Michelob talks to shops

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Anheuser-Busch Cos. is in discussions with four agencies to work on its estimated $40 million account for Michelob, a super-premium brew that's suffered sales slides for two decades, according to executives close to the agencies and the brewer.

Incumbent Leap Partnership, Chicago, is believed to be among those invited to submit ideas. The discussions follow the departure of key Leap executives who had forged a relationship with the world's largest brewer. Anheuser-Busch shifted Michelob brand managers over the summer.

Anheuser-Busch did not return phone calls, but those close to the company and agencies say most if not all the shops in contention are on Anheuser-Busch's lengthy roster.

It is not known if agencies have presented work. Several agency executives cautioned the talks don't necessarily constitute a formal review because Anheuser-Busch constantly solicits ideas.

Beyond Leap, the other agencies aren't clear. Likely contenders are Omnicom Group's DDB Worldwide, Chicago; Red, Boston; and Waylon Advertising, St. Louis. Waylon declined to comment. Red and DDB couldn't be reached.

DDB, a mainstay on flagship Budweiser, in July did one Michelob Light spot. Red and Waylon have handled new products, and Waylon was Tequiza's agency until March.

Leap is a unit of Leapnet, a languishing interactive shop that in June underwent a 5-for-1 reverse stock split to bring its stock price over $1 and avoid being delisted. It closed Sept. 7 at $1.10, giving it a market capitalization of $6.4 million. Leap opened in November 1993 by a trio who had worked on Anheuser-Busch at DDB. The brewer was an early client; Leap then worked on rival Philip Morris Cos.' Miller Brewing Co. from 1994-95. It won Michelob in 1997.

Leap's hold on the business has been tenuous since the January 2000 departure of co-founder and top creative Joe Sciarrotta to WPP Group's Ogilvy & Mather Worldwide, Chicago, and the March departure of President Tom Sharbaugh, a former Anheuser-Busch executive.

Leap is "in consideration, but if someone comes up with better work, they'll be out," said one executive at Anheuser-Busch's eight-plus roster shops. The promiscuous brewer, spends more than $356 million on U.S. advertising annually.

Michelob, the country's 20th top-selling beer, is the largest domestic regular super-premium and Anheuser-Busch's No. 7 offering. The family of six products received $38.7 million in measured media last year and $17.7 million in the first four months of this year, according to Taylor Nelson Sofres' CMR.

Michelob's fortunes have been falling since 1980, when it peaked at about 8.1 million barrels, according to Beer Marketer's Insights. Last year it sold 1.7 million barrels.

Though still the dominant super-premium beer, Michelob has been outflanked by imports and domestic specialties including craft brews. While the overall beer market has risen about 1%, or 2 million barrels, annually since 1998, Michelob has dropped 8%-exceeding the 5% drop among super-premium beers. In contrast, imports rose 23% during that time, domestic specialties 5%, and domestic lights 13%.

Tom Pirko, president of beverage consultancy Bevmark, said that with Anheuser-Busch's marketing might, Michelob could have forestalled the import crush. "We should never have seen the Heinekens or Becks or Coronas," he said. "That market should have been Michelob's."

Contributing: Kate MacArthur

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