BUDWEISER (ANHEUSER-BUSCH)
MARKETING PLAN
THE COMPANY HISTORY
Budweiser is referred to as Bud, a brewing company founded at St. Louis in the mid 1800s.
Budweiser beer is America’s drink. One out of five alcoholic drinks sold in America is a Bud. It is
the world’s most popular beer. In 1865, the brewery produced 8,000 barrels. These numbers
grew quickly when Budweiser Lager Beer was introduced to public in 1876. The company
expanded rapidly and controlled all the means for producing its beer. In the 1950s, the
company expanded its businesses in various cities, in an attempt to tap into a European
tradition. In 1970s, Budweiser became a true icon of American culture, thanks to a model of
commercial development, the envy of the world. In 1980, it made a history by expanding into
the global marketplace with agreements to brew and sell in Canada, Japan, and elsewhere.
Budweiser along with the brand extensions Bud Light, Bud Dry and Bud Ice is creating an image
for itself: a mass-produced, drinkable beer that symbolizes the “good life”. Now, the King of
Beers is being sold in more than 60 countries worldwide.
Company Mission:
“During production of the Budweiser Budvar lager we use traditional procedures and the
knowledge passed down to us by previous generations of brewers. We produce our beer
exclusively from the highest quality raw materials – whole heads of Žatec hop, selected
Moravian malt and virgin clear water from our Artesian wells. Due to the unavoidable
delicious flavour, unique composition and care in production, our lager is searched for by
lovers of high quality beer in all continents.”
BUDWEISER WITHIN THE BEER INDUSTRY
The beer industry in USA is still in a growing stage. On 2006 the total industry production
amounted to 196,721 million barrels, not including non alcoholic beers, an increase of 1.9%
from the period before (2005). Another main indicator that confirms this stage is the augment
in the number of new competitors, mainly foreign ones. Actually, the largest growing sector is
imported beers with an 11.5% increase in barrel production, representing 13.5% of the total US
market1.
On average, US Households spent $426 in alcohol beverages. Households in the <$49K
category spent 57% of their “alcohol budget” on beer while high income households only spent
41% on beer.
The top ten states: California, Texas, Florida, New York, Illinois, Ohio,
Pennsylvania, Michigan, North Carolina and Georgia comprise near 53% of the total American
market.
The U.S. beer industry is divided into three basic levels of brewing according to annual
production: high volume, regional, and small breweries.
1

The large breweries: annual shipments of over 15 million barrels.

The regional breweries: annual shipment of less than 15 million barrels.

The small breweries: consist of microbreweries and brewpubs.
http://www.beerinstitute.org/statistics.asp?bid=220
Budweiser ™ is produced by Anheuser-Busch (AB). AB’s market share is 48.4 percent, shipping
over 102.3 million barrels. Budweiser is the most well-known beer brand and leads the beer
market in USA. Its main competitors in this market are Coors, Heineken and Miller2. Besides
competitive forces, Budweiser also faces social and regulatory forces.
Total Industry
2006 November YTD (1,000s of Barrels)
Industry Segment
YTD 2005 YTD 2006
Barrels
Barrels
Volume
Change
Percent
Change
Domestic Production
165,727
166,675
948
+0.6%
Imports
23,807
26,546
2,739
11.5%
Exports
3,454
3,554
101
2.9%
Non Alcoholic
1.051
946
-105
-10.0%
Total Industry
192,989
196,721
3,732
1.9%
Note for 2006: Molson/Coors closes Memphis brewery and temporarily moves
some production including NAs to Canada.
2
Source: Beer Institute, 2006
REGULATORY FORCES:
It is mandatory to all alcoholic industry to warn the consumers about the consequences of
alcohol abuse. Budweiser has placed resources and developed many campaigns to prevent
underage drinking as well as alcohol abuse for the last 25 years.
Another implication of the regulatory forces is the high taxation imposed on alcoholic
beverages, for beer this is around $0.19 per gallon, ranging from $1.19 in Alaska to $0.02 in
Wyoming. This tax is a government attempt to discourage possible drinkers by rising beer
2
http://finance.aol.com/quotes/anheuser-busch-companies-inc/bud/nys/profile
prices. Actually Budweiser has had to implement moderate price increases during the last years
instead of a big one to compensate taxation with a minimal loss of customers.3
SOCIAL FORCES:
American market is a highly segmented one in terms of demographics. This means that every
state is a particular market and marketing strategies must be developed for each situation. This
represents different marketing mixes throughout US, forcing cost increases.
Budweiser main goal is to maintain its position as beer brand leader. It bases its marketing
strategy in employing psychological influences to affect the final purchases decision. Given that
Humans tend to retain funny images in their minds more than serious ones, Budweiser uses
humor to influence the selective retention process and place its brand in the minds of the
consumers. Some famous campaigns have entered the popular culture in the United States.
That is the case of the campaign built around the phrase “Whassup”.
Budweiser not only uses catchy phrases to retain and attract new customers. Cognizant that the
greatest consumers of domestic beers are young sport-minded men and woman; Budweiser
sponsors many sports ranging from form baseball to fishing competitions, in order to maintain
brand awareness in different market segments.
As a conclusion, several factors affect today’s Budweiser’s marketing strategy. Our goal will be
to take the position of the Budweiser’s marketing group to study and analyze these factors and
provide meaningful suggestions to this strategy.
3
http://www.anheuser-busch.com/_pdf/2006AR_Anheuser_Busch.pdf
BUDWEISER’S SWOT ANALYSIS
Strengths
 Financial Status
 Market
share
Effective
marketing
campaigns
 Distribution channels
 Cutting edge manufacturing plants
 Good marketing
 Brand name recognition creating
strong competitive advantage and
customer loyalty
 Highly recognized reputation
among customers
Opportunities

The international market is four
times the size of the U.S. market.

New alliances by becoming the
Weakness



Increase of cost of production
results in low profit margin.
Rising prices of barley and
wheat.

Shortage of beer ingredients
Threats

U.S.: Miller-Coors new alliance.

Local companies already
established within every
international market.
Extra costs involved with oversees
distribution or production
U.S. beer importer of a number
of inBev’s premium European
brands such as Beck’s, Bass


Miller and Molson Coors
Brewing joint venture

High industry competition. In
2001 the company experienced
decrease in market share due
to Miller’s discounted
marketing approach.

Anti-alcohol campaigns can
have negative effect on overall
sales

New regulatory forces can limit
sales volume
Pale Ale.

Becoming an importer for the
Dutch premium lager Grolsch,
Singapore’s tiger Beer and
Czechvar premium Czech Lager

Establishing new relationship
with Hansen Natural Corp;
none beer related producer of
energy drinks such as Monster
Energy, Lost Energy.
Wholesalers and retailers do not
sell the product properly.
High reliance on the US market.
Strengths
Anheuser-Busch has many different strengths that will help them if they where to look into new
markets. One advantage that Anheuser has is their financial status.
A look at their annual report shows that they achieved their best results of the decade 4.
Earnings per share increased 16.2%. Sales to retailers increased 3% over the year. They also
received 3% more revenue per barrel due to more cost-effective manufacturing. Sales for all of
Anheuser’s major brand families increased, and Bud Light continued with its eighth consecutive
year of double-digit growth. Anheuser has strength in other areas to. Budweiser controls 70.1%
of the domestic beer market. Their nearest competitor is Miller Genuine Draft with 11.2% of
the market share. Anheuser’s distribution also gives them more power in the industry. They
have devised an incentive plan for their wholesalers that reward them for selling only
Anheuser-Busch products. This plan focuses the wholesaler on selling only one product group.
This approach had helped boost domestic sales over the competition. Anheuser’s
manufacturing plants are the most technologically advanced in the industry. This is due to a
modernization program that involved updating and replacing old equipment. This has reduced
cost by around $300 million per year. It has also increased the output of each facility. Anheuser
has an advantage because of their name. Budweiser is one of the most valuable trademarks in
the world today. This is due to the large number of promotions they have each year.
Weaknesses
Budweiser focuses on brand positioning and massive distribution, however even though they
offer great incentive programs for their wholesalers, they may not have the proper direction to
sell the product efficiently. If the wholesaler is not promoting, sales in the area will be hurt.
4
http//:www.anheuser-busch.com-2006ARAnheuser_Busch.pdf
Actually Budweiser’s retail performance is poor considering its marketing investments, which
sometimes end up boosting competitor’s retail sales.
Another problem is that Budweiser is stuck in a mature market where domestic volume
dropped 1.8% in 20055. Although it reported its first profit increase in five quarters in July and
sales grew 5.9% to $4.26 billion, it needs to reduce its reliance on the US market. It has tried to
build a worldwide brand by marketing campaigns, such as plastering the Budweiser logo on
stadium walls at the FIFA World Cup, and through local partnerships.
Opportunities
Right now, Anheuser has a big opportunity to increase globally. The international market is
four times the size of the U.S. market. This allows them many chances to expand their market.
With a bigger market it will also give Anheuser a chance to experiment with different product
lines that may appeal to different market segments. The size of the international market may
also be more likely to produce higher growth rates. With less restriction on trade barriers it
gives a company a better chance to import products into a country. It is a lot easier for a
company who has the resources to enter new markets. However, their biggest focus is in
creating new alliances with other large beer distributors such as inBev’s and Hansen Natural
Corp.
Threats
Budweiser faces two types of threats, international and local ones. The first one is that even
with Anheuser’s size Budweiser will still have threats when entering new markets. They will
have to compete against the existing companies that have already established themselves in
the market. They could drive Anheuser out before they even get a chance to fight. Competing in
5
http://www.managementtoday.co.uk/search/article/606071/on-move-august-busch/
another country can be very expensive. Keeping costs down will be a problem that arises. They
will have extra costs involved with oversees distribution or production. The costs will be
absorbed in the price of the product. Lower priced alternatives would be able to compete and
slow down their market growth. Foreign exchange rates will also have a big impact on
operations in the international market. They could cause a big loss in profits due to a shift in the
rates. Increased barriers or government regulations could also prevent market penetration.
Another possible source of threats could be the regulation of their ability to advertise and
market their products the way they currently do.
The second threat for Budweiser is local: Now, A-B's last two significant U.S. competitors have
combined in a joint venture called MillerCoors6. They are projecting that MillerCoors will
achieve $500 million a year in cost savings, which will flow straight to the bottom lines of the
two parent companies, besides MillerCoors will have a market share of 29 percent, the closest
any rival has been to the St. Louis colossus in 20 years. This cost reductions will eventually
reduce Coors and Miller prices, expand their distribution channels and allow them to compete
in more even conditions against Budweiser.
6
http://www.stltoday.com/stltoday/business/columnists.nsf/davidnicklaus/story/A12DBB54918677EB8625737000
0CF663?OpenDocument
Beer Industry Environmental Analysis
Beer is broadly enjoyed across all key demographic segments.
I. % of Total Beer Consumers in each Demographic Segment
A. Age
MA-27
28-34
35-49
Age
MA-27
28-34
35-49
50+
17%
18%
34%
30%
50+
%
B. Ethnicity
White
AfricanAmerican
Ethnicity
white
AfricanAmerican
Latino
%
84%
6%
10%
Latino
C. Gender
Male
Gender
Male
Female
%
70%
30%
Female
D. Occupation
White Collar
Boue collar
Gray collar
other
Occupation
White
Collar
Blue
Collar
Gray
Collar
other
%
21%
19%
33%
27%
E. Income
<$35K
$35-49K
$50k or more
Income
<$35K
$35K-49K
$50k or more
%
25%
17%
58%
II.Growth of these key consumers groups will impact growth of beer
consumption.
10-Year Growth Estimate
21-27 Year old
+7%
Latino
+30%
African-American
+18%
50+ population
+27%
III.Beer buyers are very similar to beer drinkers
IV.Beer is purchased in greater quantities and more than any other type of alcohol
beverages.
V.Grocery is the most common beer channel choice
Grocery is the channel of choices for nearly 1/2 of beer buyers.
Grocery/Superma
rket
Liquor store
Conveniece
Mass
Merchandise
Drug
Warehouse club
Others
Channel
%
Grocery/
Liquor
Supermarket
store
46%
21%
Convenience
Mass
Drug
Merchandise
13%
5%
Warehouse
Others
club
2%
3%
10%
COMPETITOR’S ANALYSIS
Because of the high costs involved in the production equipments Budweiser’s competition
has been narrowed down to three main competitors: Miller, Coors and imported beers:
Heineken and Corona. Nevertheless, Corona cannot be considered a real competitor since A-B
owns a 50% share in Grupo Modelo7, Corona’s manufacturer, and it is imported by A-B as a way
to fight back Heineken’s growing market share.
8
Advertising is a key issue in beer competition and it focuses on selling a high quality brand.
Budweiser places $4.08 per barrel in advertising, and sells a fresh image normally related with
sports, Miller’s ads cost per barrel is around $6.09. It represents itself as a great product for
people who deserve it, and finally Coors’ ads cost per barrel is $8.63, in an effort to change the
spread image of a product for anti-gay and anti-feminist consumers.
In an attempt to reach as many markets as possible and fight competition more efficiently,
Budweiser has developed a whole line of products, taking advantage of its brand name to place
7
8
http://www.sinofile.net/Saiweng/swsite.nsf/Pr?readform&6043
http://www.deed.state.mn.us/bizdev/PDFs/beer.pdf
them in the market. That way, we can see different types of beer all related to Budweiser: Bud
light, Bud Silver, Bud Ice, Budweiser Select, Bud Dry and Bud Silver.
Recently Budweiser and the beer industry in general are facing a fast growing competitive
market: wine. American average consumer is changing his drinking habits for alcoholic
beverages considered more “refined” such as wine, while wine manufacturers are focusing
more in low income consumers, reducing wine prices and advertising its benefits. Actually, The
United States is set to overtake France in the next five years as the world's largest wine market,
U.S. consumption of still wine, that is, not sparkling wine, is estimated to rise to 27.3 million
hectoliters, or 721.2 million gallons, in 2010 from 23 million in 2005, and a great part of those
consumers will come from the beer market.
BUDWEISER’S EGG DIAGRAM
Budweiser’s Current Marketing Mix
Current Products
Budweiser Family
Budweiser
Brewed and sold since 1876, Budweiser leads the U.S. premium beer category,
outselling all other domestic premium beers combined.
Bud Light
Introduced nationally in 1982. Bud Light contains more malt and hops by ratio of
ingredients than Budweiser, which gives the brew a distinctively clean and crisp
taste.
Budweiser Select
Bud Select is a new beer developed by using two-row and roasted specialty malts
for a rich color.
Bud Dry
Introduced in 1989 Bud Dry is the first dry-brewed beer produced by an American
brewer.
Bud Ice
Introduced in 1984, Bud Ice is a smooth-tasting ice beer. Bud Ice’s ice-brewing
process creates a slightly sweet taste.
Bud Ice Light
Bud Ice Light was introduced in 1994. Bud Ice Light combines Bud Ice’s unique
taste profile with fewer calories.
Current Price
The management of Anheuser-Busch Cos. Inc. estimated that 2007 earnings for the brewer
of Bud Light and Budweiser are expected to exceed company targets because of a stronger beer
market. The annual beer shipment volume grew by 2.1 percent in 2006, the best annual
performance since 1990. In 2007, industry growth is estimated to be 1.8 percent and it is
exceeding prior expectations. The strong industry is caused by favorable pricing environment
within the last two years. So far, the brewer raised prices in several states in the fourth quarter
and plans to continue to implement price increases in early 2008.
Current Promotion
The company includes in its marketing promotions a long line of TV advertisements. It is also
known for the sports sponsorship, video games (Tapper), and a vast presence in motor sports ;
Bernie Little's Miss Budweiser hydroplane boat, sponsoring the Budweiser King Top Fuel
Dragster driven by Brandon Bernstein. Budweiser is also the official beer of NHAR and NASCAR.
The company also does its marketing through popular music. Budweiser is an official partner
and sponsor of Major League Soccer and the Major League Soccer and Los Angeles Galaxy as
well as the headline sponsor of the British Basketball League in the 1990s.
Current Place
The company distributes it’s product within American market and has the largest market share
within the beer industry. Additionally, marketing management team creates new segments that
target many different international sectors. Anheuser-Busch International uses dual focus in its
marketing strategy: making equity investments in leading brewers, growth markets and
increasing Anheuser-Busch brand sales in international markets.
New Markets
Central-America
The beer market in Central America has been growing an estimated 4 percent annually since
2000.
China
China is by far the world’s largest and fastest growing beer market and during the past five
years has accounted for 45 percent of the growth in global beer volume. Over the past 10 years,
industry volume growth has averaged 7 percent annually. Anheuser-Busch is well-positioned to
take part in the substantial long-term growth opportunities in this country.
Canada
Budweiser remains the No. 1 beer brand in Canada through a very successful license and sales
agreement with Labatt Breweries.
Mexico
Mexico is the largest export market for Anheuser-Busch beers, and Bud Light and Budweiser
lead the growing import category through a distribution partnership with Grupo Modelo,
Mexico’s leading brewer.
Russia
Russia is the world’s fifth-largest beer market, and consumers there are increasingly turning to
beer, especially premium international brands.
Recommended Marketing Strategy for the Company
Anheuser-Bush has been the largest growing company within the beer industry. It sells its
product not only in America but also all over the world with long term goal of targeting other
large potential markets. Information gathered above has been rather impressive however, after
closer analysis we believe that every company should have some room for improvement. This is
why our team suggests some improvement as well as new marketing ideas that the AnheuserBush should implement in their long-term marketing strategy.
Product
The company has been very successful in being able to separate its product from the
competitor’s products. People are very aware of its unique taste and quality. After, analyzing
beers offered by the company we think that the products offered do represent wide range of
diversity in tastes and also fulfill desires of many different marketing segments. For instance,
the line of Bud Light that contains lower amount of calories definitely attracts clients that are
more weight conscious; for instance, women. We also support an idea that the company
introduces seasonal flavored beers such as chocolate or cherry during seasons such as
Christmas time. This marketing strategy attracts additional clients, who don’t drink beer on
regular bases but enjoy it during holidays.
Price
Price of beer in general is rather elastic, which means that the price increaser, decreases
demand for the beer. This is due to the fact that customers can always find other alcoholic
beverages that might substitute for the beer such as hard lemonades, wine, etc. Recent high
prices resulted from increase of average barley prices by 17% since the beginning of the year to
the highest in 11 years. This increase is partly because farmers are devoting less acreage to the
grain in favor of more lucrative crops, especially corn. Barley has also become more expensive
because now that more corn is being sold to make ethanol, there is less corn available to be fed
to animals. That is leading to greater demand for other feed grains, including barley, for
livestock. For instance, Anheuser-Bush Europe, whose sales results include France, Spain and
Italy have shown that their overall revenues decreased due to high prices of beer and reduction
in product demand. Therefore, our recommendation would be for the company to focus on
developing cost reduction strategy that eventually would be recommended to implement
within all of their marketing segments.
Promotion
As we previously stated the company has been involved in many various ways of marketing
promotions, however not all of them have been as successful as expected. For instance,
Budweiser introduced new idea of targeting its audience through their own bud TV. It is a
creative idea of reaching out to customers who specifically are interested in that kind of
product. This idea seems to be very attractive at first, however was not as victorious as the
company predicted. This concept did not work because, first of all the channel’s name implies
that it is specifically related to beer only, which limited audiences interest, especially women.
Second of all, this channel is available on-line and is a subject to strict age confirmation, which
results in visitor’s driver license verification. This causes too much inconvenience for many
viewers. Overall, at first good idea turned into a total disaster. Furthermore, decrease in
promoting smoking also negatively affects beer sales, since both complement each other very
well. This should be another challenge for the company on how to promote it’s product without
promoting alcoholism and bed lifestyle habits. We believe that the company should also focus
on maybe promoting heritage of beer rather than humorous and free of worries way of living.
Place
Anheuser-Bush is the largest worldwide beer selling company. They sell their product almost
everywhere. Our recommendation would be for the company to be very careful and sensitive
to the wants and cultural tastes of each market that’s being targeted. Cultural differences, and
marketing trends differ from country to country, therefore promoting all American beer in
China will probably not be the best idea. The marketing product introduction should be maybe
presented as a beer that is for open minded people that crave the worldly taste. Each market
should be given a lot of attention and studied carefully.
MARKETING PLAN
BUDWEISER
TEAM 4
Coral Andres
Kralka Kasha
Dang Michael
Yang Yuhan
Sultan Mohamed