In January, Coors Light surpassed Budweiser to become the #2 selling beer in the U.S. It was a major blow for Budweiser, a brand that has been in decline for the last three decades.Certainly the changing tastes of the American consumers has impacted sales of Anheuser Busch’s flagship brand, but marketing decisions have also played a big role in the fall of the iconic brand. Budweiser has tried to be everything from fratty to refined to sporty to hipster.
Click here for Budweiser’s disaster timeline>
Anheuser-Busch has always put a major focus on marketing. This is the company, after all, that spent $246.2 million solely on Super Bowl commercials from 2002 to 2011.
Edward McClelland of Salon says that from its inception, Budweiser was a “triumph of marketing over quality.”
The quality was questionable: Adolphus Busch, the company’s founder, called his beer “dot schlop” and preferred to drink wine and St. Louis drinkers were not fans of the drink either, but the Busch family still bought licenses and paid rent for bar owners in exchange for serving the product.
Budweiser had its glory days in the 1950s when Anheuser-Busch helped strengthen its national brand by sponsoring shows featuring Jackie Gleason, Milton Berle, and Frank Sinatra. It also promoted its beer by sponsoring sporting events and branding stadiums. By the 1980s, Budweiser was synonymous with American culture.
“Budweiser’s kind of a mainstay. It’s a good old American tradition, like going to a baseball game or a college football game,” says Kevin Eichelberger, webmaster of BeerTees.com.
But something has happened in the past three decades and, while it still has clout overseas, the Budweiser brand is tired here at home.
Undoubtedly, owners A-B InBev will try to save it with marketing, as they have always done. But will that be enough to return Budweiser to the throne and its former glory?
First poured in 1876, Budweiser was the best selling beer in the U.S. for much of the 19th and 20th centuries.
The beer, which is based on a Bohemian-style pilsner, is named after a town in Adolphus Busch's native Germany called Bmische Budweis.
Busch was the first to pasteurize beer, use refrigerated rail cars, and bottle on a large scale, which made Budweiser the first truly national beer.
Since the 16th Century, the Czechs called this style of pilsner 'The Beer of Kings,' since it was brewed in Budejovice, the imperial brewery of the Holy Roman Empire. As a pp lay on this, Busch marketed his product as 'The King of Beers.'
Bud Light, introduced in 1982, was the number three beer in the country at the time (Miller Lite was number two). It shipped 9.7 million barrels in 1988. Trailing Bud Light was Coors Light, which had sold 8.9 million barrels.
'Budweiser took off in the 1980s with branding that showcased men working cheerfully and industriously in artisanal trades,' write Douglas Holt and Douglas Cameron in their book Cultural Strategy, 'men whom Budweiser beer saluted with a baritone-voiced announcer proclaiming 'This Bud's for you!''
They argue that by the 1990s, that ideology lost resonance with the beer buying audience, which led to its decline.
In its place rose Bud Light, a brand that had spent a decade perfecting the 'Peter Pan stories of men who engage in juvenile high jinks.' This rebellious, sophomoric humour was the new fashion and Budweiser would try to emulate it in some respects.
Americans were starting to care more about their ever-increasing waistbands and began to move towards light beers.
The 1980s changed how Americans dieted and exercised. By the 1990s, low-fat and low-carb diets were all the rage.
While it was still a close race , Bud Light sold 33.9 million barrels while Budweiser sold 33.4 million barrels. A taste for light beer and trend of calorie-consciousness would mean that the sales gap would widen significantly over the next decade.
And Budweiser soon learned that while consumers were conscious of the scale, it turns out the were willing to spend the extra calories if the taste was there.
Since 2007, annual sales of the top 10 beer brands in the U.S. have dropped by 8.1 per cent, while the top 10 craft brewers -- brands like Sierra Nevada and Samuel Adams -- increased sales by 26 per cent. And the number of craft producers is the highest it's been since 1880.
Anheuser-Busch tried to break into this market by buying a stake in Red Hook ale in 2004. 'That killed Red Hook's cred with serious beer drinkers,' said Kevin Eichelberger to Salon.
By the late 1990s, the profitable Baby Boomers and 20-something consumers were moving away from beer altogether.
As Baby Boomers began to reach their fifties in the late 1990s and early 2000s, they started to gravitate towards wine. The younger generation, on the other hand, took a renewed interest in spirits.
'The 'cocktail culture,' inspired by TV shows like Sex in the City and the younger generation's interest in experimenting with new beverages, has led to a loss of market share for beer in favour of spirits and wine,' wrote the Beverage Network in an overview of the 2005 beer industry.
August Busch IV was the head of marketing for the brand when it produced some of its most legendary work.
'Whassup' and the Budweiser Frogs were not only critically acclaimed, but also became part of Y2K American culture. Unfortunately, even those frogs couldn't stop the flagship brand's demise.
Advertising watch groups equated the frogs to Joe Camel after a 1996 study showed that children often recognised the Budweiser frogs as much as Ronald McDonald, Tony the Tiger, and Bugs Bunny. Many have speculated that Budweiser's frogs were targeting younger people to their alcoholic products.
While Budweiser denied this, the frogs were still phased out over the next couple of years. Eventually, the frogs were replaced by lizards. Maybe kids like frogs better than lizards?
And then the reign of Busch III came to a close and Anheuser Busch went through some internal growing pains.
As The Fourth tried to expand the Anheuser-Busch business, he cannibalised sales of its other products.
Bob Lachky, VP-brand management and director of global brand creative, told Ad Age:
'With nearly 50% market share of the U.S. beer industry, some cannibalization of our beer brands is inevitable,' Bob Lachky, VP-brand management and director of global brand creative, told Ad Age.
Unfortunately, it seems that much of the cannibalization came at the expense of Budweiser, which has seen a 60 per cent decrease in sales since 1988. Bud Select, Bud Light Lime, and Bud Light Platinum are three of the brands increased that cannibalization since 2005.
A-B also tried to expand its offering beyond beer, which took resources and marketing money from its other brands, like Budweiser.
Under Busch IV, a series of new products were launched to try to grab the 20-something audience that had turned its back on beer in favour of liquor. Some of the failed products that Budweiser launched in this time were:
- Jekyll and Hyde - a liquor
- Spykes - a fruit-flavored malt beverage
- BE (pronounced B-to-the-E) - an alcoholic energy drink
In trying to compete with sibling brand Bud Light, which was really taking off after Busch III's retirement, Budweiser's advertising went all over the map.
The brand schizophrenically jumped between a patriotic messaging that targeted Baby Boomers and the kind of sophomoric humour that attracted 20-somethings--which was also the tactic used by Bud Light. While the Bud Lights, Coors Lights, and Miller Lights of the industry had success with their singular and unwavering messaging, Budweiser's inconsistency hurt the brand.
Bud Light had made hilarious high jinks its brand in the 1980s, but in trying to find a new audience Budweiser decided to move in on that territory when it partnered with Wedding Crashers in 2005.
'Wedding Crashers is a perfect fit with Budweiser,' said Jim Schumaker, Vice-President of Branded Entertainment for Anheuser-Busch. 'Owen Wilson's and Vince Vaughn's characters could be taken straight from a Budweiser commercial.'
In 2008, Belgian-Brazilian brewing company InBev announced that it had made a $52 billion dollar offer for Anheuser-Busch. The deal would create the largest brewer in the world.
But many were upset that the brand would no longer be American made and owned.
'We've kind of lost a part of our history here and all across the United States,' said Phillip McClary to CNN.
'I was proud to drink Budweiser, not any more,' said P.J. Champion, a student at the University of Mississippi.
But InBev and A-B were confident that the merger would make A-B's stronger.
'This combination will create a stronger, more competitive global company with an unrivalled worldwide brand portfolio and distribution network, with great potential for growth all over the world,' said InBev's Carlos Brito to the BBC.
And August Busch IV said the transaction would 'enhance global market access for Budweiser, one of America's truly iconic brands'.
But in the three years that InBev has owned Budweiser, sales have not turned around. In fact, 2009 and 2010 were some of the toughest years for the flagship brand.
Seeing the success of PBR, a brand that was in a deep slump before being adopted by hipster culture, Budweiser attempted to group the same group. In 2010, it hosted a series of free Happy Hours in the hopes of attracting a young crowd. Then in 2011, it redesigned the can with the hipster style in mind.
Kevin Eichelberger told Salon:
'Budweiser is seen as kind of like 'The Man. People who want to be anti-establishment, they're more comfortable with Miller.
As Budweiser saw Coors Light gaining on its sales, it decided that it needed to do something to gain buzz. The first step was to announce a new network TV reality show called 'Bud United presents: The Big Time.'
The show features amateur contestants plastered in Budweiser branding competing in sports, music, cooking and more.
In January 2012, Coors outsold Budweiser 18.2 million barrels to 17.7 million barrels, respectively. This marked the first time in over two decades that Budweiser wasn't in either the #1 or #2 spot.
'Anytime you can dethrone the king, it's special,' a MillerCoors spokesman told Advertising Age.
An Anheuser-Busch spokesman would only tell Ad Age that the company had a strategy to stabilise Budweiser.
Budweiser's 'Eternal Optimism' highlights American achievements throughout history and how Budweiser was always a part of them.
The commercial was well received, like most Budweiser commercials are, but beverage industry consultant Tom Pirko thinks that A-B needs a way to convince a new generation that Budweiser has something to offer beyond its contributions to history.
'Their problem, I think, is a bravery question. Is there a willingness to take risks with an established brand?' he told St. Louis Today.
A-B is looking to make Budweiser the Coca Cola of beers. While the brand is currently sold in 86 countries -- and is particularly popular in China -- it is looking to expand through InBev's already established global network.
Budweiser plans to use its existing brand recognition -- thanks to American pop culture -- to help project the 'American Dream' promise around the globe.
Hopefully the Americana appeal will work abroad, since it doesn't seem to be doing the trick at home.
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