Bud brewer chases premium profits

Anheuser-Busch InBev's new Straw-Ber-Rita and Black Crown beverages steer away from the company's slumping core beer brands.

By Jason Notte Mar 26, 2013 3:41PM

Bud Light Lime's Straw-Ber-Rita (© PRNewsFoto/Anheuser-Busch)
So what if Budweiser is now in third place among beer brands, behind Coors Light? Anheuser-Busch InBev (BUD) doesn't need consumers' 30-pack pity when its premium brands are the toast of America's upscale drinking party.

After recording losses in both sales and production every year since 2008, A-B InBev saw an estimated 0.6% uptick in 2012, according to Beer Marketer's Insights. Just don't thank Budweiser and Bud Light, which consumers have been steadily shunning since at least 2009. While those brands have lost market share, A-B's Bud Light Platinum and Lime-A-Rita malt beverage increased sales by 2.5 million barrels combined last year.

Now A-B is launching a strawberry version of its Lime-A-Rita, according to a press release from the company, and continuing to chip away at a premium beer sector it targeted with Budweiser Black Crown earlier this year. It's the exact opposite of the old beer-and-bottle graphic strategy that rival MillerCoors, a U.S. joint venture between MolsonCoors (TAP) and SABMiller, is employing to jolt flagging Miller Lite sales. But a look at the changing beer landscape indicates A-B may be on to something.

U.S. beer sales grew 1.5% last year, but not particularly because of anything big brewers did. A-B and MolsonCoors' stagnant to slumping sales were offset by 9.3% growth by Samuel Adams producer Boston Beer Company (SAM), a 10.6% surge by Pennsylvania-based regional brewing giant D.G. Yuengling & Son, a 5% leap by Heineken USA and a 3.6% uptick by Grupo Modelo/Constellation Brands (STZ) joint venture and Corona importer Crown.

Washington beer industry lobbying group The Beer Institute notes that beer pumped $250 billion into the American economy last year, but that tide of cash didn't boost all breweries. Though beer sales on the whole rose 1.5%, craft beer industry group The Brewers Association points out that craft beer sales rose 15% by volume and 17% in dollars during 2012 and now constitute 6.5% of the beer market's volume and 10.2% of its sales.

Since the recession, working- and middle-class beer drinkers have eased back on their purchases of big beer brands and trimmed the amount they consume in a year. Meanwhile, middle, upper-middle and upper-class beer drinkers have both rediscovered imports and embraced craft beers, increasing the market share of both.

While MolsonCoors tries to bolster its failing core brands, it's slowly started increasing promotion of its Blue Moon line of premium wheat beers. That beer's sales increased 26% in 2010 as the recession reached bottom and rose another 19% a year later. A-B, meanwhile, addressed this trend by purchasing the Craft Brew Alliance's (BREW) Chicago-based Goose Island brand early last year and announcing plans to buy Mexico's Grupo Modelo. After meeting initial resistance from the Department of Justice, A-B revised its deal to give up U.S. rights to Corona, Dos Equis and other Modelo brands in exchange for the brewery's share of the global market.

A-B InBev has seen the future, and it's not gimmicky cans of American light lager. The U.S.-Belgian hybrid company is chipping its way back into drinkers' good graces one Lime-A-Rita and craft beer at a time, and letting Miller, Coors and Pabst (which increased sales 4.4% last year) take bigger swigs of the cheap stuff.

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Mar 26, 2013 5:33PM
Mar 26, 2013 6:11PM
Good beer (which Bud is not) does not need fruit flavors added to make it taste good to a beer lover.  It's like when a bartender asks if I want a lime wedge with my Corona (which is marginal beer at best), I tell them I ordered a beer, not a limeade, and to not "fruit the beer".  But of course, if we're going to attract younger and younger drinkers, let's make it taste like KoolAid.
Mar 26, 2013 6:42PM

You so called experts can pontificate all you want on what a beer should taste like, blah blah blah.

but the fact of the matter is that the consumer dictates what becomes popular and what does not.

and if a beers popularity is just a fad or here to stay. so take your half baked ideas and put em

where the sun don"t shine.

Mar 26, 2013 5:17PM
Strawberry?  America is full of wooses, YUK. A beer should taste like a beer something the Germans have known for centuries. That's why they have the Purity Law which, because of the rice, will not label Bud as beer.
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