ST. LOUIS -- Luiz Edmond, president of North American operations for Anheuser-Busch InBev NV, said that the company plans launch 19 new products in the United States this year, its biggest such push since Belgium's InBev acquired St. Louis-based Anheuser-Busch for $52 billion in 2008, according to a report by the Wall Street Journal.
New offerings include small-batch craft brews, cider and an expanded lineup of malt beverages that take their cues from tequila and tea instead of beer.
Among other strategies being rolled out by Edmond to lure consumers: Hike the alcohol content of light beer, lean more heavily on the iconic Clydesdale draught horses in marketing and rein in distributors who have picked up rival brands, said the report.
Edmond is leading a drive to win consumers back to the company's brands, including Bud Light and Budweiser, which are the nation's top-selling and third-best-selling beers, but have been steadily losing drinkers to smaller brewers or to liquor,
A-B InBev's North American operating margins have risen above 40% from under 30% in 2008. But the merged company's U.S. shipments have fallen for three straight years, said the report, slipping below 100 million barrels in 2011 for the first time since 2000. After last year's 3.2% drop in shipments, Anheuser's share of the U.S. beer market has shrunk to 46.9% from 48.9% in 2008, according to the Journal, citing Beer Marketer's Insights, a trade publication and data service.
Edmond isn't sure the company will sell more beer in the United States this year. But he is hopeful the economic recovery is finally reaching the young, lower-income males that have long represented A-B's core customers. He expects market-share losses to narrow. "I think it will be better than last year,'" he said.
A-B InBev isn't the only big brewer struggling to keep customers, the Journal said. Shipments at Chicago-based MillerCoors LLC, the No. 2 U.S. player by volume, slumped 3% in 2011 as its market share dipped to 28.4%, according to Beer Marketer's Insights. MillerCoors, a joint venture between London's SABMiller PLC and Denver-based Molson Coors Brewing Co., is boosting its advertising budget for troubled Miller Lite by 50% this summer (see Related Content below for previous CSP Daily News coverage).
The volume declines coincide with the rise of hundreds of small, independent U.S. brewers that pitch bolder-tasting beers such as India Pale Ales, or IPAs, to consumers increasingly seeking variety. Production at U.S. craft breweries soared 13% in 2011, topping 10 million barrels for the first time, according to the newspaper, citing Brewers Association. The total U.S. beer market is approximately 200 million barrels.
A-B is responding by expanding its own offerings, including Bud Light Platinum (see Related Content below), which it launched in late January. The 6% alcohol content is higher than the 4.2% in Bud Light, which has suffered three straight years of volume declines. Platinum is also sweeter and sold in a cobalt blue bottle, in part to generate buzz in bars, where more drinkers have been reaching for spirits.
The new beer has quickly captured more than a 1% market share, despite frequently running out of stock in recent weeks amid stronger-than-expected demand, said the report. A-B is increasing production, with six of the company's 12 U.S. breweries to supply Platinum by this summer, up from two earlier this year.
"Platinum, that's a game changer for us," Edmond said.
At its research brewery in St. Louis, Anheuser is experimenting with three new beers each day. One of them, a wheat IPA, arrived in U.S. stores in February under its Shock Top label, which competes against craft beers. Shock Top sales doubled last year, boosted by new flavors such as pumpkin ale.
Some of Anheuser's new products have little to do with beer. Bud Light Lime-a-Rita, an 8% alcohol malt beverage arriving in stores in April, tastes like a margarita. The company is rolling out a tea-and-lemonade drink in April and a cider in May, each containing 4% alcohol, under the Michelob beer brand.
It also has stepped up marketing for Stella Artois, its biggest Belgian beer, whose shipments to U.S. retailers soared 24% last year to top one million barrels. Volumes of Goose Island, a smaller, Chicago-based craft brewer Anheuser bought last year for $39 million, grew more than 20%.
But Edmond said Bud Light and Budweiser, which together still represent more than half of the company's U.S. sales, remain top priorities.
A-B is trying to stabilize Budweiser, whose U.S. shipments have fallen 23 straight years, by drawing heavily on the brand's more distant past. A new TV commercial recreates a scene from 1933, when Clydesdale horses delivered Budweiser at the end of Prohibition. The famous horses have also been bringing more free samples of Budweiser to festivals and fairs.
And last November, A-B also told more than 500 wholesalers who distribute its products across the United States that it wants them to sell fewer rival brews. The company warned that wholesalers who aren't tightly "aligned'' with A-B might be prevented from acquiring other wholesalers through equity agreements, a type of business contract, that A-B holds with the wholesalers.
The toughening rhetoric has made a growing number of wholesalers "anxious,'' Joe Thompson, president of Independent Beverage Group, a beer-industry consultancy, told the newspaper. Brewers and distillers are required to distribute alcohol through intermediaries instead of selling them directly to retailers.
Edmond isn't making any apologies, saying wholesalers will have to decide which brewer they want to partner with most closely. "I'm loyal to my wholesalers. Why would I not expect the same loyalty to me,'' he said.
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