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Will Bud Family Megabranding Backfire On Anheuser-Busch?

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About 18 months ago, Anheuser-Busch executives started publicly touting a new strategy to boost sales and profits: Adding new line extensions to Bud Light and Budweiser. Each big beer would be the main component of a “megabrand.” Bud Light would get Bud Light Lime and – later – Bud Light Golden Wheat; Budweiser got Budweiser American Ale as a reinforcement.

The strategy makes sense to lots of observers. Bud Light Golden Wheat is in the midst of a big roll-out, and Bud Light Lime was one of the biggest new beer launches of the last few years. Count Pete Reid, publisher of Modern Brewery Age, among the advocates of the strategy.

“Budweiser is a declining brand, there’s no getting around it,” said Reid. “But they’ve propped up the flagship, largely because of family pride. They’re going to have to support that brand if they want it to stay an iconic brand.”

Likewise, Nick Lake of Nielsen Co. says the “megabrand” strategy is probably a good one.

“Anheuser-Busch has spent billions of dollars to build brand equity for Bud Light,” said Lake. Thus, even though not everybody likes the beer, “the brand name resonates with a lot of people.”

Adding different flavors to Bud Light allows Anheuser-Busch to attract people who don’t usually drink Bud Light, Lake said.

But critics argue that Anheuser-Busch’s line extensions may encourage once-loyal drinkers to wander away from the company. Line extensions, they say, remind drinkers of the endless variety on the beer menu, and may lead them to try offerings from other brewers?

Consultant David “Bump” Williams, who called the strategy of adding line extensions “a big mistake.”

“You’re now encouraging a loyal Bud Light shopper to try something new,” said Williams. If that drinker likes Bud Light Lime, Anheuser-Busch runs the risk of losing that once-loyal Bud Light shopper to other lime beers from other brewers.

Beer-buying is typically driven by habit,

“People get into routines,” he said. “If you go to the store, you’ll get Bud Light, Bud Light, Bud Light.”

Therein lies the risk for Anheuser-Busch, because line extensions can break beer-buying habits, said Schuhmacher.

A similar situation may exist when it comes to cheaper beers. Anheuser-Busch’s advertising of Natural Light and Busch beers may actually help competitors such as Pabst Blue Ribbon, Williams said. Natty Light is getting its first national TV campaign in 25 years.

Anheuser-Busch has convinced retailer that they need to put “subpremium” brands out on display, and push them. But retailers make more money on PBR because that brand has managed to avoid discounts, Williams said. Thus, retailers may be more inclined to put PBR in prominent places.

Anheuser-Busch is “bringing the spotlight onto another set of competitors,” said Williams.

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Sunday, September 24, 8:48 am

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