Budweiser Becoming a Global Brand
Tony is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
When Belgian brewer Inbev bought Anheuser-Busch for $52 billion a few years ago forming Anheuser-Busch InBev NV ADR (NYSE: BUD), it had a plan in mind. A crucial part of that plan was to turn around the fortunes of Anheuser-Busch's flagship brand, Budweiser, and truly turn it into one of the most iconic brands on the planet, like Coca-Cola or McDonald's.
It is not easy to have a beer brand succeed globally since in the beer market it is usually local brands that predominate. However, like other premium beers, global brands are growing faster than their local counterparts as beer drinkers expand their tastes. Importantly, global premium beer brands typically have higher gross margins and wider net profit margins than local competitors.
Budweiser is well on its way and is already the number two global beer brand, ahead of Corona and trailing only Heineken ADR (NASDAQOTH: HEINY), according to the data firm Plato Logic. Its sales have expanded robustly in the past several years outside the United States. Only three years ago, just 28 percent of Budweiser sales came from overseas. Today, that figure stands at 44 percent.
This gain did not happen by accident. The management at the firm has shifted its marketing focus. Part of the change has moved away from traditional to digital media. It is increasingly using an integrated approach, combining television advertising with ads on Facebook, Twitter and YouTube. This is an interesting contrast to the decision made by General Motors, which plans to stop paying for ads on Facebook. This move by GM brought the entire Facebook business model into question with some investors who sold the stock after its IPO.
Another change has been in the company's push of the Budweiser brand into emerging markets. In less than two years, it has grabbed a full one percent market share in Russia. And in China, Budweiser achieved double-digit sales growth last year despite it being priced at a 400 percent premium to some local brands.
The real change in focus, however, has been Anheuser-Busch InBev's decision to use a unified, global approach to marketing, using one centralized marketing team to create themes and then tailor them to individual markets where Budweiser is rolled out. The company is hardly alone in this approach.
Other beer companies such as Heineken are following a similar approach. In the US, for instance, it has stopped trying to brand its flagship brand as an American beer and instead tried to turn into a cool global brand using outside-of-the-box strategies including having James Bond drink it in his latest movie, Skyfall.
Other beverage firms are also adopting this strategy. One company that comes to mind is troubled Pepsico (NYSE: PEP), which just recently shifted away from its old strategy of market-by-market marketing. It now is selling its brands around the globe under unified themes. Pepsi plans to spend up to an additional $600 million this year in its global campaigns to boost market share for its 12 core brands including Pepsi-Cola, Fritos and Tropicana.
Anheuser-Busch Inbev thinks it has just scratched the surface to Budweiser's potential. Its vice president of global brands, Frank Abenante, says, “We have the opportunity to be the first global beer brand as opposed to a local jewel. Bud's equity is immense.” BUD's shareholders are hoping he is correct and that Budweiser will one day become a premier global brand.
tdalmoe has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.