Budweiser sees big sales drop

Seems pretty fucking genius to me if a patron's only choice is an AB-Inbev product. They're not buying Miller Lite or Coors Lite, in your scenario, are they? So whatever they pick, it's a sale for AB-Inbev.

 

From my reading of the article, profits are up, not sliding ($1.82 billion in North American profit alone in a quarter is nothing to scoff at, much less a 50% increase in stock price), but sales of Budweiser & Becks are down. How they classify Budweiser as the flagship, when Bud Light outsells it doesn't jive for me.

It really didn't give any information on their #1 selling beer, Bud Light, other than that its still #1.

 

One word: Women.

Please note: I do not personally believe any of the following to be true. This is my best guess at InBev's odd experiments.

Beer companies have been trying to break into the female market for years. Yes, some women drink beer. Yes, that number is growing thanks to craft. But, macro beer has a lot of stereotypes to deal with as far as who drinks it. Hint: Think Homer Simpson and Al Bundy.

Why make lime flavored beer? Or Lime-a-Rita? Or 55 calorie? Or orange flavored? Women. I'm guessing InBev has some focus groups somewhere that say these things will attract female drinkers.

This, by the by, is also why Goose Island is so focused on breaking into the wine market.

Edit: There's also the toss shit against the wall and see what sticks theory.

 

AB-I has a marketing budget. They use whatever they want for each brand. It doesn't really matter how many brands they have, IMO... overall they have a marketing budget that they allocate. Each time AB sells a serving of Bud Light, they made a sale. What's the difference if they didn't buy a select 55 or mich ultra? AB-I gets the money regardless. Better that, to AB-I, then AB-I only offers one light choice and bars decide to bring in Coors Ligh and Miller Lite so that their customers have a choice. Flooding the shelf with product has long been a goal of AB/AB-I. In your bar scenario, the only choices were AB-I products. A Miller Lite or Coors light drinker is unable to buy anything but an AB-I product in this scenario. AB-I wins because they filled the bar with their products.

 

Even ignoring that scenario, imagine a bar with 7 light beers on tap, 5 of them ABI products, plus Miller Lite and Coors Light.

If the consumer chooses at random, then ABI gets 5/7ths of the sales. If they only had Bud Light, they would get 1/3rd of the sales.

Obviously it doesnt really work that way, but its not that far off, more flavors and options gives them a better chance of hitting the target for more consumers.

 

Profit, Schmofit.

People lost their jobs and their product got more gimmicky or watered-down in the process.

 

Made 1.82 billion and cut spending lowering the already low quality of their beer? Wow. How do you spell greed? B-U-D-W-E-I-S-E-R

 

Where I see a risk for AB (and they know it) is the jump for a consumer from Platinum, Shock Top, or Goose Island to Brooklyn Lager, Bells Oberon or Fat Tire its a lot easier than the jump from Bud, and in pushing those brands they could easily develop more Craft Beer drinkers who will give them a much smaller share of their dollar

 

Can anyone say Daimler Chysler/Mercedes Benz. Use plasitic here instead of carbon fiber. Use pastic instead of metal. Forget about giving your customer a powerful/reliable engine. Milk her for all she is worth, except your flagship for the company is now a piece of shit.

At some point you cross a boundry from making a quality product to making shit and eventually you are forgotten about. I would not give you half the money for a MB that I would a BMW. I will pay 2-3 times more for Stone, Bells, Founder products over AB.

You know what happens once you make steak out of your milking cows?

You get steaks, that are tough and tasteless, and no more milk. Not a good stategy for long term survival.

 

Long term I think InBev's strategy is going to bite them in the ass. Hell, they are almost out of companies of a large enough size to rinse and repeat their cost cutting strategy on to make enough money to move the needle. And the changes being made on the product side are starting to hurt them from some of the articles I've read. (I do think some of the back office changes are smart, but their real savings are on cutting corners on the products.) Not buying hops for a year for example because they have too much left over from last year should raise all sorts of quality questions in the mind of anyone who knows even the smallest bit about making beer.

 

Part of the answer to why AB-Inbev is spawning a bunch of different light beers might be the fact that light beer as a category is still doing okay, it's the regular strenght beers that are hurting and have done so for quite some time. As long as light beer continues to be a viable category, it makes sense that product innovation is focused on this category. Malt liquor came and went, dry beers came and went, ice beers came and went, but light beer still stands strong even after 3-4 decades of market share growth. Just take a look at the market share per brand from 2010:


Top Beers by Brand 2010:

1. Bud Light (unchanged from 2009) – 28.5% market share
2. Budweiser (unchanged from 2009) – 11.4% market share
3. Coors Light (unchanged from 2009) – 10.2% market share
4. Miller Lite (unchanged from 2009) – 9.1% market share
5. Natural Light (unchanged from 2009) – 6.0% market share
6. Busch Light (up from #7 in 2009) – 4.0% market share
7. Busch (up from #8 in 2009) – 3.6% market share
8. Miller High Life (up from #10 in 2009) – 2.7% market share
9. Keystone Light (not listed in 2009) – 2.6% market share
10. Natural Ice (not listed in 2009) – 1.9% market share

http://www.thebeerfathers.com/top-us-beer-brand-stats-2010-update/

Light beer brands featured in the 10 ten's share of total US beer market: 60,4%
Regular beer share: 17,7%

With this in mind it makes sense that they would focus on innovation within the light beer category.

The big brewers are struggling to find "the next big thing" in regular beer it seems. They've tried reviving some of the brands with advertising but it doesn't appear to have gone over very well. Bud light platinum combines light beer and "higher strenght beer". Budweiser Black Crown is I guess the closest they've come in a while to try and revive regular beer, but they do it with a higher alcohol level associated with malt liqours and ice beers.

 

It's a business with many many heads other than brewing Bud crap, the share holders come first, just like any other business. The layoffs are sad, I hate that, but the product profile won't change. Bud is consistent it has to be, I would bet that it tastes the same now as it did in 1975. I'd rather drink Ultra or Lite. IMO Bud and it's lighter brother are over carbonated crap brews, only Michelob is worth a bottle every now and then.

 

Even Anheuser-Busch (pre-InBev) didn't claim that:

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Less bitter? How is this possible when you use 1/4 lb of hops per barrel. They probably changed the adjunct side of things, but dedicated Bud drinkers I believe would be up in arms if the taste noticeably had changed. But he's the VP so i stand corrected.

 

Not sure how Sea World/Busch Gardens, Blackberry, and execs flying commercial (the horror!) fit with the other things other than being cost-cutting. They certainly have no negative affect on the product or consumer.

 

Reminds me of that story about the 2 bulls on the hilltop...

Anyway....AB is more than happy to have a beer garnering 2% market share and another with 4%. There is no sense in combining the 2 brands. They are both still in the top 10 brands and making tons for the brewer. 2% or 4% may not sound like much, but you do not even see BBC, SN, Stone, etc, on that list. If you have not seen it, watch the movie Beer Wars. It is spelled out there. It is all about SHELF SPACE. More products means more shelf space taken up. This even goes as far as the number of packaging options (6,12,24,36,bottle,can). There is a finite limit to the amount of shelf space in any store. The more shelves filled with various AB products....the less chance of seeing their upstart craft competitors. No reason to combine brands to save pennies when it would cost you dollars in shelf space exposure. At least that is the way they see it. And they still control the market. Real world.

 

Joe Owades (of Gablinger/Lite/Sam Adams fame) claimed that AB's Budweiser went from 20 IBU's in 1946, to 17 in '70's and 14 by the '80's, and most unofficial sources put it between 10-12 today.

See the linked WSJ article for how what the AB VP called "creep" works... "noticeably" is the key word, since the dedicated Bud drinker wouldn't notice it over a period of years.

OTOH, as someone who drank Bud as an underage kid in the '60's [when you drank what was easily bought by your tall buddy with a fake ID] I'm always a bit shocked at it's lightness these days when I taste a Budweiser at a party, etc., after avoiding the beer for four decades.