Credits Increased Revenue to Marketing Efforts

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BOSTON ( -- Anheuser-Busch Co.'s 2003 marketing budget will increase next year, though to a smaller degree than in the past, largely because 2002 has seen a greater marketing outlay, the company said today.

The brewer spent $1.8 billion on marketing, distribution and administration expenses in the first nine months of this year, compared with last year's $1.6 billion -- an 8% increase, according to quarterly statements released today.

Randy Baker, chief financial officer, told analysts in a conference call that this year's marketing represented a high base, and though 2003 would increase, the boost would be "relatively small" by comparison.

$257 million spent so far
Anheuser-Busch spent $257 million in measured media in the first seven months of this year, compared with $222 million for that period in 2001 and the same amount in 2000, according to Taylor Nelson Sofres' CMR.

Mr. Baker said media

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inflation contributed to this year's ad spending, but that the brewer's long-term contracts had ameliorated costs.

He said the world's largest brewer would continue to spend next year based on market needs and opportunities. He said marketing had helped it raise prices, which is boosting financial results. The company began increasing prices in October and will do so again in the first quarter of next year.

"The image of the products are partly established by the advertising [and] the quality of the creative," he said. Anheuser-Busch uses a stable of large and small agencies, though its three primary agencies are Omnicom Group's DDB Worldwide in Chicago and sibling Goodby, Silverstein & Partners, San Francisco, as well independent Waylon Ad in St. Louis.

Net sales and income up
The company said the third-quarter results represent its 16th consecutive quarter of solid double-digit earnings per share growth. Net income for the quarter was $622 million, or 71 cents per share, compared wih $559 million, or 62 cents per share, a year earlier. Net sales for the quarter were $3.7 billion, compared with $3.5 billion a year earlier, a 5% increase. For the nine months ended Sept. 30, net sales were $10.5 billion, compared with $10 billion for the same period in 2001, a 5% jump. Net income in that period was $1.7 billion, or $1.88 per share, from $1.5 billion, or $1.63 per share, a year earlier.

The company also credited the introduction of premium alternative malt beverage Bacardi Silver for boosting sales. Mr. Baker, however, said the alt-malt category appears to have peaked, though he acknowledged some of the slide was likely due to colder weather than usual this summer. He declined to say what Anheuser-Busch would spend on Bacardi Silver next year, other than "what is necessary based on the competitive situation."

Overseas gains
The company said profits and volume on Anheuser-Busch brands overseas rose significantly, and that packaging and its entertainment properties contributed to the results.

Separately, Mr. Baker said the recent launch of the high-end, low-carbohydrate Michelob Ultra had exceeded expectations and was helping the Michelob family. Mr. Baker said Ultra was making beer drinkers out of people who normally drink other products, and that the brew had more female followers and was skewing younger than Anheuser-Busch's other products.

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