A-B DIVESTS PROPERTIES, BEER IS ITS BUSINESS

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The real Busch Stadium is the world.

That message came across clearly last week as Anheuser-Busch Cos. announced it would shed its Eagle Snacks, St. Louis Cardinals and Busch Memorial Stadium properties.

A-B said it wants to concentrate on beer and theme parks, and added that the moves complement the July announcement that A-B would spin off its Campbell Taggart baking subsidiary.

Eagle Snacks lost $25 million last year and the baseball franchise $12 million. Although that may seem like more of an annoyance than an open wound to a company that piled up $1 billion in profits during that period, the U.S.' No. 1 brewer faces a stagnant market for its main product at home and tantalizingly untapped potential abroad.

Of those 1994 profits, $50 million came from international beer expansion.

A-B is "getting rid of these operations because they're taking up cash and using resources," said Manny Goldman, securities analyst at PaineWebber, San Francisco. "Anheuser-Busch wants Budweiser to be a well-respected, large-selling international beer brand, and it's trying to strike up international franchises of major significance."

Added Tom Pirko, president of New York consultancy Bevmark: "Anheuser-Busch has to be like Coca-Cola-it has to be a world brand. It can't sit home and bleed with baseball strikes; that's a drain on its priorities and attention. They need to devote themselves not to what comes out of the oven or plays on the diamond. Their business is beer."

"Internationally, Anheuser-Busch never had much impact with either snack or bakery goods-both efforts were half-baked," Mr. Pirko said. "They were never going to achieve any parity against competition and barriers from PepsiCo's Frito-Lay."

A-B has been forming joint ventures with foreign brewers because beer consumption is growing much faster in countries like Brazil and China than in the U.S.

A-B now has major brewing deals in Canada, Latin America, Europe and Asia. The brewer has voiced particular interest in Asia, which features an expanding middle class and fast-growing economies-plus low beer consumption.

Per capita beer consumption in China, which Budweiser entered this summer, is only about an eighth of that in the U.S.

A-B's relatively recent entry to the international scene has been a serious effort: In four or five years, the brewer has put $500 million to $600 million into overseas operations, Mr. Goldman said.

Eagle Snacks were introduced in 1979 with seemingly great promise-a brewer joined by a sister line of munchies. But Eagle never turned a profit.

After avoiding TV ads for more than a year, Eagle hired a new agency and tried to revive the brand early this year. The humorous spots from Glennon Cos., St. Louis, targeted men 18 to 34 with the tagline, "What you feed your face."

But competing with Frito-Lay, which owns half the salty snack market, proved too fierce. Bouyed by strong pretzel sales, Eagle gained some market share in the past year but still has only 4.9% of the $6.3 billion category, according to Information Resources Inc.

A-B said last week it had been contacted by several interested buyers, but selling Eagle could be tough. Keebler Co. has yet to find a buyer for its salty snack division, put on the block in June.

The decision to let go of the Cardinals in no way reflects a strategic shift in how A-B regards baseball as a marketing vehicle, said Tony Ponturo, who, as VP-corporate media buying and sports marketing, is A-B's point man on sports marketing.

"It's two separate issues," he said. "Our decision to sell the Cardinals is really a statement on the opportunity to make money in baseball as an owner as opposed to using baseball as a marketing vehicle. When it comes to the latter, we gauge our continued involvement and shape programs based on media issues like reach and demographics, standard measurements we use for any media buy or marketing initiative.

"We want to pool our energies into our core business, our heritage, especially as we work to build the brand outside the United States."

However, A-B still believes in its Busch Gardens theme parks.

"They make money and they serve as good global marketing vehicles for Anheuser-Busch," Mr. Ponturo said. "The parks have international potential, and the ones here draw a great deal of international traffic, which means a lot of people from all over are....coming into contact with Anheuser-Busch."

Written from reports by Todd Pruzan, Jeanne Whalen and Jeff Jensen.

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