By Michael E. Miller
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By David Villano
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Bars and liquor stores weren't the only sources of negative news. Coors received complaints from people in at least ten states -- from concerned parents and school board members to police officers -- worried that kids would start drinking Zima because it tasted more like a soft drink than an alcoholic beverage. Rumor had it that Zima couldn't be detected by a breathalyzer. "There have been perceptions that Zima is a fad with teens," says Bart Alexander, group manager of alcohol issues at Coors. "We were a little confused by that. Zima is sold as a unique alcoholic beverage, and each bottle says it's a unique alcoholic beverage.
"There was some concern because it was clear," Alexander continues, "but if kids want to sneak something clear in their drinks, they can mix vodka with orange juice and rum with Coke. We don't want any underage consumers."
On June 29 of this year, Coors released its second-quarter returns. The company reported a net income of $15.2 million, or 40 cents per share, down 36.5 percent from $23.9 million, or 63 cents per share, a year earlier. Net sales for the second quarter were $399.5 million, down 7.6 percent from $432.2 million in the second quarter of 1994.
The brewery blamed some of the recent loss on increased costs, but it fingered Zima as the real culprit. "The company's lower results for the second quarter of 1995 were primarily attributable to a decrease in Zima Clearmalt volume, as well as higher aluminum and other packaging-material costs," Coors announced in releasing the figures. "Zima Clearmalt sales volume in the second quarter of 1995 declined approximately 60 percent from a year earlier. As a result, total Coors Brewing Company sales volume of malt beverages for the second quarter of 1995 was 4,842,000 barrels, down 6.3 percent from a record 5,166,000 barrels sold a year earlier."
The Zima Beverage Company, an operating unit of Coors set up to market the clearmalt beverage, thinks the parent company sold its baby short with that announcement. "The company is coming back and trying to repeat last year's numbers," brand manager Mark Lee says. "But when you don't have the benefit of all that trial and you've shaken down to a base of committed users, it's quite natural that the brand dropped off to a level of consistent use."
Coors CEO Peter Coors did offer a brief rationale for Zima's decline in the earnings announcement, but since it was buried four paragraphs down in the release, many people missed it. "Since Zima is a higher-margin profit," Coors said, "the decline in volume compared to last year hurt our profitability through the second quarter."
Over the past six months, however, Zima has held on to a 0.8 share of the beer market, according to data from A.C. Nielsen, which tracks liquor sales.
Zima also outsells Beck's, Rolling Rock, Samuel Adams, and Molson Ice.
And it is currently the leader of the wine coolers.
"It's unfortunate the way Zima was positioned in that announcement," says Zima's assistant brand manager Julie Demlow. "I think the combination of the media and the announcement, which certainly put a lot of focus on Zima's performance, were equally at fault. Zima is still a very respectable piece of business that is making the company a profit."
Zima also marks one of the few times -- perhaps the only time -- Coors has forced the competition to their drawing boards. "Zima had such an amazing trial. I don't know of any other alcoholic beverage in the past decade that had nearly half of all alcohol consumers try it," Lee says. "Our trial curve was so huge we almost hit 1.3 million barrels last year."
Zima's competition has a long way to go before it gets anywhere close to that. Miller is testing its version of a clearmalt called Qube in Providence and Sacramento, but it has yet to launch the brand nationally. And although Stroh's has introduced Clash, a malt that is targeted toward men and women between the ages of 21 and 25, the brand is still in the test-market phase.
If Zima's numbers are respectable, why does everyone rip into the drink?
"Making fun of Zima comes from a number of places," says Scott Rabschnuck of Foote, Cone & Belding, the San Francisco advertising agency that handles Zima's account. "Honestly, alcohol beverages are still a male-dominated world. It's how guys prove themselves and show how much chest hair they have. Men like traditionally more masculine, powerful beverages -- anything from beers to bourbons. Wine coolers and light beers are for the less serious drinker, or females. Well, Zima falls more into that camp. Zima is clear, it's got a citrusy taste. The packaging is upscale. It's very neatly designed. It's pretty. When you add all that up, it's definitely not seen as a hard-core, traditionally masculine drink, so it's invited to be seen as wussy: 'For all you guys who can't drink and for all you women who used to drink wine coolers, here's the drink for you.' And once something like that happens, it spirals."
In some ways, assistant brand manager Demlow says, Coors asked for trouble by promoting the drink so heavily at the start. "All the hype that bordered around Zima when it was first introduced and the instant celebrity status Zima took on totally fed into people not wanting to accept it," she theorizes. "In America, when something becomes a hot topic of conversation and also is so visible yet shrouded in mystery like Zima was, people tend to say that they don't want to be a part of it. Here's where that self-directed individualism comes into play: 'You know what you want and what you like to drink, so none of this is an issue for you.'