SABMiller recipe change sends VB in the direction of New CokeComment on this story
SABMiller, the world’s second-largest brewer, will send its Victoria Bitter beer the way of New Coke, discarding a recipe change that saw VB overtaken as Australia’s top seller by Kirin Holdings’ XXXX Gold.
Carlton & United Breweries, the Australian beer business SABMiller acquired with its takeover of Foster’s Group last year, will revert to a formula abandoned in 2007 and raise the alcohol content from 4.6 percent to 4.9 percent from October, the London-based company says in a statement on its website. The beermaker on Wednesday placed full-page advertisements in the Herald Sun, Australia’s top-selling daily newspaper, saying: “We got it wrong.”
The reversal echoes the experience of Coca-Cola’s New Coke, said John Roberts, a professor of marketing at Australian National University and London Business School.
New Coke attracted so many protests when it replaced Coca-Cola’s classic formula in 1985 that the original was reintroduced three months later.
“You can do almost anything you want with the taste, but in beverages you don’t mess with the brand image,” Roberts said. “People are doing more than drinking beer, they’re drinking the whole story.”
Kirin’s shares rose 2.2 percent to close at ¥988 (R105) in Tokyo on Wednesday, the biggest gain since August 7, while the broader Nikkei 225 index fell 1.1 percent. SABMiller fell 0.3 percent in London as the FTSE 100 index slid 0.5 percent.
Recipe changes to century-old VB – as it’s known to locals – dropped in strength in 2007, and again in 2009, to save on an excise tax levied on alcohol content, Carlton & United spokeswoman Jennifer Howard said from Melbourne. The company also introduced new packaging and variants of the brew to arrest a slipping market share.
XXXX Gold, brewed by Kirin’s Lion unit, in April ended VB’s more than 20 years as Australia’s top-selling beer.
XXXX Gold had a 12.4 percent market share in the 12 months until June, compared with 12.1 percent for VB, according to Nielsen Holdings NV data quoted by Lion.
Foster’s has also fallen behind Lion as the country’s largest brewer since SABMiller completed its A$10.5 billion (R90bn) takeover of the Melbourne-based company in December.
The decision to up VB’s alcohol content will cost SABMiller more than A$10 million a year in excise tax, a necessary cost to restore the beer’s original flavour, Howard said.
“Vic Bitter drinkers have spoken and told us we should not have tinkered with their beer,” chief CUB marketing officer Andy Gibson said. “We have listened.”
Carlton & United first brewed a beer with the VB branding in 1907, the company’s website says. Its breweries in Victoria and Queensland states produce more than 20 million cases per year, Howard said.
Roberts said VB is considered a “blue-singlet” beer, in reference to the coloured tank-tops stereotypically worn by working-class Australian men. That puts a premium on perceived authenticity, he said.