Despite the ebbing popularity of low-carb beer-a category A-B created with Michelob Ultra-the country's largest brewer believes enough volume will remain to justify a new brew, according to executives close to the company. And although A-B recently vowed not to dignify Miller Brewing Co.'s taunts that Miller Lite has half the carbs of Bud Light, the new brew, said to be called Budweiser Select, is in itself a response.
A "primary objective is to discredit and invalidate the Miller Lite low-carb [positioning] and go after their consumers," said an executive close to A-B.
There are risks. It's not clear that drinkers are parched for a new carb-counting entrant. And if it does catch on, it could cannibalize sales of Bud and Bud Light.
A low-carb Bud could also create consumer confusion, given that A-B has run ads undermining its rival's low-carb positioning and saying consumers should choose on taste. Print and point of sale ads ridiculed Miller Lite as the "Queen of Carbs."
"I don't know why they'd do it now," said Tom Pirko, president of consultancy BevMark.
A-B declined to comment, other than to say, "We are continually evaluating new products to meet today' ever-changing marketplace." But U.S. brewery president August Busch IV has offered hints about its plans. "While the low-carb phenomenon is no longer expanding, consumer interest in a healthier, more balanced lifestyle is here to stay and our marketing strategy must capitalize on it," he said at an investor conference earlier this month. "We are also developing a variety of new products we intend to test in the coming months, featuring unique taste and varying degrees of carbohydrates, calories and alcohol content in order to capture incremental volume opportunity."
Omnicom Group's DDB Worldwide, Chicago, is working on creative for the product, executives said. DDB referred questions to the marketer.
A recent analyst report from UBS, based on conversations with wholesalers, suggested A-B could put the product in test soon. "We understand that A-B is looking to test market Budweiser Select in a few markets, with a more broad-based test in [the fourth quarter]," UBS analyst Caroline Levy wrote in a Sept. 16 report based on conversations with wholesalers. "If test-market results go well, we believe the brewer will look to launch the product nationally in January 2005."
A-B's Michelob Ultra juggernaut hit 3.1 million barrels in sales in 2003. But the beer is showing signs of slowdown. Volume at supermarkets-which represents about 20% of beer sales-was up 46% for the year-to-date ended Sept. 5, according to figures from Information Resources Inc. But it slipped by 1.1% in the four weeks ended Sept. 5. Its share for the four-week period fell to 2.7% from 2.9% for the year-to-date period.
Meanwhile, Coors Brewing Co. low-carb brew Aspen Edge, rolled out nationally this spring, is also showing signs of weakness. For the 13 weeks ended Sept. 5 it had 0.3% share in supermarkets; during the 4-week period it had 0.2%.