The king of beers is ratcheting up marketing in nightspots to reach 21-to-27 year olds that increasingly are hoisting martinis instead of brews. To grab these drinkers, A-B is hitting the bars with more promotions, increasing field staff, bringing in third-party promoters and developing menu programs with restaurant chains.
The No. 1 brewer is fighting back as spirits marketers have taken share from beer in recent years, partly because of their focus on promotional and experiential marketing tactics. The Jagerettes, women who push shots of Sidney Frank Importing Co.'s Jagermeister in bars, are a classic example.
"Where are 21-to-25-year-olds up for grabs? In the [bars]," said Brian Sudano, senior VP of the consultancy Beverage Marketing. "They have to do something here."
The brewer of Budweiser and Bud Light has deep pockets-it spent $2.5 billion on marketing, distribution and administrative expenses in 2003-but to be successful A-B will need to do more than bar hop. A-B will need to be creative, and it will need to be persistent. "They've got to make a long-term commitment to this," said Darrell Jursa, president of the consultancy Liquid Intelligence.
Spirits represented 28% of all alcoholic beverages consumed in the U.S. in 2003, compared to 27% in 2000, according to Beverage Marketing. Beer slipped to 59% from 60% in the same period.
Much of the ground lost by beer was in bars and nightclubs, the so-called on-premise channel. For instance, beer on-premise volume slipped by nearly 1% in 2003, according to Beverage Marketing. Spirits grew 7%.
The growth in spirits is the cumulative result of a host of marketing efforts since the mid-1990s ranging from growing use of electronic media(see story, P. 1) to product placement (Absolut on "Sex and the City," for instance) to bar promotion. For example, Allied Domecq built its Courvoisier cognac brand by holding events at hip urban clubs.
feeling the pinch
A-B, while growing, has felt the pinch. Earlier this month, it reduced its volume guidance for the second time in two months; the brewer predicts shipments to grow by 1% this year, compared to forecasts as high as 2% early this year.
August Busch IV, president of A-B's U.S. brewery, raised these issues at an investor meeting earlier this month. "The growth of spirits and wine represents a threat not only to [A-B] but also to the beer industry as a whole," he said. While some of that growth is driven by the population aging, he said, "of greater concern is the fact that more and more of these products and spirits in particular are gaining acceptance among" 21-to-27-year-olds.
A-B is already in the midst of a promotion in which it provides samples of fresh-brewed beer at bars, and will extend the sampling effort to National Football League stadiums and retailers. The effort is tied to new TV work from Omnicom Group's DDB Worldwide, Chicago, touting that A-B has the freshest-brewed beer.
Moving forward, Mr. Busch said the brewer plans to step up activities at "high-image" venues, add more field staff and increase visits from that staff. With chain accounts, A-B wants to develop menu programs and come up with recipes for drinks mixing their beers with juices and other ingredients.