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Anheuser-Busch: Beer's No. 1 Underdog

Building on innovation; focusing on the core

ST. LOUIS -- David Almeida isn’t shy about touting Anheuser-Busch’s strengths and position as the largest brewer of beer in the United States and around the world. At the same time, he positions A-B as an underdog in the industry, as a company that needs to fight and scramble to maintain its market position. Anheuser-busch beer collection

Top that end, A-B is leveraging consumer and retailer insights to develop new products while also focusing on its core brands to sell more beer … and maintain market share.

“How do you play in the high end and also grow the core [Budweiser and Bud Light]?” he asked this week during a trade-publishing open house at A-B’s St. Louis headquarters in outlining the company’s dilemma.

Almeida, vice president of sales and wholesale development, was one of the first executives from Belgium’s InBev to move into a leadership role at A-B when the two companies merged in 2008, and he paints a picture of a brewer ready to move forward toward innovation and growth more than ever before.

“We have a much tighter handle on things than we’ve ever had before,” he said.

Splashes of what it calls “game-changing innovation” are easy to pick out of the beer landscape: Led by Bud Light Lime-a-Rita and Bud Light Platinum, Anheuser-Busch accounted for 87% of all volume growth driven by innovation in 2012, according to Almeida. In 2013, that number was 77%, this time led by Straw-ber-Rita and Budweiser Black Crown.

These admirable numbers were driven by new products that leveraged the Budweiser and Bud Light brands, but even as these brand extensions grew, the flagship products themselves stumbled during the same years. This led A-B to make 2014 a year to refocus on Bud and Bud Light.

“Our strategy in 2014 was to focus on our core,” Almeida said. “How can we boost Budweiser and Bud Light?”

Much of the answer was packaging.

During this year, A-B rolled out 25-ounce-can packaging that gave consumers “an extra ounce of beer for the same price.” It also brought aluminum bottles—long used exclusively for special events—to retail for the first time. “We had to elevate the image,” Almeida said. “It cost a lot more to use that package, but we made it work. … After three years of Coors Light outgrowing Bud Light, Bud Light was back this summer.”

Early sales data shows Bud Light gained 1 share point in 2014, according to Almeida.

“It’s virtually impossible [for a competitor] to gain share of market without taking share from Bud Light,” he said. “Winning with Bud Light is fundamental for us.”

And more of this “balanced” growth—new products plus growing the core—is on tap for 2015.

A-B executives at the open house showcased a dozen new “big bet” brands and line extensions, including additions to the ShockTop and Lime-a-Rita lines, and a new take on mixed drinks that will target male consumers.

They also suggested more innovation in packaging, both in unique looks and unexpected package sizes. “We’re not ashamed to say we’re borrowing from what Coca-Cola is doing with package sizes,” said Jorn Socquet, vice president of brand marketing for A-B, referring to Coca-Cola’s multiple-size strategy that aims to provide drinks for a wider variety of occasions.

The overall growth strategy is a matter of A-B taking a page from its suggested playbook for retailers: advocating a balanced approach to stocking beer.

“If you’re not leveraging the entire business, it’s very difficult to grow,” said C.J. Watson, vice president of small formats, during a discussion of best practices. “The best craft [beer] convenience store in the county is also the best value [beer] store in the county.”

A-B is hanging its future growth on the idea that the same is true for brewers.

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