Marketing in Action Case Real Choices at Anheuser-Busch InBev

  1. Summary of case
  2. Situation Analysis:

-External Environment Analysis

-Internal Environment Analysis

  • SWOT analysis
  • Answer Questions:
  • What is the decision facing the company?
  • What factors are important in understanding this decision situation?

(3) What are the alternatives?

      Should come up with at least two or more alternatives.

      -Alternative One: 4 P’s and Pros and Cons of strategy

      -Alternative Two: 4 P’s and Pros and Cons of Strategy etc.

      -Alternative Three: 4 P’s and Pros and Cons of the strategy etc.

(4) What decision(s) do you recommend?

      Choose alternative(s) that is most suitable for the company at the time of situation. Provide reasons that you chose the alternative for the decision.

(5) What are some ways to implement your recommendations?

Your deliverables are:

A. Paper: You will create a 2-3 pages written case analysis paper (12-point font, single-spaced). You will need more than company web site research to do this right.

Marketing in Action Case Real Choices at Anheuser-Busch InBev

Can beer drinkers distinguish between the taste of one brand of beer and another? Research studies say they can’t. This is one reason that beer marketing has traditionally focused more on establishing an identity for the brand and less on differentiating it from competitors. In recent years, however, beer consumers have shown that they actually want something different in the products they choose, driving them not just to new brands, but to whole new categories of alcoholic beverages. The popularity of so-called “hard” seltzers is the latest example of this shift in behavior. Market leader Anheuser-Busch InBev hopes to capitalize on this trend with its line of spiked seltzer drinks.

Anheuser-Busch InBev (commonly called AB InBev) is the parent company of the brand Budweiser, the undisputed “King of Beers.” The company has a massive portfolio of brands—some 500—including well-known names Corona, Stella Artois, Michelob Ultra and the best-selling beer in the U.S., Bud Light. Until recently, the most seismic shift in beer consumer preferences was toward less filling, lower calorie brews. Anheuser-Busch did not pioneer this category (Miller Lite was first in 1975), but it later took over leadership with Bud Light. While traditional beer is still the largest category of alcohol in the U.S., a 2019 study showed the category is shrinking, falling from 22.3 percent of in-store sales to 17.7 percent. Some consumers reduced their alcohol consumption, while others moved to the more distinctive “craft” brews. In the last two years, many of these traditional beer drinkers moved to flavored malt beverages, of which hard seltzers are the most popular.

A focus on health and wellness helped drive the popularity of light beer, and it’s driving much of the interest in the new seltzer products. A 2020 survey found that 59 percent of beer drinkers had reduced beer drinking for health reasons. Sixty-two percent said they were most concerned about weight gain, and 29 percent reported that they count calories most or all of the time when they drink. A Nielsen study found that those who choose craft beers were looking for more variety, as well as better quality and more flavor options. Much of this trend is driven by younger drinkers—millennials and Gen Zers—who think of traditional beer as stale and unhealthy. These more “mindful” drinkers are also more adventurous. They look for something different in their beverages (along with a buzz), and hard seltzer producers like AB InBev are happy to oblige.

AB InBev is attacking the seltzer market with several brands that focus on different demographics. Its Bon & Viv is a premium product targeted toward non-beer drinkers, particularly millennial women. Natural Light Seltzer targets a market familiar to you: college age drinkers of its popular Natural Light beer. This offering is priced for the lower budgets of its target market; it costs about 20 percent less than mainstream alternatives. But the company’s biggest play is the leveraging of its top brand with the introduction of Bud Light Seltzer. Priced between its other two seltzer offerings, AB InBev hopes this new product in its portfolio will attract the average “backyard beer drinker” who is looking for a crisp alternative from a familiar brand. The numbers are right for the health-conscious imbiber: 100 calories, 1 gram of sugar, 2 grams of carbs, and 5 percent alcohol. For variety (or adventure), you get a choice of Black Cherry, Lemon Lime, Strawberry, or Mango.

The company is serious about seltzers, with plans to invest an additional $100 million into the category. It launched the brand with an ad that takes place in the real town of Seltzer, Pennsylvania, where a fictitious mayor sums up the company’s ambitions for the product, saying “If you love Bud Light, you’ll love Bud Light Seltzer. If you don’t love Bud Light, you’ll love Bud Light Seltzer.” As further proof of its commitment, Bud Light Seltzer was promoted with a 60-second Super Bowl ad in 2020 that the new product shared with its namesake, Bud Light. To create extra buzz, the company let social media users select which of two ads actually made it to the Super Bowl.

The future looks pretty sparkling for seltzers. While growing by over 212 percent in 2019, the subcategory still represented only 2.6 percent of the overall beer market. AB InBev hopes it can capture 20 percent of the market with its three seltzer brands. Compared to craft beers that have many small producers, hard seltzer is largely driven by national brands, which of course plays to the strengths of a company like AB InBev with its huge distribution network. The hard seltzer category, worth $1.75 billion in 2019, is expected to grow to $4.7 billion by 2022. Fifty percent of alcohol drinkers haven’t even tried seltzer yet, a factor that AB InBev thinks plays to its advantage due to the high awareness of its existing beer brands. But AB InBev is playing catchup in the market. Early 2020 numbers claimed only nine percent market share for Bud Light Seltzer, and 2019 share numbers for Bon & Viv and Natural Light Seltzer landed at 5 percent and 2 percent, respectively. This combined 16 percent share is still far behind market leader White Claw, whose share in 2019 was 59 percent.

AB InBev’s chief marketing officer, Pedro Earp, understands how beer consumers have changed. He observes, “ . . . years ago, you could create an average product or a product that didn’t have a lot of functional difference and you could really use mass advertising to drive emotional differentiation. The world has completely changed. Consumers are much more savvy about what’s a great product or not. So true product differentiation became a much more important factor than emotional differentiation.” He added, “ . . . you need to understand your consumers much better, their passion points and needs.” The company’s challenge ahead is to understand and respond to those changing consumer tastes with beverage tastes that beer drinkers will continue to buy.78

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