A-B Takes the Gloves Off

Top brewer reveals changes, plans for 2008 as competition tightens

Published in CSP Daily News

By
Steve Holtz, Online News Director & Beverage Editor

ST. LOUIS -- The King of Beers is not happy with being merely princely. Granted, displeasure with a 50 share of the U.S. beer business is a unique point of view, but Anheuser-Busch Inc. (A-B) is simply not waiting until that share drops. We aren't, as a company, pleased with where we stand, said Don Johnson, vice president of national retail sales, during A-B's Retail Trade Symposium last week.

There has been change aplenty within the St. Louis-based brewing behemothan explosion in brands, a reduction of management layers, a global reachand change aplenty [image-nocss] outside the brewer's doors. Craft and import sales have boomed in recent years, consumers are more demanding of choice and flavor, and A-B rivals Molson Coors and SABMiller have proposed a merger in the United State to claim a 28 share of the market.

Meanwhile, Johnson said beer industry sales grew 2.1% in 2006 and 1.4% thus far in 2007. We're not pleased, said Johnson. But we're optimistic.

Johnson and other A-B executives presented reviews of the recent past and their strategic plans for 2008. Among the revelations were a re-positioning of and re-investment in Budweiser as The Great American Lager, telling a story of ingredients, heritage, care and quality, as well as strengthening Bud Light's No. 1 position. A-B will boost media spending on the two icons by $33 million and $40 million, respectively.

As (Bud Light) goes, so goes Anheuser Busch, Johnson said. We've got to get the core products going again.

Johnson displayed a stark graphic comparing A-B in 2002 to 2007. Then, it had 72 brands under its umbrella; now, it has 147. Five years ago, there were 1,900 A-B SKUs; now, there are 2,875. The company sold only beer in 2002; in 2007, it also sells energy drinks, water and spirits.

Johnson said remapping A-B's 10 regions into five will translate into flexibility and autonomy. The sales staff's main response to the pending Coors-Miller joint venture--and the assumed attack on A-B's accounts--will be to better use analytics. Three hundred people have been added to sales, 150 of them to urban accounts. Wholesaler websites have been simplified, new merchandising tools have been created, and craft beer companies have been bought or made partners for more options.

Hand-to-hand combat, is what Johnson called the new sales approach.

Two years ago, A-B had no craft brands. Today it has 27. Through a deal made with Brussels-based InBev and the purchase of Rolling Rock, as well as the work of A-B's innovation team, A-B has a craft-brand lineup that, according to Johnson, if taken together would make it the third largest brewer of craft beers in the country.

Most recently, A-B introduced its new seasonal products Michelob Celebrate Cherry and Michelob Celebrate Chocolate, a duo of aromatic, smooth, complex and balanced lagers now available in most states through the end of the year.

New this year, Michelob Celebrate Cherry is made with natural cherry juice and aged on dark cherries, giving it a deep garnet color and the flavor of black cherries. Michelob Celebrate Cherry is brewed with Munich, carapils caramel malts and European aroma hops.

Michelob Celebrate Chocolate, introduced in 2006, is brewed with caramel and roasted malts, and a variety of Hallertau/Tettnang and Alsace hops, and aged on real cocoa beans, giving it a chocolate aroma and complex dark cocoa taste. Both lagers are 8.5% alcohol by volume (ABV).

Beyond beer, however, Tom Burkemper, A-B's director of imports, crafts and specialties, presented A-B's non-alcoholic portfolio.

Its partnership with Hansen Beverages has given A-B the category's No. 2 energy drink, Monster, complemented by A-B's 180 energy drink.Icelandic Glacial, A-B's water offering, is differentiated by being carbon neutral (It does not use more carbon than it replaces). The super-premium water will launch nationally in Fall 2008.Its entry into wellness/functionality, Borba, trumpets skin health, and will be initially pushed for sale only to businesses like spas and boutiques.

This is an area that is a particular challenge for Anheuser-Busch because we're getting out of alcohol and getting into new categories that open up a lot of new doors for us, Burkemper said.

By Steve Holtz, Online News Director & Beverage Editor
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