SAN DIEGO (CN) — A marketing researcher hired by craft brewer Stone Brewing said Friday the company should recover “at least” the $42 million spent by beer conglomerate MillerCoors to rebrand its Keystone Light lager in a campaign Stone Brewing claims caused its growing business to nosedive.
“It would take at least 100% of what Keystone spent to rebuild their brand [Stone Brewing] back to where it was,” University of Washington professor Robert Palmatier said, adding, “but that would not account for lost profits or revenues.”
Palmatier’s valuation was the first indication of the ballpark amount Stone Brewing will likely ask an eight-member San Diego jury to award in damages next week as a trademark trial wraps up in U.S. District Judge Roger Benitez’s courtroom.
Stone Brewing sued MillerCoors — now known as Molson Coors — in 2018 claiming the company separated the words “key” from “stone” in its 30-year-old Keystone Light economy beer to emphasize the word “stone” in a rebranding campaign which watered down Stone Brewing’s reputation as a brewer of premium-quality, bitter craft brews.
On Friday, Stone Brewing co-founder and original master brewer Steve Wager testified he and co-founder Greg Koch “wanted to build a company that would be around for 100 years after we were gone.”
“Stone lasts a long time,” Wagner said, in explaining how the duo settled on the name for their beer brand.
Despite being on “a constant improvement trajectory” to continue to improve the quality of its beer since its founding in 1996, Wagner said the company may not survive the business losses it claims to have suffered because of consumer confusion caused by Keystone Light’s “stone”-heavy rebranding.
“I know Keystone spent tens of millions of dollars to advertise. I think it would take at least as much to try to rebuild our brand,” Wagner said during questioning by his attorney Douglas Curran.
Curran asked Wagner a follow-up question.
“If Stone isn’t made whole, what do you think will happen?”
Wagner responded: “I think we’re going to lose our company.”
But during cross-examination questioning, MillerCoors attorney Daniel Lombard pointed out Wagner became aware of his client’s use of “stone” as a nickname for Keystone Light as early as 2010 — eight years before the lawsuit was filed.
“The truth is you’ve known for many, many years MillerCoors uses the nickname 'stone' and 'stones' in marketing of Keystone,” Lombard said before showing the jury an email Wagner sent Koch April 21, 2010 attaching an article about a previous Keystone Light national ad campaign.
In the email Wagner wrote to Koch: “Note the ‘stone’ reference.”
Wagner said he didn’t personally take any steps back in 2010 to challenge the MillerCoors ad campaign as it wasn’t his “area of responsibility” and would have been handled by Koch.
Stone Brewing did later challenge a trademark application by MillerCoors for “Hold my Stones,” causing the beer conglomerate to abandon its application with the U.S. Patent and Trademark Office, Wagner said.
When Palmatier took the stand, he testified that the most damage to a brand is caused by consumer confusion.
He said after MillerCoors went live with its “Own the Stone” rebranding campaign for Keystone Light Stone Brewing began to take on the budget lager’s negative attributes identified by consumers including that the beer was “cheap,” “light,” “watered down,” and “bad tasting.”
Palmatier said he compared Keystone Light’s packaging before and after the 2017 rebranding and found the word “stone” on the packaging had increased by 1,600% when measuring the surface area.
A PowerPoint slide prepared by Palmatier and shown in court further noted: “[Keystone] fundamentally changed the role of ‘stone’ from a minor word to the primary branding element.”
The Keystone Light marketing campaign had a “pre-shopping” effect on consumers, Palmatier added, causing confused shoppers or those associating Stone Brewing with Keystone Light to opt for a different craft brew when shopping.
The effect was Stone Brewing performed 5% worse than its competitors after Keystone Light’s rebranding, Palmatier said.
The trial will continue Monday.
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