What’s in Bud Light Lime?

Hint: Not Bud Light.

Bud Light Lime is named after the best-selling beer in the country. But the resemblance is only label deep.

The base beer in Anheuser-Busch’s new product is not Bud Light, reports Monday’s installment of Beer Business Daily.

From the issue:

Regarding Bud Light Lime, he [a brewmaster cited by BBD] said that “it's not possible to tell precisely what the base it is although we have a guess or two. Not an exact match to any other beer via what we know from routine market sampling,” but that it ain't Bud Light as they have different “hopping schemes.”

Doug Muhleman, A-B’s group VP of brewing operations & technology, AKA chief brewer, told BBD: “We formulated for max refreshment and interaction with lime. It has Bud Light bones. Other than that, Harry, brewmasters don't share their secrets.”

The article notes that Miller Chill is not based on Miller Lite or any other preexisting beer from Miller Brewing Company -- which is true. (And why it’s not called Miller Lite Chill.)

Brew News

Brew Blog's picks of stories from the beer business and beyond.

Wired Magazine takes a look at how some craft brewers are tweaking their recipes in face of higher hops prices. "Ian Ward, president of Brewers Supply Group in Shakopee, Minnesota -- the nation's largest craft brew supplier -- says things are only going to get worse. 'That's the crisis that brewers are finding themselves in,' Ward says. 'They're having to review their recipes. The crisis really hasn't hit hard yet.'" The Appellation Beer Blog has a take here.

Ad Age has a story about Bud Light Lime's alliance with singer Santogold. From the story: "A-B is hoping this musical tie-in works better than its last. The brewer's 2006 decision to link Budweiser Select to a Jay-Z record -- even naming the hip-hop magnate co-brand director -- sold more records than beer. Boosted by beer ads that treated the brand as a product placement in a music video, the album enjoyed a strong launch, while Bud Select sales continued to decline. Today, the once-national brand is only marketed in a limited number of major urban markets."

Bud Ale: “A New Style of Ale.”

“Distinctly American.”

Budweiser American Ale, due for release in October, will be billed as “a new style of ale.”

That’s the language used on the label, based on filings with the federal government.

The predominantly red label -- which includes an image of the Anheuser-Busch eagle, the A-B compass and hops – bears this legend: “Budweiser American Ale defines a new style of ale – The American Ale – created by Anheuser-Busch brewmasters to deliver robust ale taste that’s full-bodied, but not too heavy nor too bitter.”

The neck ringer further plays up the “American” angle: “Budweiser American Ale. An ale that’s distinctly American in character. Savor the difference.”

InBev European Imports Up 17 Percent

Led by Stella Artois.

The United States was a bright spot for InBev during a rough first quarter.

European imports, led by Stella Artois, grew by 17 percent during the quarter, InBev reported. That strong performance drove a 2.9 percent increase in volume for North America.

(Canada, where InBev markets Labatt, represents two-thirds of its North American volume and grew by 1.6 percent).

Anheuser-Busch started handling InBev’s European brands last year. Recall that imports helped minimize A-B’s decline in sales-to-retailers during the first quarter and drove the increase in shipments.

Worldwide, Stella Artois volume grew by 7.2 percent, thanks to higher volumes in the United Kingdom, the United States and Argentina. Beck’s grew by 0.7 percent worldwide.

InBev’s earnings fell by a greater-than-expected 11 percent during the first quarter amid rising costs and soft performance in Brazil.

Here’s InBev’s earnings release.

Here’s the Wall Street Journal’s coverage of InBev’s earnings.

Here’s Brew Blog’s coverage of A-B’s earnings.

Beer Marketer's Insights (subscription required) has more on InBev's earnings.

Brew News

Brew Blog's picks of stories from the beer business and beyond.

Here’s coverage of Molson Coors Brewing Company’s first-quarter earnings from The Wall Street Journal and Bloomberg. Morgan Stanley and Credit Suisse weigh in as well.

Anheuser-Busch's Ascent 54 -- a beer now marketed only in Colorado -- goes national this fall as Michelob Dunkel Weisse, reports the Rocky Mountain News.

Beer Business Daily (subscription required), remarking on Coors’ success with packaging innovation, says: “Here's a prediction: A-B is fast-tracking some package innovations of its own.” Should be interesting to watch whether that develops.

The Greensboro (N.C.) News and Record has an interesting story about craft beer dinners hosted by Foothills Brewing in Winston-Salem.

Brew News

Brew Blog’s picks of news stories from the beer business and beyond.

Supermarket beer volume fell 0.4 percent during the four weeks ended April 26, according to beer sales statistics from Nielsen. Miller volume share fell 0.5 points while dollar share fell 0.3 points. Anheuser-Busch volume share declined 0.1 points and dollar share dropped 0.4 points. Coors volume and dollar share both increased by 0.8 points. Imports gained 0.1 points of volume share but dollar share slipped by 0.2 points. Craft volume share was up 0.3 points and dollar share was up 0.7 points.

The entry price for a Super Bowl commercial will be $3 million next year, the Wall Street Journal reports. But longtime buyers won’t necessarily have to pay that much. From the story: “Anheuser-Busch, for example, has locked in a rate of about $2 million for each of its spots, according to a person familiar with the matter.”

The St. Louis Post-Dispatch explores the potential impact of an economic slowdown on the beer business.

Takeover Rumors Swirl Around A-B (Again)

Option prices jump.

Anheuser-Busch, once again, is at the center of takeover rumors.

From a Bloomberg report:

Speculation that Anheuser-Busch Cos. will be acquired sent options on the world's second-largest brewer to the highest prices since January.

Implied volatility for the St. Louis-based company rose to 31.47, indicating traders anticipate bigger share-price swings. Call-option trading increased to 46,007 contracts, the most since June. The most-active options give the right to buy the stock for $55 by June 20. Anheuser-Busch has never closed above $55.

``It looks like a significant position being built in anticipation of a potential takeout,'' said Henry Schwartz, president of Trade Alert LLC, a New York-based provider of options market analytics.

The Bloomberg story notes that A-B President and CEO August Busch IV last month told distributors the brewer wouldn’t be sold under his watch.

A-B chief financial officer W. Randolph Baker told Bloomberg in an e-mailed statement that the brewer doesn’t “confirm, deny or speculate on rumors.”

The Bloomberg report can be seen here.

Here's Brew Blog's coverage of remarks by August Busch IV to distributors.

Will Busch Light Hurt Premium Lights?

Historically high price gap against Miller Lite.

Will Busch Light drag down premium light brands like Miller Lite?

It’s a question worth asking because the price gap between Busch Light and Miller Lite is at a historically high level. And wide price gaps can encourage people to trade down. Recall when A-B reported first quarter earnings, the Busch and Natural Light franchises were the only big brand families that grew during the first quarter.

For the quarter ended March 29, the total aggregate price gap (a national weighted average price gap) between Miller Lite and the Busch franchise was $4.33, according to beer sales statistics from Nielsen. During the same period, 30 percent of market volume had experienced higher Busch Light discounting.

For context, during the year-earlier period the price gap was $3.94.

Brew News

Brew Blog's picks of stories from the beer business and beyond.

Starbucks saw a 28 percent drop in profits during the first quarter as same-store sales slid, Ad Age reports. "While we are not going to use the economy as an excuse, it is important to keep in mind that our second-quarter results do reflect the sharp weakening U.S. consumer environment," said CEO Howard Schultz. "Like most other retailers and restaurants, we are experiencing a downturn in customer traffic demonstrated in reduced frequency of customer visits that we believe tie to a real reduction in consumers' discretionary spending habits." On tap: An array of non-coffee beverages.

Beer Marketer’s Insights Express (subscription required), detects a trend of Anheuser-Busch branch distributors buying independent distributors. “Owning all or part of a distrib is increasingly AB's preferred option. This looks more and more like strategic shift. It's almost as if while AB's distribs become increasingly non-exclusive, AB simultaneously seeks more control of its system thru increased ownership.”

Beer Business Daily (subscription required) notes that a recent report from UBS says Heineken USA faces “many challenges.” From BBD: “UBS says that Heineken USA faces many challenges, including the growth of crafts and big brewers interesting in getting into the high priced beer segment. UBS says that if HUSA doesn't address brand Heineken's brand image, “it could end up being perceived as stale or merely mainstream, which would result in consumers being less willing to pay an 48% premium to the mainstream beer category. The Heineken brand’s market share in the US has not improved significantly since 2001, when it first broke the 2% share mark.’”

A-B Sales to Retailers Slip

Core brands drop 1.4 percent in first quarter.

Anheuser-Busch reported on Wednesday that its U.S. sales to retailers slid during the first quarter.

Total STRs were down 0.7 percent. But core brands fell by 1.4 percent. Shipments were up 0.4 percent, but that was driven by a 0.6 point push from imports.

A-B reported earnings per share of 71 cents for the first quarter. That’s up 6 percent over the year-earlier period but a penny shy of analyst expectations.

A-B CEO August Busch IV said he was optimistic about the summer.

From the earnings release:

We are increasing marketing and sales support for our core beer brands, and, although U.S. beer sales-to-retailers results were below expectations, we are optimistic concerning the outlook for beer sales during the key summer selling season.

Equity income from its investment in Grupo Modelo, the brewer of Corona Extra, slid by $33 million, or 21 percent. Equity income in the year earlier period was buoyed by a $17 million benefit from the return of an advertising fund that was part of Modelo’s former beer import contract.

The earnings release can be seen here.

The latest issue of Brew Magazine took a look at A-B’s effort to revamp its core brands. The issue can be seen here.

If you would like a subscription to the print version of Brew, drop a line with your name and mailing address here.

Aggressive Summer for Bud Light?

Pricing weak, promotions up.

Is Bud Light getting ready for an aggressive summer?

Some supermarket trends point to that possibility.

Consider:

Bud Light’s pricing is up only 0.7 percent during the four weeks ended April 12, according to beer sales statistics from Nielsen. Miller Lite, meanwhile, was up 1.8 percent and Coors Light was up 2.5 percent.

A wide gap lies between Bud Light’s volume share gain and dollar share gain, suggesting pricing activity. During the four week period, Bud Light gained 0.5 points of volume share. But dollar share increased by only 0.2 points.

Miller Lite lost 0.2 points of dollar and volume share. Coors Light gained 0.3 points of volume share and 0.2 points of dollar share.

Anheuser-Busch has made it plain it wants to get its trademark Budweiser and Bud Light franchises back on track this year. Will pricing be a way to accomplish that?

Corona Preparing for May 5 Showdown

New advertising, promotions on tap.

Coming off its first down year in more than a decade and facing a new challenger from Anheuser-Busch, Corona Extra is gearing up for a critical Cinco de Mayo holiday.

Brandweek has the details about Crown Imports’ efforts behind the brand, which include a new Cinco de Mayo TV commercial as well as radio support, countdown calendars in bars and nightclubs and “themed online invitation templates on Evite.com.”

Corona is facing challenges as it heads into the holiday season. From Brandweek:

Corona Extra shipments declined 0.8% last year after growing steadily since 1991, per Beer Marketer's Insights, West Nyack, N.Y. The slump continued into the first quarter where case sales—in supermarkets, c-stores and drug stores—declined 5.9% for the 52-weeks ended Feb. 23, compared to the year-ago period, per Nielsen. However, Corona Light's case volume increased 3.2%, while imported beer sales overall slipped 0.8%. Measured media spending in the U.S. last year was $60 million for Corona Extra and $9 million for Corona Light (excluding online), per Nielsen Monitor-Plus.

Corona faces fresh competition this Cinco de Mayo as A-B prepares to roll out Bud Light Lime. Again, from Brandweek:

A-B: "These Are Challenging Times"

CEO: A-B won't be acquired on "my watch," WSJ says.

Anheuser-Busch knows it has a lot at stake this year -- and it told its distributors just that.

"I don't need to tell you these are challenging times," A-B CEO August Busch IV told distributors at a meeting in Chicago this week, according to a report from Beer Business Daily.

The theme of the meeting: The Will to Win.

From BBD's report:

… make no bones about it, the stakes have never been higher for The King to win. The year 2008 will be a pivotal one for A-B as its largest two competitors merge to clip A-B's market share advantage to less than 20 points, it comes to market with a slew of new products (two of which contain the holy Bud trademark name), and it defends its massively important core brand volume.

Just how much is at stake was verbalized best by a distributor who asked about the possibility of A-B being bought out by an overseas competitor. … One of the questions yesterday was whether, with the weak dollar and strong overseas brewers, could A-B be acquired? August replied that, if A-B can grow sales and control costs, it can control its own destiny.

Showdown!

Bud Light Lime coming to town.

Talking to distributors last fall about Miller Chill's success, top Miller Brewing Company sales executive Tom Cardella made a prediction.

“We were first out the gate with a differentiated product that makes us all a lot of money,” said Cardella, executive vice president of sales and distribution. “[Anheuser-Busch] sees that and wants a piece of the action.”

Cardella’s prediction soon will come to pass as A-B prepares to push Bud Light Lime into stores in time for Cinco de Mayo. Ads already are airing for the brand.

The latest issue of Brew magazine took a look at A-B’s rollout of Bud Light Lime and how it’s introduction is laying the scene for fierce competition. If you would like a free subscription the print version of Brew, drop a line with your name and street mailing address here.

From the issue:

Cinco de Mayo is shaping up as one of the biggest scraps the beer business has seen in a while.

That’s the day Anheuser-Busch rolls out Bud Light Lime, a lime-flavored line extension. And it’s backing it with a $35 million marketing budget.

The beer is a clear shot at Miller Brewing Company’s Miller Chill, the chelada-style light beer that swiftly gained share and distribution during its national rollout last summer. And, Bud Light Lime’s May 5 rollout suggests to some that it’s also aimed at Corona Extra – somewhat ironically given that A-B has a 50 percent stake in Corona brewer Grupo Modelo.

Can Budweiser Be Saved?

A-B now says yes.

At nearly 25 million barrels of volume, Budweiser is a huge brand.

Thing is, it’s half the size it was in 1988.

Budweiser has been in decline for going on 20 years. In the past, the growth of Bud Light more than offset the slippage. But in 2007, Bud and Bud Select lost more volume than Bud Light picked up.

Hoping to slow down Bud’s descent, A-B is changing the brand’s marketing strategy and investing more dollars in it.

The latest issue of Brew Magazine takes a look at A-B’s plans for Bud. To receive a free subscription to the print version of Brew, drop a line with your name and street mailing address here.

From the issue:

Anheuser-Busch is poised to commemorate a less-than enjoyable anniversary this year: the 20th straight year of decline for Budweiser.

Once the biggest beer in the country, the King of Beers saw its volume dip by 4.7 percent – or 1.2 million barrels – to 24.6 million barrels in 2007, according to figures from Beer Marketer’s Insights. That’s less than half its peak of 50.5 million in 1988.

But A-B’s new top marketing exec thinks that trend can be turned around.

Interviewed by the St. Louis Post Dispatch earlier this year about A-B’s efforts to reach Latino consumers, A-B Vice President of Marketing Dave Peacock said, “Contrary to a lot of people’s thoughts, Budweiser can grow.”

Bud’s Gambit

A-B is determined to boost Bud and Bud Light. What does that mean for everyone else?

Anheuser-Busch’s core brands -- a group that includes Bud, Michelob and others -- didn’t meet the No. 1 brewer’s expectations last year.

A-B’s determined to make sure that doesn’t happen again.

Increased ad budgets. New products. New positionings. You name it, A-B is going to try it this year to get its core brands -- namely Budweiser and Bud Light -- back on track.

The latest issue of Brew Magazine takes a look at what A-B’s doing to boost Bud and Bud Light. And it looks at what it means for everyone else.

If you would like to receive a subscription to the print edition of Brew, drop an email with your name and mailing address here.

Here’s an excerpt from the latest Brew:

“I’ll shave my head if I could make this year’s volume target.”

So said Anheuser-Busch President and CEO August Busch IV in February at a gathering of analysts and investors in Florida.

Busch was joking. But his wisecrack underscores that A-B is dead-set on revitalizing its core brands in 2008.

And, as beer industry veterans know: Watch out if A-B is serious about something.

Just a few items on A-B’s agenda:

• Add $70 million to the combined annual ad budgets of Bud and Bud Light – which typically top $200 million already, more than the total ad budgets of either Miller Brewing Company or Coors Brewing Company, according to figures from TNS/Media Intelligence.

• Spend $35 million to launch Bud Light Lime – a clear shot at Miller Chill and Corona Extra. Analyst William Pecoriello of Morgan Stanley estimates the brand could hit 1 million barrels of volume.

• Increase the pool of ads on the air and refresh them more often.

• Launch Budweiser American Ale in the fall.

Many Michelobs

Dunkel Weisse, others on tap.

Anheuser-Busch – which has stated previously it plans to slow down on new product introductions – appears poised to roll out no fewer than four new styles of Michelob

The brewer has received label approvals for four new Michelob line extensions: Michelob Brown Ale, Michelob Red Ale, Michelob Dunkel Weiss and Michelob Bohemian Pilsner.

The approvals were for kegs. It’s not clear whether A-B plans to roll out bottle versions of the brews.

The new brands appear to fit in with A-B’s effort to position Michelob as a craft-style brand (ad tagline: “Crafting a better beer”).

More Bud/Bud Light Extensions on Tap?

A-B “trying to reset the portfolio.”

Back in January, Anheuser-Busch told Brandweek that it planned to tone down its new product push and focus on its core brands.

From Brandweek:

"We've got the resources to make anything, but sometimes we've done that without a purpose," said Bob Lachky, evp-global industry and development and chief creative officer at A-B, St. Louis. "We've become smarter marketers."

Since then, of course, A-B has announced plans to introduce Bud Light Lime -- its biggest new product launch since Bud Select. And Budweiser American Ale is on tap for the fall.

Lachky’s comments and the new introductions aren’t mutually exclusive. But recent comments from top A-B marketer Dave Peacock suggest that A-B might be open to introducing more line extensions of Bud and Bud Light in the future.

Peacock told the St. Louis Post-Dispatch that it has redefined its core brands. Under that rethinking, Budweiser is no longer a single brand family. Instead Budweiser and Bud Light are each considered “mega brands”:

From the article:

That partly explains A-B’s willingness to create new beers associated with the image of either Budweiser or Bud Light. Budweiser gets its American Ale cousin, which will try to trade on the image of quality and craftsmanship cultivated by craft beers. Bud Light, meanwhile, gets Bud Light Lime, geared towards the image of refreshment, sociability and summer fun enjoyed by Bud Light and imports such as Corona.

“We’re kind of trying to reset the portfolio,” said Peacock. A-B needs to have “the ability to leverage off the core brand nameplate and also…be willing to trim what you need to trim.”

Bud Ale Coming in Fall

Will retail at higher price point.

Budweiser American Ale will hit retail this fall, according to a report in Beer Business Daily.

The new line extension from Anheuser-Busch -- which was first reported by Brew Blog -- will be available in draft and six packs, top A-B marketing exec Dave Peacock told BBD in an interview.

It will sell at a higher price point than regular Budweiser, according to BBD.

From the report:

A-B vp marketing Dave Peacock told BBD that they just finished an extensive research process which suggests that the concept is "very appealing" to consumers and it "improves the Budweiser image and validates our Great American Lager positioning for the mother brand."

New Budweiser Line Extension on Tap?

Receives label approval for Budweiser American Ale.

Anheuser-Busch appears poised to roll out a craft-style line extension of its Budweiser brand.

The brewer has received label approval from the Treasury Department’s Alcohol and Tobacco Tax and Trade Bureau for Budweiser American Ale.

Bud American Ale has 5.1 percent alcohol by volume, according to label filings. A-B received approvals for 12-ounce bottles and three sizes of barrels (half, quarter and 1/6).

It's worth noting that A-B appears ready to extend the Bud brand into the craft space on the heels of Miller Brewing Company introducing the Miller Lite Brewers Collection, a trio of craft-style light beers.

In A Twist, A-B Advertising Natural Light

Faces competition in economy aisle.

Anheuser-Busch is ratcheting up marketing support for Natural Light -- a brand that traditionally gets little, if any, media support -- as competition heats up in the economy aisle.

According to Brandweek, A-B in April will break TV ads in 30 markets that focus on humorous “Nattyisms.” An ad demonstrating the “Nat-a-pult” shows a guy tossing a beer to a buddy who doesn’t want to lose his spot on the couch.

A-B is running the ads in face of the Natural Light showing slight slippage in grocery stores, according to beer sales statistics from Nielsen. The brand lost 0.1 points of share during the four weeks ended March 8.

Natural Light is doing better in convenience stores, according to beer market analysis by Nielsen. It was up 0.3 points for the four weeks ended February 23. But overall A-B lost 0.8 points of share during the period.

The story notes that Natural Light is seeing increased competition from other brewers -- including Miller Brewing Company -- in the economy section.

The story can be seen here.

A-B Energizing 180

Testing draft version.

Anheuser-Busch is trying to energize its 180 lineup with new products and innovation.

A-B disclosed in its latest 10-K filing with the Securities and Exchange Commission that it is testing a draft version of the energy drink. That’s on top of rolling out three new low-calorie flavors in 2007.

From the report:

The Company has energy drinks, “180”, “180 Orange”, “180 Blue”, “180 Red” (introduced in 2007), “180 Blue Low Calorie” (introduced in 2007) and “180 Orange Low Calorie” (introduced in 2007) in the energy drink category. 180, 180 Orange and 180 Blue are sold on a nationwide basis, 180 Red is sold in 49 states, and 180 Blue Low Calorie and 180 Orange Low Calorie in 40 states. All 180 brands are available in packaged form only with the exception of 180 which is in test in draught form.

A-B hopes to tap into the growing energy drink area as it diversifies from beer in search of new sources of growth. Its major initiative is a distribution deal with Hansen Natural, marketer of Monster. But it is stepping up support of its small 180 line.

A-B Drops More Brands

Peels line appears gone.

Innovation is hard work -- even for a dominant industry leader like Anheuser-Busch.

The brewer has rolled out dozens of new products in recent years in an effort to mine new sources of growth in the beer industry. None of them have been runaway hits. Bud Select, its biggest success, has been declining since the year it was launched despite receiving tens of millions in marketing support.

A-B disclosed in its 10-k filing with the Securities and Exchange Commission that it’s giving up on some new brands.

Particularly of note: The Peels line of alcohol fruit juices appears to be history, or close ot it. Marketed in department stores and spas, the product represented a new effort by A-B to market to women. But sales never took off.

The filing lists every single brand in the lineup – save the last entrant Nectarine Citrus – as being discontinued. Nor does the label appear on a page of A-B’s Web site that lists brands. Peels Pear Lemon was discontinued last year.

Budweiser Losing Distribution in Supermarkets

Follows long-running share decline.

In recent years, Budweiser has shown an uncanny ability to gain shelf space in supermarkets and convenience stores even as its sales decline.

But performance finally appears to be catching up with Budweiser, at least in supermarkets.

Budweiser saw the number of items carried in supermarkets (a proxy for shelf space) slip by 0.1 points, according to beer sales statistics from Nielsen.

That may seem modest – but Bud has now suffered this same 0.1 point loss for 12 consecutive rolling four-week periods.

Simply put, that’s the first such distribution loss detected for Bud on record. And it comes as Bud is posting one of the biggest velocity declines in the business. According to Nielsen, case sales are down 8.1 percent per total distribution points – a proxy Nielsen uses to measure breadth of distribution.

Given that performance, perhaps it’s not surprising that A-B is ratcheting up spending for Budweiser – and rolling out a major line extension, Bud Light Lime, that could take up some of that lost shelf space.

Bud TV in Limbo

“Not totally dead yet,” says A-B media exec.

Bud TV, which was launched last year with great fanfare but fell far short of viewership expectations, now faces an uncertain future.

From an Adweek report:

Speaking at the Association of National Advertisers TV conference in New York yesterday, Tony Ponturo, president and CEO of the Busch Media Group, was less than enthusiastic about the service's prospects.

He described the online content offering as, "Not totally dead yet," and insisted that the company wouldn't kill the service altogether because, if nothing else, it provides, "a valuable link to the creative community." And it's creatives, after all, who produce ads.

But how Bud.TV evolves "is an open question," he said.

That said, Ponturo noted that the service was "flawed," in that it tried to be too "hip and cool" for its own good. The feedback from consumers, said Ponturo, was, "We really like your ads," but the other site content wasn't especially popular.

The whole report can be seen here.

Bud Light Lime Has More Carbs than Chill

Carb count 20 percent higher.

Anheuser-Busch appears to be betting it can take share from Miller Chill with a higher-carb, higher-calorie knockoff.

Bud Light Lime, set to hit the market in May, has 116 calories and 8 grams of carbohydrates, according to label materials filed with the Treasury Department's Alcohol and Tobacco Tax and Trade Bureau.

Miller Chill, meanwhile, has 110 calories and 6.5 grams of carbohydrates.

The two brands are both 4.2 percent alcohol by volume.

A label image can be seen here.

The calorie and carb stats can be seen on the back label here.

The label application can be seen here.

Miller Chill Top New Brand in Supers

Racked up $40.8 million in sales, according to IRI.

Miller Chill was “by far” the top new beer brand in supermarkets last year, Beer Marketer’s Insights Express reported yesterday.

BMI, citing beer sales statistics from IRI, said Miller Chill posted $40.8 million in sales in 2007.

Anheuser-Busch’s Bacardi Silver Mojito was a distant second, with $8.1 million in sales.

A-B placed six brands on the top 10 -- including two brands launched regionally, Land Shark Lager and Bud Light Chelada. But their combined performance didn’t match that of Miller Chill.

From the BMI Express report:

AB also had #3 Landshark Lager and #4 Bud Light Chelada, plus #s 7, 9 and 10. But all of new brands #2-10 didn't equal total of Chill. Only craft brand in top 15: Alaskan IPA.

Given Miller Chill’s success, who can blame A-B for launching Bud Light Lime in hopes of taking some of that volume?

The Beer Marketer's Insights home page is here.

Previous Brew Blog coverage of Bud Light Lime can be seen here.

Is A-B “Running Out of Opportunities” Globally?

Rumors it may make a run for Russian brewer.

Might Anheuser-Busch make a run for the biggest Russian brewer?

Baltik Beverages Holding, the No. 1 Russian brewer, currently is jointly owned by Scottish & Newcastle and Carlsberg SA. But Carlsberg, which teamed up with Heineken NV in a bid for S & N, is poised to take over the whole entity.

But the Daily (London) Telegraph is reporting rumors that A-B might try to crash the party.

From the report:

Anheuser Busch, the US brewing monolith behind the Budweiser brand, has long coveted the Russian business and the coming weeks could present it with its last chance to get its hands on one of the world's fastest growing brewers.

Carlsberg looks set to take full control of BBH, the Russian joint venture, after Scottish & Newcastle accepted a £7.8bn joint takeover bid from the Danish brewer and Heineken last month. However, industry insiders believe there is a chance Anheuser could still crash the party.

The reason is that while A-B has a dominant market share in the United States, it has a limited presence in developing markets that will drive the growth of the global beer industry in years to come.

From the Telegraph story:

One insider at a European brewer said: "For Anheuser it is decision time because it has a problem. They have an historic opportunity with S&N or InBev because they are running out of opportunities. "

Speaking of Russia, SABMiller plc CEO Graham Mackay said the brewer is eyeing expanding its presence in Russia, through acquisition or organic growth.

The Telegraph story can be seen here.

The Financial Times' coverage of Mackay's comments on Russia can be seen here.

Miller, Coors Gain in C-Stores

Bud drags down A-B.

Miller Brewing Company and Coors Brewing Company gained share in convenience stores during the four weeks ended January 26, according to beer sales statistics from Nielsen.

Anheuser-Busch, which dominates the channel with 61.4 percent of case volume, saw its share erode as Budweiser declined.

Miller gained 0.2 points of volume and dollar share during the period. Its gain was driven by Miller Chill, which has held its 0.2 share in C-stores.

Miller also got a boost from the Milwaukee’s Best franchise, which gained 0.1 points of case share.

Will Bud Light Lime Distract A-B?

Could Bud Light Lime douse A-B’s “hot hand?”

Analysts and observers have suggested that Anheuser-Busch lost focus on its core brands as it added a bevy of crafts and imports to its portfolio.

Now come suggestions that the same thing could happen as A-B prepares the aggressive launch of Bud Light Lime, a line extension that’s clearly aimed at Miller Chill.

From a Wall Street Journal story about the launch:

John Greening, a former advertising-agency executive who represented Anheuser, said he is concerned the brewer is diluting its top-selling brand. "I worry they're losing their focus," said Mr. Greening, now a professor of marketing communications at Northwestern University. "Their hot hand has always been Bud Light. This takes the attention away from the hot hand."

Meanwhile, a story in Adweek detects skepticism in the distributor ranks about Bud Light Lime:

"Just like with Land Shark, we can put it in 8 to 10 percent of our accounts and if it doesn't grow, it doesn't grow," said a Southwest wholesaler, referring to another A-B entry. "Personally I question it. We've got a great strategy put in place for Bud Light, and we're looking for a great year. We got hammered with Bud Select, and I don't know if (Bud Light Lime) is incremental business, new business, or what."

The Wall Street Journal story (subscription required) can be seen here.

The Adweek story can be seen here.

Brew Blog's previous coverage of Bud Light Lime can be seen here.

A-B Rolling Out Chill Clone

May 5 launch.

Anheuser-Busch has confirmed that it’s planning a national rollout of Bud Light Lime.

Bud Light Lime, whose launch was first reported by Brew Blog, will be introduced nationally on May 5. It will be backed with a $35 million marketing campaign, according to reports in beer industry trade magazines.

The brand, which will come in a clear glass bottle with an APL label, will be rolled out with no test-marketing.

A-B has launched literally dozens of new products over the past two years in an effort to mine niches and seek new sources of volume (it’s already discontinued some new products). Now that Miller Chill has proven itself in the market, A-B appears to be going after it.

A-B Rolling out Chill Knockoff?

Following “denigrate, replicate” playbook.

Is Anheuser-Busch poised to introduce a Miller Chill clone?

There have been rumblings from the field that the No. 1 brewer is getting ready to do exactly that. According to industry sources, A-B has been quietly laying the groundwork for a lime-flavored version of Bud Light.

The brand, to be sold in six packs, is priced above Bud Light, the sources said. Refreshment will be a key selling point.

In other words, the taste profile, price point and positioning all bear a striking resemblance to Miller Chill.

A-B-InBev Combo Rumors Heat Up

Could things get hostile?

The perennial rumors of a combination between Anheuser-Busch and InBev heated up this week.

A Belgian business magazine reported that the two were in talks that could lead to a merger.

From a Reuters report:

InBev, the world's second-largest beer producer by volume, and. Anheuser-Busch are in talks that could lead to a merger of the two, Belgian business magazine Trends said on Thursday.

The New York Times’ Deal Book blog, citing Breakingviews, suggested that now -- as opposed to last year when similar rumors surfaced -- InBev would hold the upper hand in a deal. That’s due to its higher market valuation and the superior performance of its stock.

Is A-B Facing Distributor Jailbreak?

More wholesalers dropping exclusivity, WSJ reports.

For years, Anheuser-Busch racked up share gains with a distributor network that was willing to drop imports and crafts to focus exclusively on Budweiser and Bud Light.

But now a growing number of distributors are dropping exclusivity to bring in hot imports and crafts -- and A-B could pay a price.

So reports Wednesday’s Wall Street Journal in a story headlined “Beer Distributors Want More than Just One Best Bud.”

From the story:

“In the past year, distributors in Texas, Tennessee and elsewhere have decided to eschew Anheuser's incentives and begin selling rival beers such as Yuengling Lager, as well as wine and spirits. Recently, R.H. Barringer Co. became the first Anheuser distributor in North Carolina to start selling other brands, acquiring a rival that sells wine and imported beer. Today, about 60% of Anheuser's sales flow through distributors carrying only its brands, down from about 70% at its peak.

“The shift might help competing alcohol brands gain market share, as distributors divert some of their attention from Anheuser, which accounts for about 48% of U.S. beer sales. For consumers, it means greater choice at their local bars and liquor stores. Wall Street analysts say the movement signals a weakening of the St. Louis brewer's clout in the marketplace, as small-batch "craft" beers and imports, as well as wine and spirits, wrest market share from mass-market brews like Budweiser.”

Deja Dude?

Some claim A-B’s new “Dude” ad campaign has been done before.

Anheuser-Busch, which has long been seeking an encore for its wildly popular “Whassup” ads, has generated some buzz with its new “Dude” campaign for Bud Light.

But some are asking whether we’ve seen it all before.

From this week’s Advertising Age:

"But the ads have also drawn notice for what some call a suspicious resemblance to earlier work. Consider that after the online magazine Slate ran a positive review of the 'brilliant' campaign, its comments pages were quickly overrun by allegations of theft and plagiarism of, among other things, a recurring gag on a popular Tulsa, Okla., morning radio show, a Spanish-language Coors Light ad, an anti-drunk-driving campaign that aired in New Zealand, a scene from the 1998 film 'Baseketball' and a 1980s stand-up act by the former 'Saturday Night Live' star Rob Schneider.

Rumors of InBev-A-B Deal Surface – Again

A-B declines comment.

The Wall Street Journal on Friday reported that the long-rumored combination of InBev and Anheuser-Busch is once again on the table.

From the story:

“InBev and Anheuser already have held discussions, say people in the industry familiar with both brewers' thinking. Although reports of the talks surfaced as long as a year ago, they have become more serious, and a deal is possible this year, people in the industry say.”

The report came on the heels of A-B reporting fourth quarter earnings that missed Wall Street estimates. Equity income from A-B’s stake in Grupo Modelo, which long has buoyed A-B’s profits, declined during the quarter.

A-B Earnings Miss Wall Street Expectations

Modelo equity income down.

Anheuser-Busch on Thursday reported fourth quarter earnings that fell short of Wall Street analyst expectations.

A-B reported earnings of 29 cents per diluted share. The Street was expecting 32 cents.

Equity income from A-B’s 50 percent stake in Grupo Modelo has helped boost the company’s earnings in the past. That didn’t happen in the fourth quarter.

Equity income dropped 12 percent, “reflecting reduced Grupo Modelo export volume and increased production costs, partially offset by benefits from Modelo's Crown import joint venture,” according to the release.

According to A-B’s release, the beer industry grew by 1.4 percent in 2007. A-B’s share increased to 48.5 percent from 48.2 percent in 2006.

So Will A-B Pull New Bud Spots?

Marketing chief says it will stick to “virtues.”

Anheuser-Busch’s top marketer made remarks in today’s Wall Street Journal that led Brew Blog to wonder whether the company intended to pull ads that tout Budweiser at the expense of crafts and imports.

Responding through a prepared statement in a story about Miller Lite’s upcoming “Dalmatian II” television spot, David Peacock, A-B’s vice president of marketing, said, “We recognize that in an election year there tends to be a lot of negative advertising, and we feel speaking to the quality and virtues of our brands will differentiate us in a cluttered advertising environment.”

Given this stance, will A-B stick with Bud ads that take shots at crafts and imports?

In one, Rob Riggle talks about how Bud has more taste than a light beer but isn’t as heavy as an import. And in another he suggests dark and cloudy beers can hide imperfections.

Or does A-B not consider these “negative advertising”?

Big A-B Distributor Consolidations in 2008?

“What’s driving it are the fundamentals,” says consultant Joe Thompson.

The biggest Anheuser-Busch distributor in the country was created last year when Silver Eagle Distributors acquired BudCo. The year ended with a bang when south Texas distributor L&F Distrbuting bought Desert Eagle Distributing.

Expect more big -- and little -- A-B wholesaler consolidations in 2008, says consultant Joe Thompson, who handled a number of A-B distributor deals last year.

“What’s driving it are the fundamentals,” he explains. “The problem that the A-B system has is that they are primarily a domestic [beer] system. And the domestics are struggling.”

Bud Light Bowl

A-B to prop up core brands with Super Bowl ads.

As its core brands struggle, Anheuser-Busch is expected to devote its 4 minutes of advertising time during Super Bowl XLII to just two brands: Bud Light and Budweiser, reports say.

A-B is expected to run 6 30-second ads for Bud Light during the game and one 60-second ad for Budweiser.

A-B is changing tack from recent years when it would use the Super Bowl to highlight a variety of brands, such as Bud Select, the New York Times notes:

"The decision to promote only Budweiser and Bud Light would represent a change in strategy. In recent Super Bowls, Anheuser-Busch also ran commercials for smaller brands like Budweiser Select, Michelob Amber Bock and Michelob Ultra Amber; spots called 'Here's to beer,' which celebrated beer as an alternative to other alcoholic beverages; and commercials that encouraged driving responsibly."

A-B is shifting strategy after a weak showing by its core brands. While workhorse Bud Light grew, Budweiser and Bud Select struggled. A-B’s core brands saw sales-to-retailers slide by 0.3 percent in 2007. Shipments of core brands increased by 0.3 percent.

Corona Extra Mainstream?

“The strategic direction on Corona worries us,” analyst writes.

Will the launch of Corona Extra 12-pack cans undermine the image of the No. 1 import?

That’s the question raised in Tuesday report by Bear Stearns analyst Justin Hott.

Commenting on recent reports that Grupo Modelo would not be taking pricing on Corona, Hott writes:

“However, we are less enthusiastic about the launch of Corona into 12-pack cans, a format that does little to build brand equity. … This move by Modelo may help short term volumes, but we doubt it helps the status of the brand.” 

Bud Takes Shots at Crafts, Lights, Imports

Ads tout Bud as "The Great American Lager."

In recent ads touting Budweiser as “The Great American Lager,” Anheuser-Busch manages to take shots at crafts, imports and light beer -- even though A-B has positions in all those areas.

In one ad, actor-comedian Rob Riggle explains to a woman in a bar that Bud is less heavy than an import yet has more taste than a light beer.

In another, Riggle suggests brewing a lighter beer is more difficult than making a darker beer. That’s a pretty clear shot at crafts.

A-B to Tap Russian Beer Market?

Reportedly in talks to help S&N buy Baltic Beverages Holding.

Is Anheuser-Busch poised to crack into the Russian beer market?

Anheuser-Busch and some private equity groups have met with Scottish & Newcastle to discuss a joint bid to take over Baltic Beverages Holding, the No. 1 Russian brewer, news reports over the weekend said.

BBH is a joint venture between Scottish & Newcastle and Carlsberg. But now that S&N is in the sights of a buyout bid by Carlsberg and Heineken, it is moving to take full control of BBH.

Getting a stake in BBH would enhance A-B’s international presence.

From the UK’s Daily Telegraph:

"S&N's plan would be to finance a bid for BBH by offering a 25 per cent stake to a minority partner.

"Anheuser-Busch has long coveted a place in the rapidly expanding Russian beer market and replacing Carlsberg in a new joint venture with S&N would offer it part ownership of the country's leading brewer."

The Telegraph story can be seen here.

Rolling Rock Red?

A-B preparing new Rolling Rock line extension.

Anheuser-Busch appears poised to roll out a red lager version of Rolling Rock called Rolling Rock Red.

Copy on the back of the bottle reads (according to federal filings): “From the good name of Rolling Rock along with the untraditionally painted green bottle, we created this finely crafted red lager beer. Our toasted caramel malt introduces a rich, robust taste to a remarkably smooth finish. We tender this finely crafted red lager for your continued enjoyment, as a tribute to your good taste.”

While the number 33 has been a traditional part of Rolling Rock iconography, Rolling Rock Red's label has a “3.”

Can Budweiser Grow?

New A-B marketing chief says it can.

Anheuser-Busch, which saw sales-to-retailers of its core brands slide in 2007, is expected to significantly ramp up its marketing spend in 2008, Advertising Age reports.

Budweiser is one of the brands marked for increased spending.

Which begs the question: Can Budweiser start growing again? It certainly would appear to face long odds: It’s roughly half the size of its peak. Miller Lite has supplanted it as the No. 2 beer in supermarkets. Premium full-calorie domestic beers face headwinds. And Bud has been declining since 1988.

Indeed, many beer industry observers have written off the brand’s prospects for growth.

But Dave Peacock, tapped last year as A-B’s top marketer, believes the brand’s fortunes can be reversed.

A-B Core Brand Sales Fall

Imports drive growth.

Imports kept Anheuser-Busch growing in 2007.

Anheuser-Busch’s sales to retailers grew by 1.3 percent during the year, A-B reported on Monday. But backing out imports -- particularly the InBev European brands -- A-B’s STRs slid by 0.3 percent.

A-B’s shipments increased by 2 percent during the year, but that was largely driven by imports. A-B’s core brand shipments increased by 0.3 percent.

"Anheuser-Busch achieved increased shipments in 2007 due to the success of our initiatives to broaden the company’s beer portfolio, including the addition of InBev European brands,” A-B CEO August Busch IV said in a press release.

Noted Beer Marketer’s Insights Express:

"Including exports, looks like AB shipments edged over 105 mil bbls. Take out Euro brands tho, and AB volume basically the same in 07 as it was in 03."

The A-B press release can be seen here.

The BMI home page is here.

Big Boxes Boost Busch

24- and 30-packs help drive share gain.

Anheuser-Busch recently improved its share in supermarkets thanks largely to its Busch franchise.

A-B maintained flat share in supermarkets during the four weeks ended December 22, according to beer sales statistics from Nielsen. That was the first time A-B avoided a year-over-year volume share loss since June 30.

The biggest contributor was the Busch franchise, which gained 0.4 points of case share during the period. (Bud Light gained 0.1 points and Michelob Ultra added 0.2 points). The Busch franchise's dollar share increased by half as much, 0.2 points.

Credit big packages for the growth.

A-B to Push Crafts in C-Stores?

Advertising craft-style brands in trade media.

It’s not news that Anheuser-Busch has been losing share in convenience stores even as crafts gain space in that channel.

Is A-B trying to reclaim some of that space in the channel it dominates with its own craft-style brews?

That would appear to be the case, based on an ad buy in the trade magazine Convenience Store News.

The December 10, 2007 issue of CSN includes a full-page ad for Shock Top Belgian White Ale, a brand A-B appears poised to push as a Blue Moon fighter. (Shock Top began as a seasonal called Spring Heat Spiced Wheat).

The same issue also has a full-page ad for Stone Mill Pale Ale and Wild Hop Lager, two organic brews made by A-B under the Green Valley Brewing Company name.

A-B’s plans remain to be seen. But pushing craft style brews would make sense. A-B has more than 60 percent share in the channel. And crafts are increasingly popular.

Moreover, it’s widely expected that craft brewers will be forced to raise prices in the coming year due to higher commodity costs. That could benefit A-B.

The CSN web site can be seen here.

New Seasonal from A-B

Sun Dog for summer?

Anheuser-Busch appears poised to introduce a new summer craft-style seasonal.

A-B late last month filed a number of label applications for Sun Dog Amber Wheat ale. The brand’s label, which depicts a shorts- and shades-wearing dog clutching a Frisbee, is described as a “limited edition” and a “seasonal brew.”

Given the graphics and name it seems safe to assume the brand is a summer seasonal.

Assuming that’s the case, it’s unclear what the introduction would mean for current summer seasonal Beach Bum Blonde Ale.

A-B is morphing its spring seasonal Spring Heat Spiced Wheat into a year-round brew, Shock Top Belgian White, in an apparent effort to take on Coors Brewing Company’s Blue Moon Belgian White Ale.

UPDATE: In comments, a reader suggests Sun Dog might actually be a spring seasonal replacement for Spring Heat.

Brew Blog first noted Sun Dog here.

The label image can be seen here.

The label application is here.

Would A-B Fetch a High Price?

Analyst suggests a buyer wouldn’t pay exorbitant premium.

Rumors about Anheuser-Busch being bought, by InBev or by a private equity firm, bubbled up more than once over the course of the year.

The rumors came to nothing, of course, but the fact they surfaced at all was telling. The idea of A-B being the acquired, and not the acquirer, once would have been unthinkable.

Stifel Nicolaus on Monday published a report titled “On BUD’s Takeout Value.” It asked whether a buyer would pay “more than a typical takeout multiple for BUD.” Absent a bidding war, Stifel’s verdict was no.

Why? Largely because A-B remains underindexed in imports and crafts.