Budweiser to rain on craft brewers’ parade
No doubt, big brewers face a consumer-led backlash in favour of niche craft beers. But instead of hiding behind a napkin with embarrassment, they have stepped up their marketing efforts to lure consumers back to long-established brands with the help of crafty looking brand extensions. According to U.S. sources, global brewer AB-InBev is preparing to release a new addition to its Budweiser line in 2013. Though called Budweiser Black Crown, the beer will be a golden amber lager, i.e. darker in colour than regular Budweiser, and packaged in special bow tie-shaped cans, it transpired in early November 2012.
What’s also interesting is the upward shift in alcohol content to 6 percent ABV for Black Crown.
The Budweiser brand is apparently not the only one in the AB-InBev range to get a tan. It was reported that the brewer also received label approval for four other brands at the end of September. They include Busch Black Light Lager, Michelob Black Bock Special Dark Lager, Beck’s Black Jewel and Rolling Rock Black Rock Extra Dark Lager.
Although a label approval, which is a compulsory legal requirement, does not necessarily mean that a company will release the beer, that is usually the case.
Many observers have wondered if these dark beers could be a bid by AB-InBev to compete more directly with the craft beer industry and its higher-alcohol, more flavoursome beers. Well, it certainly looks like it. This year already, AB-InBev has launched the higher-alcohol Platinum and Lime-A-Rita under the Bud Light label.
It should not come as a surprise that AB-InBev is tinkering with its brands in the United States. It has been doing this for a quite a while over in Europe.
By the way, does anybody know how many varieties there are of its speciality beer Leffe? Eight, by our count. The Hoegaarden brand has probably got a similar number of varieties. And how many Jupiler extensions are there? Jupiler is AB-InBev’s major beer brand in Belgium. There is one for the pussies (Jupiler Blue: 3.3% ABV), one for the boys (Jupiler Original: 5.2%) and one for the men (Jupiler Tauro: 8.3%), say some cheeky bloggers. What the bloggers failed to comment on is that there is also a Jupiler Force soft drink available.
In its most daring brand venture to date, in the UK this summer AB-InBev launched a pear cider under its Stella Artois label, just over a year since the Belgian beer brand unveiled its first – apple – cider. With the cider segment being quite significant in the UK, AB-InBev must have felt the need to come up with something of its own. But rather than building its own cider brand from scratch, which would have been costly, it grafted a fruity variant on its Stella Artois brand.
It goes without saying that the same reasoning stands behind the Jupiler and Leffe extensions. Tauro was created to play a role in the segment “strong blond”, the segment which includes Duvel. We at BRAUWELT International think that AB-InBev wanted to have its own proposition and logically this should have been under another brand name. But AB-InBev launched its strong blond beer under the Jupiler umbrella since this was more cost-efficient, all the while hoping that the mainstream lager drinkers loyal to Jupiler would switch to Tauro instead of, say, Duvel. However, Belgian beer consumers soon smelt a ruse. Tauro was not really accepted by the market and recently AB-InBev lowered the alcohol content to 6.2 percent ABV to make its Tauro more accessible to a wider range of consumers.
The Leffe story is more or less similar. For many consumers, Leffe is the entry into the world of speciality beers. However, once consumers become connoisseurs, they will want to continue their discovery tour and move towards more complex beers or flavours. Leffe’s brand extensions, it is believed, will delay consumers’ eventual defection to other brands but not forever.
Of course, the Jupiler, Leffe and Stella Artois strategy could also be considered a protective approach to prevent volume declines in shrinking markets. It will work for some time. Still, the question remains: how long will AB-InBev be able to play this game? Once credibility and brand equity is eroded, consumers will search for new propositions.
To some extent, this applies to the United States as well. The U.S. beer market has been in decline for some years (though it might turn around soon), while craft beers have been on the rise. The number two brewer in the U.S., MillerCoors, responded to this by setting up its own craft beer and speciality beer unit with a decidedly different portfolio of brands. This move signalled to us that, unlike AB-InBev, MillerCoors does not think that high-end, speciality-type extensions to its mainstream brands will convince consumers that these are the real thing.
AB-InBev does not have such qualms. Because it has market clout and distribution muscle, it thinks it can get genuine craft beer innovations on the sly ... and on the cheap. Hence it’s Budweiser’s turn now to receive the AB-InBev treatment. Not that brand extensions can do much harm to Budweiser, which last year was relegated to number three spot by Coors Light in terms of volume. Budweiser, whose sales have been sliding for years, has had an especially disappointing year, despite revamped marketing. Sales to retailers fell by 7 percent in the third quarter 2012 and were down 6 percent in the first nine months of the year, it was reported. Already in 2010 AB-InBev tried to make the brand appeal to younger drinkers with the “Grab Some Buds” campaign, which included handing out free beers in bars and restaurants nationwide. Apparently to no avail.
AB-InBev may delude itself into believing that a higher ABV, a nice label and some advertising millions will help Budweiser break out of its slump. Maybe Black Crown will do the trick. But let’s face it, Budweiser Black Crown is still a lager-style beer – and in the grand scheme of things, a lager is a lager and no match for those IPAs that fans of craft beer tend to relish.
