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.

• 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.

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

1
http://www.beerinstitute.org/statistics.asp?bid=220
this market are Coors, Heineken and Miller2. Besides competitive forces,

Budweiser also faces social and regulatory forces.

Total In
2006 No
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.

Industry S
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

Domestic P
discourage possible drinkers by rising beer 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

2
http://finance.aol.com/quotes/anheuser-busch-companies-inc/bud/nys/profile
3
http://www.anheuser-busch.com/_pdf/2006AR_Anheuser_Busch.pdf
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.

 BUDWEISER’S SWOT ANALYSIS

Strengths Weakness

• Financial Status • Wholesalers and retailers

• Market
Effective share campaigns
marketing do not sell the product
• Distribution channels properly.
• Cutting edge manufacturing • High reliance on the US
plants market.
• Good marketing • Increase of cost of
• Brand name recognition production results in low
creating strong competitive profit margin. Rising
advantage and customer prices of barley and
loyalty wheat.
• Highly recognized
reputation among • Shortage of beer
customers ingredients
Opportunities Threats

• The international market is • U.S.: Miller-Coors new

four times the size of the alliance.
U.S. market.
• New alliances by
• Local companies already
becoming the U.S. beer established within every
international market.
importer of a number of • Extra costs involved with
inBev’s premium oversees distribution or
production
European brands such as • Miller and Molson Coors
Beck’s, Bass Pale Ale. Brewing joint venture

• Becoming an importer for • High industry

competition. In 2001 the
the Dutch premium lager
company experienced
Grolsch, Singapore’s tiger decrease in market share
due to Miller’s discounted
Beer and Czechvar
marketing approach.
premium Czech Lager
• Anti-alcohol campaigns
• Establishing new can have negative effect
relationship with Hansen on overall sales
Natural Corp; none beer
• New regulatory forces
related producer of
can limit sales volume
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 decade4. 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.

4
http//:www.anheuser-busch.com-2006ARAnheuser_Busch.pdf
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. 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.

5
http://www.managementtoday.co.uk/search/article/606071/on-move-august-busch/
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 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

6
http://www.stltoday.com/stltoday/business/columnists.nsf/davidnicklaus/story/A12DBB5491
8677EB86257370000CF663?OpenDocument
distribution channels and allow them to compete in more even conditions

against Budweiser.

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
B. Ethnicity
35-49 Age MA-27 28-34 35-49 50+
50+

% 17% 18% 34% 30%

White

African- Ethnicity whit African- Latino

American
Latino e American
C.
Gender % 84% 6% 10%
 Male Gende Male Femal
Female r e

% 70% 30%

D. Occupation

White Collar
Boue collar
Gray collar
Occupatio White Blue Gray othe
other n Collar Collar Collar r

% 21% 19% 33% 27%

E. Income

<$35K
$35-49K
Incom <$35 $35K- $50k or
$50k or more
e K 49K 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

Chann Grocery/ Liquo Convenienc Mass Dru Warehous Others

el r e g e
Supermarke Merchandis
t store e club

% 46% 21% 13% 5% 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.

7
http://www.sinofile.net/Saiweng/swsite.nsf/Pr?readform&6043
8
http://www.deed.state.mn.us/bizdev/PDFs/beer.pdf
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 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 Anheuser-Bush 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