What Do the Big Guys Not Understand??

Anheuser-Busch's initial new beers in response to the huge success of Miller Lite were Michelob Light (which was simply regular Michelob, by then high-gravity brewed, with a bit more water added - thus it's rather high calorie count for a "light" beer) in 1978, and, a year earlier, the awkwardly named "Anheuser-Busch Natural Light". Though a "discount" brand now, when first released ABNL was priced between premium Budweiser and super-premium Michelob.


Most every notable national and large regional brewer came out with a light/low calorie beer in the wake of "Lite Beer from Miller", and many hoped to NOT cannibalize their standard beer by simple marketing a "light" version. Thus beers like Genesee's Fyfe & Drum Lyte, Peter Hand's "Extra Light", Gold from Olympia, the new orange label Gablinger's from Rheingold, and a few others (I recall both Falstaff and Iron City having light brands with numbers in them?). That was AB's initial desire, too - to not cannibalize Bud sales with a "Light" version. Unfortunately that long name they picked meant most people were calling Anheuser-Busch Natural Light "Bud Light" or "Busch Light" anyway.

Well, as you earlier noted, Miller Lite was "the first big/nationwide light beer" - there had been a few other attempts at a "low carbohydrate/low calorie" beer - Rheingold's Gablinger's, Meister Brau's Lite, Piel's Trommer's Red Label - but Miller pretty created the market.

 

I've never understood this position. It makes it seem as if the absence of BMC would mean all these small businesses would close. Don't you think other businesses would step in and take their place? In other words, if ABinbev product brings in 56% of your liquor stores' profits and they then are forced to shut-down for some bizarre hypothetical reason, wouldn't it be possible that eight businesses providing 6% of your profits each would take their place? I mean, if the demand is the same, wouldn't there be businesses to take their spot. I'm not saying you're ignoring this, or even discussing this in any way, it just reminds of a point of view I've seen on these boards frequently. I've been vocal in regards to my dislike of ABinbev and people often come back with responses like, "yeah, but if they went under thousands of people would lose their job." To that I say, if the demand is there, then this loss of employment will be very short, as a variety of small businesses will all stop up and, collectively, fill the void left open (and thus, employ all those people again).

I'm not saying anybody would be better or worse if ABinbev closed their doors forever, just adding this element to the conversation. Ultimately, what I really want is people employed by businesses that treat their workers right and treat the economic community in which they operate right. Whether that is Abinbev or not, I'm not sure. Seems like they do things that don't align with those values (which are, admittedly, very vague).

 

Michelob Light (with the silver neck labels) was pretty popular with quite a few people in my high school, so it definitely pre-dated Bud Light. Thanks for the time line.

 

Yeah, I always remember Michelob Light circa 1978 because it was the first time I'd ever heard of "high gravity brewing", read about it a national news magazine or wire service article on the "light beer" trend. IIRC, Michelob Light had - at the time, anyway - only 20% fewer calories than regular Mich, whereas most of the other light beer followed Miller Lite's lead of having 1/3 or more fewer calories. And since Michelob as a superpremium beer was already pretty high in calories, Mich Light wound up to be something like 130 calories.

 

by the way people went crazy psycho for BCBS on black friday, id say Buds plan is working out just fine

 

I feel like no one sees the good in my post. I'm not sticking up for the big guys and I only support AB in the likes of Bourbon County. All I'm saying is that there are a lot of mom and pop stores, rural bars in my area where craft is the least of the locals worries. New Glarus can only foot the bill in the summer time when it's tourist season. Overall, in this world, sure other businesses can step in and help people out. I'm just looking at it from a small town perspective.

 

I get it and it makes sense. I just don't think it's a final answer (not that you've framed it that way, I'm just responding to general sentiments I've seen on the boards)- ie. "Well, if they went under mom and pop businesses would go under, so it's best to support them." I think that is a naïve point of view in the long run (again, not saying that' what you meant by it).

 

It's all good bro. *fist bump*

 

I certainly wouldn't base my opinion solely on that article. Though he uses a good spread of fact, the way in which the author writes does come across as being somewhat biased.That said, maybe he is just a craft beer lover that found it hard to hold back!

Regarding the advertising, I am kind of stuck in the middle. I love craft beer and I also love standard lagers, particularly being in Queensland Australia where it is nice to have something to slake your thirst. The only beer advertisements that stick in my mind are funny ones, but even they don't make me think "Well gee, I'll have to go and buy those now!" The only thing that gets me buying a beer is flavour, aroma, feel etc (craft) and refreshment / taste / value-for-money (macro lagers).

Budweiser seems to be employing the old-school, old boy technique from the 1980s, of "We have a problem with sales. What should we do? Spend money on advertising." The young employee pipes up: "Shouldn't we diversify, attempt to improve or refine the product, create a spin-off product to attract new target markets?" Old bloke's response: "You're fired."

A lot of entrenched companies seem to be making that kind of mistake, and they are losing their markets hand-over-fist. The world seems to be moving on without them, and they're unwilling to change. Oh well, plenty of beer fish in the sea.

 

Gasp! I know you blokes have 10 times more population than we do in Australia, but that seems a little... excessive. I wonder what would have happened if they had put only a trifling $349m into their mass media advertising, and put the other sliver into other forms of non-traditional promotion such as beer festivals, POS advertising and tasting sessions, or specials on the price of their beers (in my experience that is one of the best ways to get students / young people to try your beer!).

 

I think you hit the nail on the head. Unfortunately the decision makers would have to prove to their board that it is a safe financial venture. It doesn't mean that it is a bad thing necessarily - keeping a craft beer afloat is never a bad thing - they just saw a popular and profitable craft beer and pounced. Can't blame them, hey?

 

I think you just answered some of my questions I earlier posted (wish I spotted yours first). I think you're right - their market share has been falling, but what size is the market these days? The craft beer segment continues to explode, and heaps of new types and styles of alcoholic beverage come onto the market. Plenty of new companies and breweries too. They may still be making phenomenal sales, it could just look like they're dying due to more competition and a larger market.

 

Is there any information out there for just how much of this supposed 'loss' actually stayed within the AB family of beers (mostly Bud Light, I'd assume)? That's some key information that the article didn't address.

 

I think this change in marketing strategy needs to be viewed through the eyes of the company's Board and their fiscal responsibility to their shareholders. When the marquee brand suffers as much as Bud has in the eyes of a key demographic, they cannot afford NOT to switch strategies.

The customers nostalgic for era of the Clydesdales are, to put it bluntly, a "non-renewable resource". They have all the share they need there; what they need is new clients. This is a position not unlike the cigarette customers faced in the era of Joe Camel.

Call it pandering, call it cynical - it maybe even seem pointless to many of us. However, BAs (as stated by others) are not the target demographic for their new-look campaign. What they are trying to do is capture the wallets of those who are POTENTIAL BAs. You have to get the hooks in early.

Whether the strategy will work is another matter, but regardless this is all a matter of bolstering a major American marquee brand while continuing to provide increasing dividends to their shareholders.

 

In 1988, when Budweiser sales peaked at 50.6 million barrels Bud Light sold 9.5 million.

2013, with Bud at 16m bbl., Bud Light's at 38.1m and another spin-off, Bud Ice is at 2.1m bbl. Throw in 3 other "Budweiser family" beers - Bud Light Platinum, Budweiser Select and Bud Light Lime - which probably add on another 2-3 million barrels. So, pretty much even.

Total AB barrelage:

1988 = 78.5 million barrels = 41.9% market share
2013 = 96.5 million barrels* = 47.6% market share

*Includes InBev imported and domestic (Bass, Becks) brands.​

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Thanks--

That puts things in perspective. In regards to the OPs title--I think they do understand. Looks like they are doing pretty well to me. Suspect the percentage and barrelage will continue to get bigger through marketing of "crafty beer" and more acquisitions.

 

Excellent! Thanks.

You should be hired as a consultant the next time one of these guys wants to write a piece like this .

 

The big breweries also realize its not just them vs. craft breweries. Sure they are capable of taking market share, but they're taking a much broader view of the market landscape. Look at AB-Inbev's other entrants to the game in the FMB and cider categories. These guys understand that though some of their competition may be craft brewers, a perhaps even more dangerous competitor is the liquor and spirits industry. There has been an obvious shift towards sweet alcohol in the last few years, based mostly off the fact that the "juicebox generation" is starting to hit legal drinking age. You only have to look as far as the endless flavors of vodka being introduced to see whats going on.