A-B InBev Plots Comeback Plan for Struggling Bud Light Lime-A-Rita

Big Investment Includes New Ad Backed by Nelly's 'Hot in Herre'

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Bud Light Lime-A-Rita is subbing in Nelly for Lionel Ritchie. The rapper's 2002 song "Hot in Herre" backs a new ad for the flavored malt beverage that comes as Anheuser-Busch InBev plots a major investment in the struggling brand.

The ad marks the beginning of a fresh campaign describing Rita as a "bold margarita." In March another ad will air plugging a new lower-alcohol line extension called Lime-A-Rita Splash that is positioned as a "refreshing margarita." In total, five new ads will air for the Ritas franchise in 2016 that will be backed by the biggest investment ever for the four-year-old brand, said Mallika Monteiro, senior director of the Rita brand team. The brewer spent $19.6 million in measured media on Ritas in 2014, the latest full-year data available from Kantar Media.

The ad, from FCB Chicago, broke this week and got airtime during the Grammys, where 30 seconds was running for an estimated $1 million. The previous campaign, "Fiesta Forever," was by BBDO. One ad included a man handing out Ritas at offices, pools and in living rooms, while speaking and singing Mr. Richie's 1980s pop hit "All Night Long."

Lime-A-Rita Splash
Lime-A-Rita Splash Credit: A-B InBev

The new creative approach aims to bring "margarita moments to life in unexpected places," Ms. Monteiro said. Referring to the art gallery ad (above), she said, "people have certain expectations of what an art opening or what an art event is like … and Lime-A-Rita can upend that." As for "Hot in Herre," she said the brand purposely chose an older song. She described it as "wedding hip-hop," meaning familiar songs that "make people take notice and get on the dance floor."

By contrast, marketing for Splash will carry a more low-key vibe, she said. At 4% alcohol-by-volume, the line extension will be sold in glass bottles and positioned for weekday drinking. The 8% ABV core Ritas line is sold in cans and aimed for weekend drinking.

While Ritas rocketed out of the gate in 2012, the brand has struggled amid competition from entrants in the FMB category, including Not Your Father's Root Beer, which is distributed by Pabst. Ritas volume fell 23% in the fourth quarter, Sanford C. Bernstein stated in a recent report.

In the early years, A-B InBev was able to maintain momentum for Ritas by continually introducing flavors. The core lineup includes lime, strawberry, mango, raspberry and lemonade in addition to seasonal flavors like a forthcoming watermelon variety.

But the new-flavor strategy has not produced the same returns it once did. "That flavor game gets more and more difficult to cycle," said Benj Steinman, president of beer trade publication Beer Marketer's Insights. "You introduce a new flavor and you might not get as much incremental lift, and all the other ones are declining."

On an earnings call in October, A-B InBev CEO Carlos Brito conceded that Ritas "had a tough year for sure." But he positioned the Splash extension as a solution to the brand's woes. "We stayed in one part of the market, the higher alcohol segment. And there was a lot of activity in both the higher and the lower alcohol segment, and we didn't capture any of the activity in the lower-alcohol segment," he said. "So, now with Splash, we're coming with a competitive solution for that segment."

But the brewer will face stiff competition. New flavored malt beverage brands that have already hit the market this year include Henry's Hard Soda by MillerCoors, which checks in at a modest 4.2% alcohol by volume, putting it in line with most light beers. On Wednesday, North American Breweries announced it would begin selling Seagram's Hard Soda on March 1 in flavors such as cherry cola, grape soda, lemon n' lime and orange cream. Even as it invests behind Ritas, A-B InBev has entered the hard soda market with a new brand called Best Damn Brewing Co., whose first product is a hard soda called Best Damn Root Beer.

But all the new sweet malt beverages might end up turning sour for brewers, according Sanford C. Bernstein analyst Trevor Stirling.

"Successful brands in this sector tend to be like shooting stars, burning brightly for a time, and impressing earth-bound observers, before fading from view," he stated in a recent report. "If anything, these cycles have become shorter as the fickle, experimental millennial generation have reached legal drinking age."

Editor's note: Hear more from Anheuser-Busch InBev at the 2016 Ad Age Digital conference. Azania Andrews, Senior Director, Digital Connections, North America, will be presenting during the April 5-6 event in New York City. Get all the details here.

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