Bud set to test upscale brew

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Anheuser-Busch Cos. is quietly preparing a fall test of Red Label from Budweiser, the first white-collar extension of its blue-collar brew.

The move underscores A-B's desire to provide distributors with a fuller array of products, especially in the highly competitive super-premium beer category where its recent efforts have faltered. Unlike Budweiser, which is a lager, Red Label will be a heartier ale-style beverage, according to one person close to the brewer. Insiders said it will be tested in New York and other major metropolitan areas.

"The high-end beer market is still on fire, and Anheuser-Busch is still looking for additional weapons," said one executive. The hope is that Red Label could afford A-B-whose biggest super-premium offering is No. 15 ranked Michelob Light-an opportunity to keep discerning drinkers in the brand family while bringing in Bass and Heineken loyalists. The brewer did not comment by press time.

Ad details for Red Label from Budweiser couldn't be learned, but it's believed Boston boutique Red Advertising is handling the line. The agency declined comment, referring calls to David English, VP-premium brands at the brewer. Mr. English could not be reached by press time.

One Western distributor said that while he'd not heard of Red Label, such an entry would be a welcome addition to the portfolio. "With the explosion and success of the import [and high-end market], A-B wants to get into the category. The wholesalers are strongly encouraging it," he said.


A-B's current focus is on developing its own super-premium products since attempts to form new alliances with imports have not come to fruition. The brewer is relying mainly on older alliances, including a significant stake in Mexico's Groupo Modelo, brewer of Corona Extra, and a re-ciprocal licensing arrangement with Japan's Kirin Brewery Co. for the two to brew each other's beers in their home countries.

New product launches are difficult, and even the country's largest beverage company is not immune to the hurdles. Two-year-old Tequiza is struggling and Tequiza Extra was shelved after just four months. Energy drink 180, which rolled out in November, is stumbling as it tries to dent sales of category leader Red Bull, wholesalers said. Other recent high-end launches from A-B include Killarney's Red Lager and "Doc" Otis Hard Lemon Malt Beverage. The brewer also is believed to be looking at an apple cider extension of the "Doc" Otis brand.

The brewer, however, has become more select in its new product forays and has lowered initial expectations for new-product success from its previous benchmark of several million barrels. By comparison, this country's top specialty brewer, Boston Beer Co., maker of Samuel Adams, sold just 1.2 million barrels last year, according to Beer Marketer's Insights.

"[A-B is] trying to capture some of the high end-business. They're trying to do it in a strategic way," the wholesaler said. "The [specialty products of late] are small, but combined they can capture some meaningful [high-end] market share, which is growing so fast. ... That's where the margin is."

Budweiser already uses red in its label, but the moniker for this product deliberately leverages the upscale cachet of colored-label spirits (like Johnnie Walker Black Label) and Budweiser's brand equity-which endures despite the King of Beers' sales slide over the past decade. Over the 10 years, Budweiser volume has dropped 30% while Bud Light's increased 172%, according to Beer Marketer's Insights. In 2000, Budweiser shipments fell 3% while Bud Light shipments jumped 11%- fewer than 3 million barrels separate the two.

A-B spent $396 million on measured media last year, according to Taylor Nelson Sofres' CMR. Most of that was dedicated to Budweiser, which received $146 million. Bud Light received $107 million, and Michelob Light got $37 million in measured media, according to CMR.

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