Miller's Gary Haigh shows his bottle

Good things come to those who wait. Just ask Gary Haigh, MD of Miller Brands.

As marketing director for Guinness in the 1990s he signed off the £1.2m budget for the brand’s surfing with horses ad. However, a week into the shoot Haigh was faced with a stark choice. There had been no waves on the sun-kissed location in Hawaii so he could either sign a blank cheque for the crew to stay on and wait for the storm clouds to arrive - at a cost of £150k a day - or come home empty-handed. Haigh chose to wait, the waves arrived and the rest is history.

Now, as head of Miller Brands, the UK & Ireland arm of SABMiller, Haigh faces similarly tough decisions. In the past 12 months the off-trade British beer market has lost its fizz, with shoppers buying 164 million fewer pints of beer in store than they did last year [Britain’s Biggest Alcohol Brands, The Grocer, 21 July 2012/Nielsen 52 w/e 28 April 2012].

To be fair, his biggest brand, Peroni, continues to thrive, with sales up 9.6% to £74m. But Miller’s collection of world beers - which also include Pilsner Urquell, Tyskie and Lech - hasn’t been immune to the downturn. Its Miller Genuine Draft brand (MGD) experienced an off-trade sales decline of 11% by value to £22.4m and 21% by volume over the past year [Nielsen 52 w/e 26 May 2012].

And mainstream competitors are constantly launching premiumised products, and advertising and promoting far more heavily. Can Haigh afford to hold his nerve and stick to the brand’s premium price point, or will he be forced to slash and burn like rival brewers?

Although MGD’s sales picked up over the 12 weeks leading up to Euro 2012, with sales growing 28% in volume and 25% in value, Haigh concedes the brand must embrace a much more aggressive pricing policy if it is to survive in the ‘big box’ lager market.

“We’ve put more of our funds into promotional support and been more cautious about the investment we want to make in England and Wales - particularly in the on-trade,” says Haigh, noting that MGD’s main market is Scotland. “We’ve simply got to get in the ring on what’s going on in the mainstream segment in the off-trade at the moment, which is ‘two for’ promotions, red pen promotions - £9 for a box, for example. That’s just the name of the game.”

Such tactics are “a deadly spiral”, says Haigh, pointing to the 80% level of volume sold on deal for both MGD and the mainstream segment. “But it is what the market is and we’ve got to get in the ring at those rates,” he adds.

This aggressive promotional strategy jars with Miller’s pricing policy for its wider portfolio, with volume on promotion for Peroni weighing in at less than 50%. But despite market pressures, Haigh is wary of overpromoting the Peroni brand.

“When you compare it with some of the other stuff that is going around with beer at the moment, Peroni is disruptive in its approach. A lot of our competitors have been value engineering the product - you’ll have seen abvs come down, and games with sizes of boxes and bottles, which is a great shame when brands have to go that way,” he says.

But is he concerned about the raft of premium brand extensions from big brewers that have flooded the lager market? “We don’t see the premium extensions as a threat because they are so strongly anchored in the mother brand,” says Haigh. “It’s great to see the market is forcing innovative thinking but I don’t know how much of it will stick - how long-lived some of that promotion will be.”

“We’ve got to get in the ring on what’s going on in the mainstream in the off-trade at the moment, which is ‘two for’ promotions”

The industry stalwart speaks from a position of authority, having seen similar fads come and go in the past.

“I worked on Smirnoff, which had incredible take up in its early years and then went quickly out of fashion. A lot of imitators came in and before we knew it, the story was about discounting - stack it high, sell it cheap - and the brand lost the zeitgeist, it was too much of its moment. For Miller and world beer, it’s about making sure you’re genuinely imported, differentiated and that you’re prepared to take the costs and challenges that come with that.”

Earlier this year, a landslide in the Swiss Alps sent 300,000 cubic metres of rock tumbling down a mountainside, blocking the railway from Italy that Miller uses to transport Peroni. Once again, Haigh had to make a call.

“We had to pay extra money to bring Peroni by boat around Spain and also by road, which is a lot more expensive than rail,” explains Haigh. “But those are the challenges you will face if you’re an importer and why you charge consumers more and why they’re prepared to pay more.”