Budweiser in Crisis: With Sales in Decline, Can New Ads Save This Brand?

Last Updated Sep 20, 2010 10:45 PM EDT

Anheuser-Busch InBev (BUD) is -- again -- looking for new advertising ideas for Budweiser, the once-venerable beer brand that is seems to be more like a sinking ship. In the U.S., Bud is the Coke of beers and everyone is familiar with its dominance. But step back a bit and that dominance is fragile, according to Ad Age:
While most beer sales have fallen in the recession, Budweiser has suffered a steeper decline than other A-B brands. Shipments dropped 9.5% in 2009 for Bud, compared with 2.5% for Bud Light, according to Beer Marketer's Insights.
According to A-B's own numbers, its beer sales by liquid volume are down in the U.S. by 3.4 percent and down by 1.7 percent by dollars (see page 19 of its Q2 2010 report). "We are not pleased with our overall market share performance," the company told investors. "Our commercial teams are now working on plans to launch Budweiser in other high potential key geographies, while taking measures to stabilize Budweiser sales in the United States home market."

Bud needs to be "stabilized"? That's as close as the beer industry comes to crisis talk. Before A-B gives instructions to its new ad agency, Anomaly, execs in St. Louis should make like Domino's Pizza (DPZ) and take an unflinching inventory of their own failings. Among them:

Addiction to consultants: A-B once hired management consultancy The Cambridge Group (because, obviously, if you're selling beer you need quants and statisticians to tell you what to do) and became convinced that "Drinkability" was the key to Bud Light's fortunes. The campaign led to first full-year sales decline in Bud Light history.

In its Q2 earnings report, A-B proclaimed that Millward Brown Optimor's 2010 BrandZ report ranked Budweiser as the only beer in the top 100 most valuable global brands. Guys! No one cares about these PowerPoint factoids! Your sales and marketing costs grew 10 percent in Q2 2010, so by your own admission you're paying more to get less bang from your advertising buck no matter how many rankings you appear in.

Ads that appear to be based on technical "learnings" from market research: Some of Bud's advertising seems to be a rote translation of bullet points about the role of beer in American life. Here's one, by agency DDB Chicago, about how to carry a round of beer when you're at a stadium. It's supposed to be a gently humorous riff about the inconvenience of buying drinks at a sporting event, but it accidentally reinforces one of the most negative aspects of the Bud brand: Budweiser is the watery stuff you get in plastic cups, and pay too much for, at giant venues. If anything, Bud needs to move away from the notion that it's a generic beer that can be served to anyone who's not fussy -- or doesn't have a choice, as in many stadia -- about the beer on offer.

Bud's ads are often same-y: This ad, about Bud's "signature" glass, is part of a set that features an annoying know-it-all bartender who educates her customers on the technicalities of Bud -- how it's made, how it should be poured. It's identical in theme to Samuel Adams' campaign for its "perfect pint" glass.

And here's an ad in which a Bud employee educates a customer about a beer that's "not too heavy but you don't want to compromise on taste" -- which sounds to me like the kind of positioning statement clients love to hear, but which should have been translated into something catchy before it was aired.

Losing the plot: To see just how far off track Bud has gone, treat yourself to another look at the hilarious "Whassup" commercial from 1999. Even though this ad says literally nothing about beer -- it barely has a script -- it describes a wealth of positive attributes about the brand: It's about relaxing at home, hanging with friends, and sharing a code so intimately that you don't need complete sentences to describe it. It's 11 years old but could easily run unedited today.

Product first, ads second: It's not just the ads, of course. If the product is compromised then the ads wil be too. And Bud is compromised. The Wall Street Journal reported in 2006 that A-B has literally made Bud worse:
Moreover, for all its devotion to consistency, Anheuser concedes Budweiser has changed over the years. It quietly tinkered with its formula to make the beer less bitter and pungent, say several former brewmasters, a byproduct of the company's desire to create a beer for the Everyman.
During the same period, Americans were discovering that beer variety and quality -- from microbrews to imports -- was improving dramatically. In the early 1990s it was sometimes difficult to find a beer that wasn't Bud or Coors in a U.S. pub. Today, it's more common to face a chalkboard behind the bar containing a baffling array of obscure brews:
The Brewers Association recently reported that craft beer sales climbed more than 10 percent in 2009, despite overall national beer sales falling 2.2 percent.
Making your product more bland when competing products are becoming more sharply defined is always brand-management suicide.

The challenge -- demanding a premium for consistency and tradition: Aside from asking for new advertising, A-B's management is trying to make back in price increases what it's lost in total sales. In some ways, this might be a good idea -- even though it punishes Bud loyalists. Budweiser must get used to the fact that it will no longer automatically dominate the competition. It will have to function as the choice of some, not all. Plenty of products settle into profitable old age this way by playing up their heritage, rewarding their loyalists, and extracting a price premium for doing so. That is probably Budweiser's best strategy: Offering consistent quality over the years, and becoming smaller but more profitable as a result.

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