How Big Can Bud Light Get?

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Brew Blog

Top A-B marketer sets ambitious goals.

Can the Bud Light “megabrand” — including offshoots such as Bud Light Lime and Bud Light Chelada — someday reach 25 share?

Dave Peacock, the vice president of marketing for Anheuser-Busch, says yes. Beer Marketer’s Insights Express had the story on Thursday (before news of InBev’s interest in A-B overshadowed everything else):

Bud Light “is its own megabrand” now, maintained Dave Peacock at Beverage Forum. And with offshoots like Bud Light Lime (almost 1 share again in 2d week) and Bud Light Chelada, Bud Light “has the opportunity to represent 1 in 4” US beers, he added. So there’s big “upside.” How big would that be? That’s 11.5 mil bbls ahead of where it is now.

Clearly this is an ambitious goal, given that Bud Light represented “only” 19.3 percent of the market in 2007, according to shipment figures from Beer Marketer’s Insights.

The only brand that held such a high market share was Budweiser. For instance, in 1989, Budweiser shipments stood at 50.0 million barrels (off its 1988 peak) and it held 25.9 percent market share. By 1991, its share had dropped to 24.1 percent.

But the world has changed a lot since then. The trends of premiumization (trading up) and fragmentation (people seeking brands that allow themselves to express their individuality more precisely) arguably work against a single brand enjoying such ubiquity again. That’s true for many other consumer categories as well.

BMI notes the challenges:

As industry grows, to get to 25 share, Bud Light megabrand would have to get even bigger. Bud Light growing just 1-2% for last 18 mos. So a lot depends on how big these offshoots can get and how much they cannibalize the Bud Light motherlode.

Indeed, cannibalization is an important consideration. Bud Light Lime — as expected — has enjoyed a rapid ascent. But there may be some cannibalization.

During the week ended May 17, Bud Light Lime hit 1.0 share in supermarkets, according to beer sales statistics from Nielsen. Bud Light, meanwhile, saw its share drop by 0.6 points.

Nearly 72 percent of markets recorded a share decline for Bud Light during the four weeks ended May 17, according to Nielsen’s beer market analysis. And 13 of Bud Light Lime’s top 20 markets have recorded Bud Light share losses.

It remains to be seen how big Bud Light can get. But if A-B seeks to fend off takeover attempts by InBev or another party, it will need to demonstrate that its vision of the future delivers greater shareholder value than a buyout. And clearly, its ability to build Bud Light would be a key part of that vision.

The Beer Marketer’s Insights home page can be seen here.

 

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