Miller Gets Flagged

2004 will be remembered as one of the most contentious years in the ongoing "beer wars." As NFL fans have noticed this year, the acrimony between SABMiller's Miller Lite and Anheuser-Busch's (NYSE: BUD  ) Bud Light has sunk to new levels of name-calling and attack ads that haven't necessarily had a positive effect on beer buyers.

It all started earlier this year, with SABMiller's "President of Beers" campaign, in which Miller criticized Anheuser-Busch's "King of Beers" status, urging beer drinkers to choose democracy and elect Miller president of beers. The king's response brought our favorite lizards, Louie and Frank, out of retirement to attack SABMiller's South African pedigree. The whole mess ended up in court over the accuracy of Anheuser-Busch's ads.

So it should come as no surprise that the competitors have found themselves embroiled in yet another behind-the-scenes fight, this time over the accuracy of Miller's latest series of ads. Television viewers have recently been treated to a series of commercials depicting either football referees flagging Bud Light drinkers for various penalties or a line of people standing outside the Anheuser-Busch headquarters with bullhorns. According to a complaint filed with all four national networks by Anheuser-Busch, these spots make misleading and false claims about taste preference. Apparently, both Viacom's (NYSE: VIA  ) CBS and General Electric's (NYSE: GE  ) NBC think the king's claims might have some merit and have agreed to pull the ads.

While Miller's aggressive spots are good comedy and show a willingness to get dirty, the company is risking a lot by directly attacking its largest competitor in these ads. First off, bringing unnecessary attention to the competition reminds potential customers that they have a choice, and second, because the ads are belligerent, there's a serious risk of consumer backlash. Consumers generally prefer to be sold on a product's positive attributes, not the competitor's negatives, and the now-in-the-spotlight alleged inaccuracy of the ads only makes SABMiller look petty, foolish, and unable to compete. In its response, Anheuser-Busch claims the Miller refs are actually stealing the Bud Light for themselves, which is also risky because acknowledging its rival gives Miller's tactics legitimacy and indicates concern by Anheuser-Busch executives.

Unfortunately for Miller, 2004 market share results highlight the failure of its negative campaign. After gaining ground in 2003, Miller Lite dropped further behind the domestic leader in convenience store sales, as Bud Light added 2.4% to its share. It may be time for Miller to cut its losses and go back to the positive campaign that brought success in 2003.

For related Fool Takes, see:

• Looking to China for Growth
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• Bud's Bigger, but Look Closer

Fool contributor Chris Mallon owns shares of Anheuser-Busch through his private investment partnership.