Morris executive trained as a lawyer and with notable marketing ability, the company began a thorough study of American beer drinking trends. Miller had been known previously as “The Champagne of Beers,” and its advertising campaigns were directed to appeal to a specific group of white-collar consumers. Murphy revised this strategy and reoriented it toward the large blue-collar market with an emphasis on the work-reward relationship. Miller’s new slogan was: “If you’ve got the time, we’ve got the beer.” This slogan, and the marketing plan behind it, led to increased sales.

By 1985 reduced calorie beers accounted for 20.5% of all beer sales. Miller has the distinction of initiating this market with its Miller Lite, which still remains the number one product in this category. Rather than marketing Miller Lite as a diet beer, the company emphasized its lower calorie content and its unique flavor. Once again it was clever advertising that accounted for Miller’s success. Television advertisements showed brawny men enjoying Miller Lite; the slogan proclaimed: “Everything you always wanted in a beer. And less.” The Miller Lite allstars, included such personalities as Rodney Danger-field and John Madden, have continued this approach in the beer’s award-winning commercials. In 1986 the tagline emphasized the beer’s uniqueness: “There’s only one Lite beer. Miller Lite.”

Miller’s rivals soon responded with low calorie beers of their own, and the company tried to prevent brewers such as Schlitz and Heileman from using the world “Light.” Fortunately for Miller’s rivals—and for the English language—the U.S. Supreme Court ruled that Miller did not have exclusive rights to the word.

Shortly after the introduction of Miller Lite, the company began to market a domestically brewed version of Löwenbräu—a German beer with a 600-year old history—to which Miller owned the U.S. distribution rights. In an $11 million advertising campaign, Miller captured 10% of Anheuser-Busch’s Michelob market. Anheuser-Busch promptly filed suit with the Federal Trade Commission accusing Miller of using deceptive packaging and advertising in order to convince consumers they were buying an imported beer. Later, when Anheuser-Busch introduced its “Natural Light” beer, Miller retaliated by pointing out that there was nothing natural about Anheuser-Busch’s product. The publicity garnered from these “beer wars” helped Miller to improve its standing within the brewing industry; by the early 1980’s, Miller was in second place behind Anheuser-Busch.

After Miller brew beer, it is filtered, aged, and finally packaged. Most packaged beers are pasteurized, but two Miller products are unique because they require no pasteurization; in effect, they are real draft beers in a bottle. Plank Road Original Draft and Miller Genuine Draft are made with special cold filtering process (purchased from Sapporo Breweries in 1985) that removes the yeast residue and allows the beer to be packaged without pasteurization (which, because it involves heating the beer, affects its flavor). Although the shelf life for these two items is the same as other packaged beer (approximately 120 days), consumers have noticed the difference in taste. Sales have skyrocketed since their introduction.

Miller’s presidents since Murphy—John Cullman, George Weisman, and the current president William Howell—have resolutely continued their company’s efforts to dislodge Anheuser-Busch as America’s largest brewery. Yet the company still has a long way to go. At present, Miller sells 40 million barrels of beer a year and has a 20% market share, as compared with Anheuser-Busch’s 67.8 million barrels and 36.6% market share. The competition between the two largest breweries in the U.S. continues.

Further Reading

Heritage Born and Pledged Anew, Milwaukee, Miller Brewing Company, 1955; Brewed in America: A History of Beer and Ale in the U.S. by Stanley Wade Baron, New York, Arno Press, 1972.

Miller Brewing Company

3939 West Highland Boulevard
Milwaukee, Wisconsin 53201
U.S.A.
(414) 931-2000
Fax: (414) 931-3735

Wholly Owned Subsidiary of Philip Morris, Inc.
Incorporated: 1888
Employees: 9,600
Sales: $4.2 billion
SICs: 2082 Malt Beverages

Between the establishment of the Miller Brewing Company in 1855 and the death of its founder in 1888, the firm’s annual productive capacity increased from 300 barrels to 80,000 barrels of beer. This impressive growth has continued to the present day: Miller now operates six breweries, five can manufacturing plants, four distributorships, a glass bottle production facility, a label and fiberboard factory, and numerous gas wells. Beginning with a staff of 25, Miller now employs about 9,500 people. The company currently produces more than 40 million barrels of beer per year and is the second largest brewery in the United States.

The founder of the Miller Brewing Company, Frederick Miller, was born in Germany in 1824. As a young man he worked in the Royal Brewing Company at Sigmaringen, Hohenzollern. In 1850, at the age of 26, he emigrated to the United States. Miller wanted to start his own brewery and regarded Milwaukee as the most promising site, probably because of the large number of beer-drinking Germans living there.

In 1855 Miller bought the Plank Road Brewery from Charles Lorenz Best and his father. These two men had been slow to modernize their operation, but Miller’s innovative techniques made him successful, indeed famous, in the brewing industry. The Bests had started a “cave-system” which provided storage for beer in a cool undisturbed place for several months after brewing. Yet these caves were small and in poor condition. Miller improved upon the Best’s system: his caves were built of brick, totaled 600 feet of tunnel, and had a capacity of 12,000 barrels. Miller used these until 1906 when, due to the company’s expansion and the availability of more modern technology, refrigerator facilities were built.

After his death, Miller’s sons Ernest, Emil, and Frederick A., along with their brother-in-law Carl, assumed control of the operation which was incorporated as the Frederick Miller Brewing Company. By 1919 production had increased to 500,000 barrels, but it was halted shortly thereafter by the enactment of Prohibition. The company managed to survive by producing cereal beverages, soft drinks, and malt-related products.

Ernest Miller died in 1922 and was succeeded as president by his brother, Frederick A. Miller. Frederick A. remained president and chief executive until 1947 when his nephew, Frederick C., became head of the firm. Frederick C. instituted a program of expansion, and was instrumental in bringing major league baseball (the Braves) to Milwaukee, thus strengthening the relationship between the beer industry and the sporting world. The cultivation of this relationship led to increased sales for Miller. But tragedy struck when Frederick C. was killed in a plane crash in Milwaukee in 1954. At the time of his death, the Miller Brewing Company was ranked ninth among American brewers.

The expansion program initiated in 1947 was continued by Norman Klug, who became president following Miller’s death. Under Klug’s management, Miller purchased the A. Gettelman Company in 1961, and four years later bought the General Brewing Corporation of Azusa, California. That same year, the firm purchased a Carling O’Keefe brewery in Fort Worth, Texas. By this time Miller had formed a can manufacturing company in Milwaukee with the Carnation Corporation. The plant produced approximately 150 million beer cans a year.

Just before Klug’s death, arrangements had been made for a diversified shipping firm, W. R. Grace, to acquire 53 percent of the brewing company. The Miller stock was owned at that time by Mrs. Lorraine Mulberger and her family, descendants of Frederick A. Miller. The Mulbergers were paid $36 million but Grace soon discovered that its purchase was significantly undervalued. Because of its cash reserves and growing importance within the industry, Miller was a prime acquisition target; in 1969 management at Grace decided to sell its interest in Miller to PepsiCo for $120 million. Yet suddenly, and without warning, Grace canceled the agreement and almost immediately sold its shares to Philip Morris for $130 million. PepsiCo filed suit in federal court to prevent this, but the suit failed.

Philip Morris purchased the remaining shares of Miller’s stock from the De Rance Foundation of Milwaukee in 1970. In 1971 Miller extended its production activities in Fort Worth, obtained a tract of land in Delaware as a possible site for a new brewery, and also acquired Formosa Springs, a Canadian brewery. By 1972 Miller Brewing ranked seventh in the beer industry.

Under the Philip Morris management, Miller’s marketing strategies and advertising campaigns became more important than ever before. Aiming to replace Anheuser-Busch as the nation’s largest brewer, the company expanded its range of brands and penetrated all segments of the market. As a result, production rose from seven million barrels in 1973 to 31 million barrels in 1978.

Led by John Murphy, a Philip Morris executive trained as a lawyer and with notable marketing ability, the company began a thorough study of American beer drinking trends. Miller had been known previously as “The Champagne of Beers,” and its advertising campaigns were directed to appeal to a specific group of white-collar consumers. Murphy revised this strategy and reoriented it toward the large blue-collar market with an emphasis on the work-reward relationship. Miller’s new slogan was: “If you’ve got the time, we’ve got the beer.” This slogan, and the marketing plan behind it, soon led to increased sales.

By 1985 reduced calorie beers accounted for 20.5 percent of all beer sales. Miller has the distinction of initiating this market with its Miller Lite, which still remains the number one product in this category. Rather than marketing Miller Lite as a diet beer, the company emphasized its lower calorie content and its unique flavor. Once again it was clever advertising that accounted for Miller’s success. Televisión advertisements showed brawny men enjoying Miller Lite; the slogan proclaimed: “Everything you always wanted in a beer. And less.” The Miller Lite allstars, included such personalities as Rodney Dangerfield and John Madden, have continued this approach in the beer’s award-winning commercials. In 1986 the tagline emphasized the beer’s uniqueness: “There’s only one Lite beer. Miller Lite.”

Miller’s rivals soon responded with low calorie beers of their own, and the company tried to prevent brewers such as Schlitz and Heileman from using the world “Light.” Fortunately for Miller’s rivals—and for the English language—the U.S. Supreme Court ruled that Miller did not have exclusive rights to the word.

Shortly after the introduction of Miller Lite, the company began to market a domestically brewed version of Löwenbräu—a German beer with a 600-year old history—to which Miller owned the U.S. distribution rights. In an $11 million advertising campaign, Miller captured 10 percent of Anheuser-Busch’s Michelob market. Anheuser-Busch promptly filed suit with the Federal Trade Commission accusing Miller of using deceptive packaging and advertising in order to convince consumers they were buying an imported beer. Later, when Anheuser-Busch introduced its “Natural Light” beer, Miller retaliated by pointing out that there was nothing natural about Anheuser-Busch’s product.

Due to the phenomenal success of Miller Lite, Miller was in second place behind Anheuser-Busch by the early 1980s. But as Miller Lite sales were climbing, sales of Miller High Life began falling. Between 1981 and 1986, High Life sales dropped 60 percent. The decline was offset by Miller Lite and also by the introduction of Milwaukee’s Best and Meister Brau, two lower-priced beers that grew to represent 16.9 percent of the company’s output by 1988. Equally important in maintaining Miller’s market share was the 1985 introduction of Miller Genuine Draft, one of the first premium unpasteurized beers to be made in the United States. Due to heavy advertising campaigns and a unique market position, production of Genuine Draft grew to 2.3 million barrels within the first two years.

Despite the success of Miller Lite and Genuine Draft, Miller was having a hard time capturing market share from Anheuser-Busch. In 1987, combined sales of Anheuser’s Budweiser and Bud Light grew 23 percent while sales of all Miller products grew only 1 percent. Parent company Philip Morris began to grow nervous. Early in 1988, Miller’s president and chief executive William Howell took an early retirement. He was replaced by Leonard J. Goldstein, a senior vice-president with considerable marketing expertise.

One of the first moves Goldstein made was to purchase the Jacob Leinenkeugle Brewing Company, a 120-year-old micro-brewery that would provide Miller with a foothold in the growing “boutique beer” market. Although the 1989 beer market was sluggish, Miller increased its market to 21 percent, against Anheuser’s 41 percent. The following year, Goldstein was named chairman, succeeded by Warren Dunn as president and chief executive. Under the two, Miller’s market share continued to increase. By 1991, it had grown to 23 percent, or 43.5 million barrels. Yet Miller’s goal of unseating Anheuser-Busch from the number one position remained far off. Although the company was firmly in second place—with a 13 percent lead over Coors—Anheuser-Busch prevailed as the undisputed market leader, with 45.7 percent of the market.

By 1993, many in the U.S. beer industry felt the domestic market was stagnant. With the exception of Genuine Draft, sales of all Miller beers fell in 1992 and income dropped 13.6 percent to $260 million. Coors and Anheuser both cut their workforce in early 1993; by December Miller had followed suit, eliminating 13 percent of its workforce through closing a manufacturing plant in Fulton, New York, and trimming 300 white collar jobs from its headquarter operations.

That year, in an attempt to compete with Anheuser-Busch in the international market, Miller paid $273 million for U.S. distribution rights and a 20 percent stake in Canada’s Molson Breweries. Some analysts questioned the move, noting that although Molson was the leading brewer in Canada, its imports to the United States declined in the year preceding Miller’s purchase. However, Miller fared better than its competitors in 1993, due to the purchase of Molson, heavy discounting of its Miller High Life brand, and aggressive marketing outside the United States, where sales of Miller Genuine Draft climbed 29 percent. As growing consumer interest in small “boutique brands” continued to threaten Miller sales, the company further protected itself by purchasing the domestic distribution rights to Fosters Lager and other imported beers. Although the domestic beer market remained static, the company continued to see its sales increase through the first half of 1994, fueled by the introduction of Ice House ice-brewed beer, and Lite Ice.

Under parent Philip Morris, Miller’s focus in the 1990s was to dislodge Anheuser-Busch as America’s largest brewery. Yet by the middle of the decade the company still had a long way to go. Miller sold approximately 41 million barrels of beer a year and had a 21 percent market share, compared with Anheuser-Busch’s 67.8 million barrels and 36.6 percent market share. Miller’s growth between 1985 and 1995 was slow but steady. Like Anheuser, Miller saw its market share increase as smaller breweries continued to lose ground. The competition between the two largest breweries in the United States continued.

Further Reading

Baron, Stanley Wade, Brewed in America: A History of Beer and Ale in the U.S., New York: Arno Press, 1972.

Heritage Born and Pledged Anew, Milwaukee: Miller Brewing Company, 1955.

Jabbonsky, Larry, “Consider it Dunn,” Beverage World, September 1992, pp. 24–28.

O’Neal, Michael, “Can a Marketing Man Make it Miller Time Again?,” Business Week, February 1, 1988, p. 26.

—updated by Maura Troester

Miller Brewing Company

3939 W Highland Blvd.
Milwaukee, Wisconsin 53208-2688
USA
Telephone: (414) 931-2000
Fax: (414) 931-3735
Web site: www.millerbrewing.com

MILLER HIGH LIFE MAN CAMPAIGN

OVERVIEW

NOTE: Also see essay for SABMiller.

The Miller Brewing Company, a subsidiary of cigarette maker Philip Morris, was the second largest beer maker in the United States behind Anheuser-Busch. The Milwaukee-based company brewed about 44 million barrels of beer a year and controlled approximately 20 percent of U.S. sales. Popular Miller Brewing brands included Miller Genuine Draft, Miller High Life, and Icehouse, as well as Red Dog, Meister Brau, Milwaukee's Best, and the nonalcoholic brew Sharp's. Miller Brewing owned eight breweries in seven states, including California, Texas, and its home state of Wisconsin.

In 1998, in an effort to revive interest in its flagging High Life brand (once the company's flagship brew but now its third biggest selling brand behind Miller Lite and Miller Genuine Draft), Miller introduced High Life's first national ads in seven years. The ad campaign, "Miller High Life Man," was created by ad agency Weiden & Kennedy, based in Portland, Oregon, and launched on April 12 during professional basketball and baseball telecasts. The tongue-in-cheek commercials, aimed at young male beer drinkers, offered bombastic salutes to duct tape, donuts, diner food, and America's debt to the French for having invented mayonnaise. Miller Brewing Company spent an estimated $5-10 million on the campaign. The well-received television ads were reinforced by new packaging featuring sleek, tall bottles and incorporating the long-retired "Girl on the Moon" symbol and the brand's erstwhile catchphrase "The Champagne of Beers."

HISTORICAL CONTEXT

Brewed since the beginning of the twentieth century, Miller High Life was the foundation brand for the Milwaukee-based Miller Brewing Company, which emerged as the industry's principal challenger to Anheuser-Busch. Beginning in 1906 High Life was touted in ads as the "Champagne of Bottled Beer," in an attempt to appeal to more affluent and status-conscious consumers. By the time the Philip Morris Company acquired Miller in 1969, however, the tag line had contributed to a widespread perception of High Life as a rich man's brew. One typical print ad from then-agency Mathisson & Company of Milwaukee, featured a needlepoint rendition of the bottle with the tag line "Home Is Where the Miller Is."

The brewing giant's new owners immediately ordered a change in direction. The ad slogan was shortened to "Champagne of Beers," and the decision was made to position High Life as a working man's brew. McCann-Erickson, a New York-based agency, was enlisted to create new ads for the brand. Their campaign, using the tag line "Miller Time," helped quadruple sales of High Life between 1970 and 1978. At 21.7 million barrels annually, it ranked just behind Anheuser-Busch' s flagship brew, Budweiser.

In 1979 Miller shipped nearly 24 million barrels of Miller High Life to distributors. That proved to be the high water mark for the brand, however. A precipitous sales decline ensued, attributable to several factors. The rising popularity of imported beer, together with the emergence of the "light" category (a trail blazed by Miller itself with its revolutionary Miller Lite brand) helped erode sales of High Life during the 1980s. Budweiser found it could gain market share by imitating High Life's strategy of pitching the brand as the workers' reward. The 1985 introduction of Miller Genuine Draft also cut significantly into High Life's business.

In 1988, in an attempt to revive High Life's sales performance, Miller changed its packaging, abandoned the "Champagne of Beers" slogan, and developed new ad campaigns. Its last national ad push for the brand came in 1991 and employed the tag line "Buy that Man a Miller." Sales continued to decline, however, and in 1993 the brewer cut the brand's price and slashed its marketing budget. Once a major force in the premium category, where it competed with the likes of Budweiser and Coors, High Life now occupied a lower-priced segment dominated by brands like Busch.

By 1996 High Life shipments had sunk below 5 million barrels. The following year, extensive tactical discounting by the brewer helped spur sales 6.8 percent to 4.7 million barrels, making it the eighth largest selling beer in the country. The surprising reversal of fortunes prompted Miller to embark on a major new marketing push for 1998. Nostalgia-driven campaigns reviving the "Miller Time" tag line had already been created for Miller Lite and Miller Genuine Draft, so a back-to-basics approach was adopted for High Life as well.

While Miller executives did not expect High Life to reclaim its former prominence, it was expected to play an important role in making Miller competitive against lower-priced rivals. "[Miller High Life] has a loyal base of consumers, and we want to articulate what it stands for to people who don't know," said Bruce Winterton, Miller's brand manager for High Life and Miller Genuine Draft, in announcing the new campaign.

TARGET MARKET

Miller High Life's "High Life Man" ads were targeted primarily at males aged 21 to 27. Historically the United States's most prolific beer drinkers, this group represented both a demographic challenge and an opportunity for America's brewers. While their numbers declined by about 3 million between 1990 and 1998, experts expected the population of "entry-level drinkers," as they were known, to begin growing around the year 2000 and to increase 14 percent over the first five years of the new millennium.

Studies showed these youthful beer drinkers to be both highly brand conscious and notoriously lacking in brand loyalty, making them an attractive challenge for advertising professionals. "Studies have indicated that is where we have the greatest opportunity to influence brand choices," commented Jeff Waalkes, Miller Brewing sales communications manager. "Although the over-30 market comprises a large segment by volume, the fact is that brand choice is pretty well set by the time a person turns 30. Rather than attempting to get such consumers to switch at that point, we believe it's more effective to try to make Miller their first choice at an earlier period."

People in their twenties were also known to be very ad-resistant, making them a hard group to reach with traditional sales approaches. "They look at advertising and marketing as almost a spectator sport," said Steven Grasse, chief executive of Gyro Worldwide, a Philadelphia advertising agency that specialized in marketing to people ages 18 to 30. "This is a savvy audience," noted Mike Johnson, brand director for Miller Lite. "They started shopping earlier; they've had candy marketed to them; they've had Channel One in their classrooms. They've been there; they've done that; they've bought the T-shirt."

To reach these jaded young consumers, beer companies often tried out offbeat marketing and promotion ideas. Miller's strategy was to have constantly changing television ads, to promote the theme of "fun, fresh, unexpected, entertaining." Other companies relied on the kind of "twisted childish humor" that these consumers grew up on. According to Janine Misdom, a partner at Sputnik, a New York marketing firm, males under the age of 30 responded most favorably to the Budweiser commercials in which a talking lizard hatches a murder plot against a group of frogs. "It's funny, it's a little bit nostalgic, and there is a little bit of the bad-boy thing," Misdom said. "They've all grown up on this offbeat humor."

COMPETITION

The beer industry remained highly competitive in 1998, with little change from the previous year in terms of market position among the major brewers. Anheuser-Busch set the pace overall in 1997, with 47.5 percent of the U.S. beer market, the same figure as 1996, according to the Maxwell Consumer Report published by analyst Jack Maxwell of Davenport & Company. Its flagship brand Budweiser was off 2 percent, which in the sluggish premium segment represented "the best performance by the brand in six years," according to Anheuser-Busch officials. Miller Brewing ended the year with a total market share of 21.4 percent. Shipments were up in double-digits for Foster's, Icehouse, and Red Dog, while Miller High Life and Milwaukee's Best also showed strong increases. Bringing up the rear of the market were Coors Brewing, at 10.9 percent, and Stroh Brewery (including former Heileman products) at 7.4 percent.

After being outspent by Miller Brewing Company in 1997, Anheuser-Busch announced plans to invest more than $300 million in brand ads in both 1998 and 1999. True to its word, the St. Louis-based brewer increased ad spending 54.7 percent to $187.2 million during the first six months of 1998, according to Competitive Media Reporting. Much of the new spending went to the Budweiser and Bud Light brands, while Anheuser-Busch retrenched in the specialty, ice, and dry beer segments. In early 1998 Anheuser-Busch also announced plans to launch a new, contemporary campaign directed at adult drinkers. The spots featured humans, rather than the brewer's popular animated lizards and frogs. While the reptiles remained a part of the company's creative mix, ads with people allowed Anheuser-Busch to portray consumers having a good time with beer, according to Bob Lachky, vice president of brand management for Anheuser-Busch.

MARKETING STRATEGY

Miller High Life's "High Life Man" ad campaign was designed to remain faithful to the blue-collar roots of the brand, even as its humorous style attracted younger beer drinkers. The ads, directed by Errol Morris of @radical. media, all featured a shadowy figure known as "High Life Man," whose activities are commented upon by an unseen narrator. "We are trying to emphasize the simplicity, pride, and common sense that are valued by Miller High Life drinkers of all ages," said Winterton. "The High Life guy wants to eat what he wants, fix things himself, and do his own thing."

The "High Life Man" campaign blended populist themes from the 1970s "Miller Time" spots with the ironic humor popular in the 1990s. In one new commercial, "Duct Tape," a Miller High Life drinker demonstrates the power of the versatile adhesive as he places a swatch of duct tape on the door of an old refrigerator filled with bottles of High Life. "The High Life man knows that if the Pharaohs had duct tape, the Sphinx would still have a nose," a voice-over intoned.

In another ad, "Boat," a man leans on a rake as he watches his hapless neighbor attempt to back a car with a boat trailer into his driveway. "Time was a man knew how to command his own vehicle," says the narrator. "Just how far are we willing to fall? Better reacquaint yourself with the High Life, soldier, before someone tries to take away your Miller Time."

In a third ad, "Burger," viewers look on as several greasy hunks of ground beef are fried on a diner stove. "Something's not quite right," however, the voice-over informs us. Then the waitress tops a burger off with a generous dollop of butter, which elicits a pleased response: "There, now that's a sandwich … That's living the High Life. That's Miller Time." Another ad, "Deviled Egg," shows a disheveled man alone in his kitchen after a party, pondering the advisability of eating the last deviled egg left on the party platter. "Mmmm, that last egg's looking real good," says the unseen narrator. "You've had quite a few though. Maybe you shouldn't." Ultimately, however, the man decides to go for it. The narrator approves. "See there," he says. "When you have the High Life, you can live it both ways."

One ad in the campaign, "Doughnut," shows a close-up of grease on a mechanic's hand, as he flicks around a powdered doughnut. The narrator says it's not a problem if the man can't wash his hands properly, since the grease provides a "semiprotective barrier between your fingerprint and your nutrition." Grease, the voice-over concludes, is nothing but added flavor "to a High Life man."

TURNING BACK THE CLOCK

The Miller Brewing Company was not the only marketer looking to boost its profits by reviving a once popular brand. In fact, it was one of many companies following a growing nostalgia trend in 1998. German automaker Volkswagen, for example, hoped to tap into baby-boomer nostalgia by rolling out a redesigned version of its Beetle, a cheap compact car favored by college-age drivers in the 1960s and 1970s. And the Pepsi-Cola Company reformulated its orange Slice brand, redesigned its container, and launched commercials designed to revive interest among teens and young adults. Like High Life, Slice, introduced amid much fanfare in the mid-1980s, had not been advertised nationally in a decade.

Why revive a fading brand rather than create a new one? Because "we know something about those old brands," said Ned Levine, a marketing consultant based in Providence, Rhode Island. "You have people out there who think of something when they think of Miller High Life. If you can take the evocative nostalgic elements out of one of those brands, it's more efficient than starting from zero."

OUTCOME

Reaction to Miller's "High Life Man" ad campaign was largely positive, although there were a few brickbats. One beer industry rival dismissed the High Life effort, calling it "too little too late" and claiming that the new ads made fun of High Life drinkers "rather than giving them joy." Perhaps echoing this sentiment, almost a quarter of respondents polled by USA Today disliked the campaign, a high disapproval rate given that the average in all USA Today polls for respondents who disliked a campaign was 13 percent. Of some consolation to High Life's marketing team was the fact that men liked the new ads more than women did. Eighteen percent of men said they liked the "High Life Man" campaign "a lot," while only 8 percent of women did.

Most advertising critics, by contrast, found the ads witty and inventive. "The direction … is priceless," raved the reviewer for Advertising Age magazine. "Even the subtle nuance of the off-kilter logos at the end of each spot makes the work feel at once old-fashioned yet completely contemporary." "The spots seem real," added the critics at Adweek Western Advertising News. "They feel like beer tastes. If you like beer, that's a good thing."

Wieden & Kennedy's "Miller High Life Man" campaign won a number of advertising industry awards, including three Addy Awards. At the annual One Show Awards, the agency picked up two gold, two silver, and one bronze medals. "Mayonnaise" won the Gold Pencil in the 20-second or less, single ad category and "Sally," another spot in the campaign, took the Silver Pencil in that category. The campaign's "Sally," "Donut," and "Fridge" took the Gold Pencil in the varying lengths campaign category, while "Boat," "Mayonnaise" and "Router" earned the Silver Pencil in that category. In addition, Wieden & Kennedy took the Bronze Pencil in the 30-second campaign category for "Boat," "Duct Tape" and "Deviled Egg."

FURTHER READING

Arndorfer, James B. "Miller Restages High Life Brand with Nod to Past." Advertising Age, May 18, 1998, p. 27.

Canfora, Jack. "Manly Men Doing Manly Things: Direction, Execution Star at Miller." Advertising Age, May 31, 1999, p. S8.

Khermouch, Gerry. "Miller Litens Up." Brandweek, April 6, 1998.

Wells, Melanie. "Miller High Life Ads Get Low Grades." USA Today, March 22, 1999.

                                            Robert Schnakenberg

MILLER LITE'S MILLER TIME CAMPAIGN

OVERVIEW

On January 12, 1997, during championship games of the American and National Football Conferences and on the Fox Network's The X-Files, the Miller Brewing Company introduced Dick as its new spokesperson for Miller Lite. The series of four commercials all began in the same way, with a campy 1950s beer can logo bearing the slogan "Miller Time," a familiar tag line that had not been used since the mid-1980s, followed by a picture of Dick, apparently straight out of his 1975 high school yearbook, complete with long hair and sideburns. Each spot ended with a coda to the "Miller Time" logo, Dick's signature of approval and his statement "Thank you for your time," a la Bartles and Jaymes. In between the logos Dick told viewers, "Anything can happen."

The four scenarios lived up to this promise. In "Adios, Amigos," several cowboys stood at the bar of a saloon and drained their bottles of Miller Lite, after which they filed into the bathroom, sadly serenading their beers with the title song. In "Magician" the title character played a shell game with mice and Miller Lite, making one disappear and the other appear in its place, except that the mice ended up under the armpits of his blond assistant. "Man in the Field" showed the upper half of a walking man, his bowler hat bobbing above a field of wheat, but when he stepped past the end of a row, his naked bottom half was revealed. (Dick maintained modesty with a strategically positioned bottle cap.) "Product Tester" followed the adventures of Dick's friend Jimmy, who could not seem to let go of his bottle of Miller Lite as he tested it by tossing it off high buildings and throwing it down staircases. More scenarios in the $140 million campaign followed throughout 1997.

The initial critical response to the ads tended to be negative. Bob Garfield panned the ads in Advertising Age, calling them "a smug, masturbatory sort of advertising." Rance Crain, the magazine's editor, proclaimed, "Miller Lite's new agency, Fallon McElligott, has invoked the" Miller Time" heritage—which is nothing less than sacrilege—but has come up with ads so horrendously bad that I'm ready to revoke their 1996 Ad Agency of the Year award." Not all of the publication's readers shared this response, however. One reader wrote in to say that the ads amused him, as did the critical reaction.

Miller, of course, was more concerned with the reaction of its target audience. In the decade since the "Miller Lite All Stars" had last argued the "Great Taste/Less Filling" debate, Miller Lite's market share had fallen, and Anheuser-Busch's Bud Light, the main competition, had replaced Miller Lite as the best-selling light beer. To turn the situation around, Miller Lite reduced the age at the upper end of its target market, from 30- to 38-year olds, while simultaneously adopting a more hip tone that would resonate with a younger audience. According to Mike Johnson, Miller Lite's brand director, the basic element of the new strategy was to "create a lot of talk with contemporary adult beer drinkers." Even negative reactions to the advertisements worked in favor of this goal, for people talked more about Miller Lite. People not only talked, however; they also began to buy more Miller Lite.

HISTORICAL CONTEXT

In 1975 Miller Brewing introduced a new concept when it established the low-calorie, or "light," beer category, brewed to appeal to the taste buds as well as the paunches of beer drinkers. During the previous year filming had begun on commercials for the new "Miller Lite All Stars" campaign, created by the Chicago advertising agency Leo Burnett USA. The ads featured former athletes and coaches arguing whether it was better that the new beer "Tastes Great" or was "Less Filling." The "Tastes Great/Less Filling" tag line tattooed itself on the psyche of American popular culture through a sustained advertising campaign that ran until the cost of hiring ex-athletes became prohibitively expensive. The campaign eventually became a victim of its own success, explained Gina Shaffer, Miller's marketing communications manager, for as other advertisers followed the precedent set by Miller Lite, it drove the value of appearances by ex-athletes through the roof.

After Miller abandoned this tag line, it decided to revive "Miller Time," which had once been the slogan of its flagship brand, Miller High Life, and which had become a cultural icon. Although Miller had laid the slogan to rest in 1985, "Miller Time" maintained its currency in American culture. Jack MacDonough, Miller's chairman and CEO, spoke about the resurrection of the slogan: "We [hadn't] been talking Miller Time for the last fifteen years … But this society did. It's never gone away. In the sports pages, somebody named Miller [basketball player Reggie Miller] would do well and they'd say it was 'Miller Time' last night. The phrase continued in the popular culture, which is why it was so much fun to pick it up again."

While Miller executives made the task sound easy, executives at Fallon McElligott, the Minneapolis advertising agency that had wooed the Miller account away from Leo Burnett, approached the job with a more realistic perspective. Mary Van Note, Fallon McElligott's group planning director, recalled that "fear struck [her] heart" when she first heard of the assignment. "It's one thing to discuss how to jumpstart a brand," she said, "it's quite another to turn around one of the biggest beers in America." Such a transformation required innovation, risk, and self-confidence, all trademarks of Fallon McElligott.

TARGET MARKET

Miller wanted to redefine Miller Lite by narrowing the age span of the target audience. The lower end would remain at 21, the legal drinking age, but at the upper end the campaign would focus on those age 30, rather than extending to 38, which had been the strategy for many years. Beer drinkers typically establish their brand preference in their 20s and maintain steadfast allegiance into their 30s and beyond, thus making it very difficult for advertising to effect a switch. Fallon McElligott thus formulated the Dick campaign to appeal to those under 30 without alienating older beer drinkers.

The campaign used the character of Dick to reach Generation Xers through various media, including commercials aired during The X Files, promotional tie-ins with MTV's Singled Out, contests to win a behind-the-scenes look at the shooting of Sports Illustrated's swimsuit issue along with print ads in the magazine, and even a Miller Lite World Wide Web page, where computer users could play "Dick-tac-toe." Miller Lite had traditionally geared its advertising toward sports, and the new campaign continued to do so as a way of maintaining its over-30 base while simultaneously reaching its younger target market.

As was typical of Fallon McElligott's self-reflexive tendencies, this age division became the topic of a commercial in which Dick solicited the opinions of Miller plant workers about his ad campaign. In one commercial father and son Jimmy and Clint Nelson disagreed over Dick's campaign. Predictably, Jimmy, who had worked at Miller's Fort Worth plant for 18 years, did not like the bizarre commercials, while Clint, his bearded, longhaired, tie-dyed son, did. Critics labeled this tactic a postmodern spoof on advertising, but Fallon McElligott copywriter Linus Karlsson called it honest. "It's not spoofy … It's straightforward. This is Dick; this is what he does."

Leslie Savan of the Village Voice doubted such a simplistic formulation. Rather, she claimed, the slick postmodernism of the ads veiled their objectionable content. Savan pointed out that Dick's friend Jimmy in the "Product Tester" spot happened to be black, concluding that "commercials designed to appeal to white guys who drink beer by using a black man doing slapstick and looking stupid are in dangerous territory," bordering on blaxploitation. Miller seemed to be in safer territory when it appealed to diversity directly. It hired the Dallas-based firms Lucero Bentz and Square One to create a Spanish-language spot on the soccer rivalry between Spain and Argentina and hired Frazier Smith, a New York agency specializing in urban advertising, for a pair of rap commercials featuring Ice-T and Dr. Dre.

Miller's Shaffer defended Fallon McElligott's tactics. "We don't expect people to like every ad," Shaffer said. "You can't be meaningful to everyone at once. It's the recall. People can repeat to us, frame by frame, what the commercial is about." In order for recall to translate into retail, however, the consumer must remember the brand as well as the message. Ken Gutwillig, manager of the Press Box Sports Emporium in Tampa, said that customers found the ads "clever and interesting." But he reported that less than a third of them remembered that the commercials advertised Miller Lite.

COMPETITION

Until Bud Light introduced competition in 1982, Miller Lite dominated the low-calorie beer market it had created. In the 1990s, however, the market shares of Miller Lite and Bud Light practically flip-flopped. Miller Lite began the decade controlling 33 percent of the light-beer market, compared with Bud Light's 19 percent. By 1997, however, Miller Lite's share of the light-beer market had fallen to 22 percent, while Bud Light's had risen to 30 percent. "In the flattest of beer decades, Bud Light has been such an exception to the no-growth rule that you wonder whether it's actually a beer," stated Greg Prince in Beverage World. "For five consecutive years, the brand has added volume on an annual double-digit basis. That figure has actually increased from 1994 (10 percent) to '95 (11.5 percent) to '96 (13.9 percent)."

Bud Light overtook Miller Lite in 1995 on the strength of a series of successful ad campaigns that dated to the late 1980s when Spuds Mackenzie, the cool dog with the black eye, became a cultural phenomenon. Bud Light carried this momentum into the 1990s with the catchphrases "Yes I am" and "I love you, man." According to Bob Scarpelli of DDB Needham Chicago, Budweiser's advertising agency, these phrases "established the brand as hip, and that translates into sales." Bud Light's success stemmed largely from its strategy of targeting 21- to 30-year-old men, many of whom saw themselves mirrored in Mr. Insincerity, a character who at any opportunity that might reward him with a Bud Light would utter, "I love you, man."

In 1997 Bud Light competed against "Miller Lite's Miller Time" campaign with a new campaign—"What Do We Have Here?"—in which Bud Light drinkers discovered seemingly endless supplies of their favorite beer. The competition played itself out not only in advertising but also in ad budgets. According to Competitive Media Reporting, which tracked ad expenditures, Miller Lite outspent Bud Light by $54 million to $31 million in the first half of 1997. Notwithstanding this advantage, Miller's Johnson maintained that "the concept is outthinking, not outspending, the competition."

MARKETING STRATEGY

Fallon McElligott's real challenge in taking on the Miller Lite account was to create a strategy for making an old brand seem new. Breweries, including Miller, had spent the previous few years introducing new products, but the failure of these new items to expand the market forced a retreat to core brands. To change the perception of a product without changing the product required sleight of hand. The creative staff at Fallon McElligott dreamed up Dick to solve this problem, with the solution amounting to the simplest of ideas—advertise the advertising. Nike had already diverted attention from its products to its message, and now Fallon McElligott took the technique a further step, circling back to draw attention to the advertising itself.

Adweek pointed out the risk of this tactic: "With armpit mice and urinating cowboys, Miller Lite advertising displayed signs of going off the deep end. What some viewed as strategic bravery, others saw as advertising suicide. What you've got is a fairly desperate client and an agency that thinks it can do no wrong. That is a recipe for either brilliance or disaster." As with all advertising, Fallon McElligott's campaign, since it could not control the audience's perception, involved a calculated risk. Through calculation, however, the agency attempted to mitigate the degree of risk. "Nothing we do is reckless," said Rob White, Fallon McElligott's director of account planning. "We know exactly what we are doing. Everything is carefully researched."

In the process of exhuming its "Miller Time" slogan, Miller decided to apply the tag line of its Miller High Life brand to its other core brands, Miller Genuine Draft and Miller Lite. The concept of "Miller Time" was also revised to fit the times. Formerly, Miller High Life advertising had defined "Miller Time" for its audience as an afterwork panacea. Miller Lite advertising allowed consumers to define "Miller Time" themselves. "Miller Time" was no longer defined by the positions of the hands on a clock, for Dick redefined "Miller Time" to describe any attitude that lent itself to the enjoyment of Miller Lite.

OUTCOME

Dick continued to create controversy, but he also continued to boost beer sales, prompting Miller to extend its "Miller Time" campaign into 1998. (In mid-1997, however, it quietly dropped Dick as its spokesperson.) The campaign won the inauspicious distinction of being named the "Most Self-Conscious Attempt to be Postmodern" in Entertainment Weekly's yearly survey of advertising. Fallon McElligott swept the awards at the competition sponsored by the Advertising Federation of Minnesota and Minnesota Art Directors/Copywriters Club, including the best of show honors for the "Product Tester" spot.

In terms of sales the numbers went up slowly but steadily for Miller Lite throughout 1997. A Nielsen Scan Track following retail sales of light beer reported an increase of 0.8 percent for Miller Lite during January 1997, while Bud Light fell by 0.1 percent. From January to June Miller Lite's supermarket sales rose 12 percent. Statistics at the end of the year showed that these trends had continued, with Beverage Marketing Corporation reporting a 1.7 percent increase in domestic shipments of Miller Lite, a healthy increase considering the competitive climate of the brewing industry.

THE REAL DICK

Dick was, of course, a fictional character, but the man pictured in the "Miller Lite's Miller Time" advertisements really did exist. In fact, he tended bar in Seattle and played guitar in a garage band. When asked, Gina Shaffer, Miller's marketing communications manager, would not reveal the true identity of Dick—"He wants a personal life"—but she did reveal that the photo was not a 1970s vintage shot but rather a current portrait—"That's how he looks."

The increases in sales did not come without a price. According to Competitive Media Reporting, Miller Lite increased its first-quarter advertising budget by $16.2 million, from $22.5 million in 1996 to $38.7 million in 1997. On the whole, however, Miller Brewing still managed to raise its volume, share, and profits in 1997, a year noted for price wars. Miller's MacDonough attributed much of the company's success in 1997 to the "Miller Time" campaigns, despite, or perhaps because of, the controversy surrounding them: "We had taken a number of calculated risks in changing our advertising and our advertising agencies and changing our strategy from introducing new products every year to let's grow what we already have to rearranging what brands we're supporting…. You would think that with all those calculated risks we would have something that didn't work. What was unusual is everything worked better than we expected. We like that."

FURTHER READING

Lippert, Barbara. "See Dick Drink: A Look at Miller Lite's 'This Is Dick' Advertising Campaign." Adweek (Eastern Edition), January 20, 1997.

"Of Beer and Brain Candy." Adweek Western Advertising News, March 16, 1998.

Prince, Greg W. "Time and Again: Miller Goes Straight to the Core and Likes the Results." Beverage World, February 15, 1998.

Savan, Leslie. "Mock and Shock: The Ad Agency That Moons You." Village Voice, March 4, 1997.

Wollenberg, Skip. "New Beer Ads Redefine Miller Time: Will They Sell Beer?" Associated Press, February 21, 1997.

                                          William D. Baue

Miller Brewing Company

founded: 1855

Contact Information:

headquarters: 3939 w. highland ave.
milwaukee, wi 53201 phone: (414)931-2000 fax: (414)931-3735 toll free: (800)645-5376 email: [email protected] url: http://www.mgdtaproom.com

OVERVIEW

In 1997 Miller Brewing Company held a 23.9-percent market share and was the second-largest brewer in the United States and the world, behind industry leader Anheuser-Busch, which had a 47.8-percent market share. The company operates breweries in Milwaukee; Eden, North Carolina; Fort Worth, Texas; Trenton, Ohio; and Irwindale, California. Miller also owns The Jacob Leinenkugel Brewing Company, a small, family owned brewery in Chippewa Falls, Wisconsin, which it purchased in 1988. Miller products are distributed to retailers in the United States, Puerto Rico, the U.S. Virgin Islands, and Guam through a network of about 650 independent distributors. The company's products are also sold in Mexico, Canada, Asia, and Great Britain.

Miller sold 43.8 million barrels in 1996, not quite half the volume of Anheuser-Busch, which sold 91.1 million barrels. In addition, Miller's premium- and budget-priced beers did not sell as well that year as did its specialty labels. Nevertheless, three of Miller's most well-known beers were among the top 10 best-selling beers in supermarkets in 1996. Miller Lite ranked third with sales of $377.2 million; Miller Genuine Draft ranked sixth with $188 million; and Miller High Life came in eighth with $113.9 million.

COMPANY FINANCES

In 1997 Miller's total sales reached $4.4 billion, securing the company the number-two spot nationally and globally. From 1996 to 1997, Miller resurrected its old advertising slogan, "Miller Time," to increase sales of the core Miller Genuine Draft and Miller Lite brands by 4.5 percent. In 1996 Miller reported sales of $4.3 billion.

ANALYSTS' OPINIONS

After a flurry of new product introductions and line extensions in the mid-1990s, including the disastrous Red Dog, the Miller Clear Beer flop, and the flat-selling Miller Beer, the company decided to shift focus and concentrate on its core brands, Miller Lite and Miller Genuine Draft. In 1997 Brandweek noted that Miller, as well as competitors Anheuser-Busch and Coors, had "sworn off what they now acknowledge to have been indiscriminate line extensions that didn't always bring much added value to the marketplace."

HISTORY

Frederick Miller, the former brewmaster at Hohenzollern Castle in Germany, founded Miller Brewing in 1855 when he purchased Plank Road Brewery, a small company near Milwaukee. Miller produced 300 barrels of lager beer during his first year in business, storing the beer in caverns dug in the hillside beside the brewery. When Miller died in 1888, the brewery was producing 80,000 barrels of beer annually.

Miller Brewing Company continued to grow in the twentieth century, and in 1903 the company sold the first bottle of Miller High Life, which for many years would be the company's flagship brand. The beer carried the famous subtitle, "The Champagne of Bottled Beer." By 1954, under the leadership of Frederick C. Miller, the founder's grandson, Miller had achieved ninth place in the beer industry, shipping 2 million barrels each year. Philip Morris Companies, a tobacco and consumer packaged goods company, bought a controlling 53-percent interest in Miller Brewing Company in 1969. Ten years later, Philip Morris purchased the remaining 47 percent of Miller.

In 1970, just after the acquisition by Philip Morris, Miller was the nations's seventh-largest brewer, producing 5.1 million barrels of beer. In 1975 the company introduced Miller Lite, the first commercially successful light beer. The product would become so popular that it eventually outsold Miller's flagship brand, Miller High Life, which suffered from declining sales. Miller Lite remained the most popular light beer in the United States until it was surpassed by Bud Light in 1994. Miller High Life was eventually repositioned as an economy, "below premium" brand. Together, Miller's "premium" and "above premium" beer segments accounted for 81.8 percent of Miller's total shipments in 1995.

By the early 1990s, Miller was brewing more than 40 million barrels of beer per year, making it the second-largest brewery in the United States. In 1993 Miller acquired a 20-percent interest in Molson Breweries of Canada, and full ownership of Molson Breweries U.S.A., along with marketing and distribution rights for Molson and Foster's beer brands in the United States.

STRATEGY

In the 1990s, Miller Brewing Company planned to grow by "building the vitality and value of the Miller trademark," according to the company. This strategy included supporting established brands such as Miller Lite and Miller Genuine Draft with targeted marketing and advertising, and building new brands, such as Miller Beer. In 1995 the company redesigned its company trademark and planned to use the trademark throughout the entire Miller brand portfolio in merchandising efforts and in sports sponsorships.

FAST FACTS: About Miller Brewing Company

Ownership: Miller Brewing Company is a private subsidiary of Philip Morris Companies Inc., a publicly owned company traded on the New York Stock Exchange.

Ticker symbol: MO

Officers: John N. MacDonough, Chmn. & CEO; Paul Napieralski, CFO; Richard F. Strup, VP

Employees: 10,000

Principal Subsidiary Companies: Miller Brewing Company's subsidiaries include: Molson Brewing U.S.A.; American Specialty & Craft Beer Company; and Leinenkugel.

Chief Competitors: As a manufacturer of a variety of beers, Miller's competitors include: Adolph Coors Company; Anheuser-Busch Incorporated; Bass; Boston Beer Company; Carlsberg; Guinness; and Heineken.

Miller also planned to participate aggressively in the imported and specialty-beer categories, which, while small, were the fastest-growing categories in the U.S. beer business in the mid-1990s. In 1995, Miller accounted for 19 percent of the import segment in the United States and shipped more than 300,000 barrels in the specialty segment. The company was also expanding its international business in the mid-1990s since more than two-thirds of the beer industry's international growth was expected to come from Latin America and Asia.

To boost sales of Miller Genuine Draft and Miller Lite, the company brought back its popular 1970s advertising slogan, "Miller Time," and had Miller Lite named "the official beer of the NFL." New "Miller Time" commercials featured a twenty-something character named Dick, who was intended to appeal to Miller's target market of 21- to 28-year-olds. By early 1998 the company credited the ad campaign with boosting sales 2 percent, and declared a "turnaround of the brand."

CURRENT TRENDS

Like other brewers, Miller Brewing Company targeted the specialty beer segment for growth in the mid-1990s. While only 2 percent of the U.S. beer market was held by specialty brews in 1995, the category was growing rapidly. To expand its position in the specialty market, in January 1995 Miller established a subsidiary, the American Specialty & Craft Beer Company. The new unit provided capital and other support to Celis Breweries Incorporated of Texas and Shipyard Brewery in Maine, independent breweries that entered into alliances with Miller. The American Specialty subsidiary also provided funds to expand capacity at Miller's Leinenkugel subsidiary.

In the mid- to late 1990s Miller was also investing more in marketing and advertising its core brands. According to Advertising Age magazine, Miller increased its marketing budget by almost a third in 1997. Overall, Miller's spending for media and promotion in 1997 was expected to reach $200 million. While Miller did not expect U.S. beer consumption to grow in the late 1990s, the company planned to increase its own volume and sales by spending marketing dollars more efficiently on core brands and in geographic regions, while continuing targeted new product launches.

Because the U.S. beer market was stagnating in the late 1990s, Miller opted not to introduce any new products in 1997. This was a marked change from the mid-1990s, when breweries introduced low-alcohol beers, red beers, dry beers, and other novel versions at a frenzied pace.

CHRONOLOGY: Key Dates for Miller Brewing Company

1855:

Frederick Miller purchases the Plank Road Brewery and establishes Miller Brewing

1888:

Incorporates as Frederick Miller Brewing Company; Frederick Miller dies and Ernest Miller takes over

1906:

Refrigerator facilities are installed in the brewery

1919:

Prohibition forces the brewery to change to cereal beverages, soft drinks, and malt-related products

1922:

Ernest Miller dies and is succeeded by Frederick A. Miller

1947:

Frederick A. Miller retires and Frederick C. Miller takes over

1954:

Frederick C. Miller dies and Norman Klug takes over—the first president not affiliated with the Miller family

1965:

W.R. Grace acquires Miller for $36 million

1969:

Grace sells Miller to Philip Morris for $130 million

1975:

Miller Lite is introduced

1985:

Miller Genuine Draft is introduced

1993:

Miller acquires a 20 percent interest in Molson Breweries of Canada and full ownership of Molson Breweries U.S.A.

1995:

Miller forms alliances with companies in Brazil, China, Great Britain, and Japan

PRODUCTS

In 1996 Miller Brewing Company made a major new product launch with its Miller beer. The full-calorie beer was designed to compete with Budweiser. However, the company already produced Miller High Life, which was often called "Miller" by beer drinkers. As a result, consumers were confused about exactly what the new Miller beer was. The company said the new brand was meeting initial sales projections in 1996, but was concerned about the confusion. "We were surprised at the depth of the confusion in some markets," Timothy Nelson, senior brand manager for the new product, was quoted as saying in the Business Journal-Milwaukee. The Journal also noted that one marketing expert compared Miller coming out with a beer called "Miller" to Ford Motor Company bringing out a new model called the "Ford." Miller Brewing Company's goal was for the new Miller beer to gain a 1-percent market share by the end of 1996. The company's advertising budget for the new beer was a secret, but industry estimates were $60 million.

Miller was also trying to revitalize its Lite beer franchise in 1995. Once the leading U.S. light beer, sales of Miller Lite had declined in the early to mid-1990s and the brand was outsold by Bud Light in 1994. However, retail sales volume of Miller Lite grew 1.3 percent in 1995 over 1994, an important trend since Miller Lite was the company's leading brand. Miller Lite was the third-leading brand of domestic beer in 1995 and the second-leading domestic light beer in 1996.

CORPORATE CITIZENSHIP

Miller Brewing Company was one of several U.S. companies involved in the entertainment industry that were making serious commitments to charitable giving in the mid-1990s, according to a report in Amusement Business magazine. "Officials cite the favorable reaction on the part of customers to knowing that the companies are returning profits to the community," the report said. Miller Brewing donated primarily to the United Cerebral Palsy Association, although it also supported local causes.

In the mid-1990s Miller Brewing Company and its distributors were heavily involved in efforts to promote responsible drinking and alcohol-information programs. These efforts were motivated partly by the desire to reduce the negative effects of excessive drinking, and partly to counter growing public pressure to restrict the advertising and sale of alcoholic beverages.

Miller Brewing supported several social and educational programs in the mid-1990s. These programs included the National Commission Against Drunk Driving; designated driver and free cab ride home programs; the TIPS program (training for intervention procedures by servers of alcohol); and the Think When You Drink advertising campaign, which reminds drinkers about the importance of consuming beer responsibly. Miller Brewing Company adopted the "Guidelines for Beverage Alcohol Marketing on College/University Campuses" and promoted the independently produced curriculum, "Preventing Alcohol Abuse." Miller Brewing also promoted the use of "wristbanding" systems at Miller-sponsored concerts and festivals to prevent underage drinking.

GLOBAL PRESENCE

Since 80 percent of the world's beer sales are made outside the United States, two top priorities for Miller Brewing Company in the mid- to late 1990s were expanding its global presence and international sales. The company's international operations are controlled through Miller International, based in Milwaukee. Miller International sold beer in more than 80 countries as of the mid-1990s. Miller brands are exported to certain markets from Miller's U.S. breweries, or are produced by local breweries under licenses.

MILLER "NOSE" NO LIMITS

Miller has been appealing to the public with their amusing, unpredictable marketing, which has helped their sales and raked in some advertising awards along the way.

In the summer of 1998, Miller Lite's advertisers decided to appeal to a "forgotten" sense. Usually advertisers focus on sight and sound, but Miller decided to do things differently. The scratch n sniff summer promotion was launched in May 1998. Beer drinkers 21 and over who smelled certain scents of summer on their Miller Lite cans won prizes. This was the first time scratch n sniff features were used on such a large scale in the beverage industry. According to Mike Johnson, a Miller Lite marketing director, "There's no limit to what we can do when it's Miller Time. We're bringing beer drinkers the smells and sounds of summer in a unique way and giving them some great prizes."

For the contest, the first thing Miller did was to conduct a nation-wide survey of America's favorite scents. According to the survey, the aroma of a smoky barbecue was the smell that best defines America. The runners up were the scents of apple pie and the ocean. Other smells that reminded people of summer were freshly cut grass, suntan oil, and grilling beef. Once the survey was complete, different scratch n sniff stickers were affixed to plastic lids on top of Miller Lite beer cans. Smells included suntan lotion, menthol rub, pizza, coconut, burnt rubber, beef, turf, and nail polish. Beer drinkers knew instantly if they had won by smelling the sticker under their lid since certain scents guaranteed specific prizes. Miller gave away several prizes, which included trips to Barbados, a Sports Illustrated swimsuit shoot, and an All-star game. Other winners received 4,000 pounds of red meat, Miller Time sandals, an opportunity to yell "goal" at a soccer game, and the chance to hang out with a real pit crew.

In early 1993 Miller signed a strategic agreement with Molson Breweries, which held 50 percent of the Canadian market. Under the agreement, Miller acquired a 20-percent interest in Molson Breweries as well as full ownership of Molson's U.S. import operations. As of 1995, Molson Breweries brewed three Miller beers for distribution in Canada.

Responding to the growing global demand for light, American-style beer, Miller posted an 18-percent increase in exports in 1995. The company's sales volume grew strongly in Taiwan, more than doubled in Great Britain, and nearly tripled in South Korea. In 1995 Miller also formed new alliances with brewers and beverage companies in Brazil, China, Great Britain, and Japan.

The international market was vital to Miller since beer consumption was growing outside the United States at about 5 percent per year in the mid-1990s, while not growing at all or actually shrinking at home. More than two-thirds of the beer industry's international growth in the late 1990s was expected to come from Latin America and Asia. Miller Brewing planned to focus its sales efforts on those markets.

The 1990s saw Miller develop partnerships with several international brewers. In Mexico, a large and growing beer market, Miller developed a partnership with FEMSA, the largest beverage company in Mexico. In the United Kingdom, John Courage Ltd., a unit of Foster's Brewing Group, agreed to brew and distribute Miller Pilsner under license. In Japan, Miller Genuine Draft and Miller Lite were distributed by Sapporo Breweries Ltd., which invented the cold-filtering technology used to make Miller Genuine Draft. In China, the Shuang He Sheng Five Star Brewery, Beijing, brewed and sold Miller products under license. In the mid-1990s, Miller products were available in many other countries and regions as well, such as Central and South America, Europe, Russia, and former Eastern-bloc nations.

SOURCES OF INFORMATION

Bibliography

facts about beer, the brewing industry, & miller brewing company. milwaukee, wi: miller brewing company, 1993.

holleran, joan. "leinenkugel brews up new history." beverage industry, may 1996.

——. "macro goes micro." beverage industry, may 1996.

khermouch, gerry. "tapped out brewers." brandweek, 5 may 1997.

lank, avrum d., and james e. causey. "miller launch of premium beer falls flat." knight-ridder/tribune business news, 30 january 1997.

mcdowell, bill, and pat sloan. "miller to boost ad budget by 30 percent." advertising age, 10 march 1997.

melvin, mary kay. "charity: amusement industry finds giving as rewarding as receiving." amusement business, 22 april 1996.

mullins, robert. "miller product launch leaves consumers befuddled, but company says sales are on track." the business journal-milwaukee, 17 august 1996.

prince, greg w. "time and again: miller goes straight to the core and likes the results." beverage world, 15 february 1998.

turcsik, richard. "miller time heals lite's wounded sales." supermarket news, 26 january 1998.

For additional industry research:

investigate companies by their standard industrial classification codes, also known as sics. miller brewing company's primary sic is:

2082 malt beverages