WOULD YOU PAY MORE FOR DRAFT BEER AT HOME VS CANNED OR BOTTLED?

By DAVID KESMODEL

MillerCoors LLC has begun testing the sale of $20 draft-beer systems for consumers to drink at home, part of a string of new products and package innovation from beer giants grappling for market share in a crowded, slow-growing industry.

MillerCoors, the second-largest U.S. brewer by revenue, has begun testing the 1.5-gallon “Home Draft” for its biggest brands — Miller Lite and Coors Light — in about a half-dozen cities, including Dallas, Phoenix and San Diego. The boxed product, which is designed to fit into refrigerators for drinkers to consume periodically, rather than for one-time party use, comes amid packaging overhauls by the U.S. units of Heineken NV and Anheuser-Busch InBev NV.

Sales of major U.S. beer brands are struggling as some recession-weary consumers drink less or switch to cheaper brews. Many of the top-selling brands showed declining sales volume at retailers in the 13 weeks through July 12 compared with a year earlier, according to market tracker Information Resources Inc. Anheuser’s Bud Light, the No. 1 brand, saw its sales volume slide 5.5%, while Heineken, the No. 9 seller, fell 15%. (The figures exclude sales at certain retailers that don’t share data with such research firms.)

“In this economy, we are seeing an increase in packaging innovation” in consumer-goods industries, said Kara Gruver, head of the North America consumer-products practice at consulting firm Bain & Co. “In many cases, it can be less costly [than creating a new product] and a very effective form of innovation.”

Chicago-based Miller Coors, a U.S. joint venture of SABMiller PLC and Molson Coors Brewing Co., is testing home-draft packages at a time when one of its major brands, Miller Lite, is mired in a prolonged slump. Despite a new ad campaign this year aimed at revitalizing the brand, Miller Lite’s retail sales fell 7.5% by volume in the recent period tracked by Information Resources.

Sister brew Coors Light, on the other hand, continues to post sales gains. Analysts attribute its long-running success in part to innovations in packaging, such as “cold-activated bottles,” whose labels turn blue when the beer inside cools to a certain temperature.

MillerCoors’s new Home Draft systems are meant to be placed upright in a refrigerator, which will keep the beer fresh for about 30 days. The price per ounce is roughly 15% higher than for an 18-pack of the same beer, MillerCoors said.

The product, which is recyclable, is aimed at the 30% of beer drinkers who say they prefer draft beer to the bottled or canned variety, said Andy England, chief marketing officer at MillerCoors. “We’re really trying to meet that occasion when you just got back from work and want to reward yourself,” rather than “the party occasion,” he said.