Can Budweiser Be Saved?

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Brew Blog

A-B now says yes.

At nearly 25 million barrels of volume, Budweiser is a huge brand.

Thing is, it’s half the size it was in 1988.

Budweiser has been in decline for going on 20 years. In the past, the growth of Bud Light more than offset the slippage. But in 2007, Bud and Bud Select lost more volume than Bud Light picked up.

Hoping to slow down Bud’s descent, A-B is changing the brand’s marketing strategy and investing more dollars in it.

The latest issue of Brew Magazine takes a look at A-B’s plans for Bud. To receive a free subscription to the print version of Brew, drop a line with your name and street mailing address here.

From the issue:

Anheuser-Busch is poised to commemorate a less-than enjoyable anniversary this year: the 20th straight year of decline for Budweiser.

Once the biggest beer in the country, the King of Beers saw its volume dip by 4.7 percent – or 1.2 million barrels – to 24.6 million barrels in 2007, according to figures from Beer Marketer’s Insights. That’s less than half its peak of 50.5 million in 1988.

But A-B’s new top marketing exec thinks that trend can be turned around.

Interviewed by the St. Louis Post Dispatch earlier this year about A-B’s efforts to reach Latino consumers, A-B Vice President of Marketing Dave Peacock said, “Contrary to a lot of people’s thoughts, Budweiser can grow.”

So with its new “Great American Lager” marketing effort, A-B is trying to reach beyond the brand’s core “loyalist” consumer. It’s going after “experimenters,” consumers who like a variety of beers. A-B also has been stepping up Latino marketing efforts.

A-B now is running ads starring “The Daily Show” funnyman Rob Riggle talking about the beer’s ingredients, taste profile and brewing process.

Historian Maureen Ogle, who wrote “Ambitious Brew: The Story of American Beer,” thinks this positioning might work.

“I think it could be smart for them to go on the Great American Lager tack,” Ogle says. “They could end up with some new consumers they would never get otherwise.”

She adds: “It is a very unusual way to sell beer. It could have the potential to draw out people who are not flat-out committed to a beer.”

A-B’s optimism runs counter to long-running conventional wisdom that Bud was going nowhere but down.

Indeed, sometimes that seemed to be the thinking at A-B itself.

Recall that in July 2006, A-B Chief Financial Officer Randy Baker said during an earnings call that “although we would love to have the situation where the Budweiser brand itself started increasing, we don’t view that as a realistic expectation.”

And it wasn’t for lack of trying. A-B has spent hundreds of millions of dollars advertising the brand, creating classic ad campaigns like the frogs and “Whassup?” A-B even lightened the taste in response to changing consumer palates – and then reverted.

So can A-B’s new leadership turn around Bud, an achievement that eluded the previous regime?

In the short term, most observers agree that the most A-B can hope for is stemming the decline.

But, as Beer Business Daily publisher and editor Harry Schuhmacher notes, A-B can reap big dividends if it can just manage to slow down Bud’s descent. Given that A-B is shifting tens of millions in ad support to Bud, that could be doable.

“If they can sustain Bud Light and slow down Bud’s decline by a point, maybe two points, I think they can have (their core brands) fixed,” Schuhmacher said.

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