Anheuser-Busch InBev NV is stepping up a campaign to revive its flagship Budweiser brand after poking fun at microbrew drinkers as mustachioed fans of pumpkin- and peach- flavored beer in a Super Bowl ad.
The Feb. 1 commercial, which called Bud a "macro-beer" that "isn't brewed to be fussed over," highlights the difficult balancing act AB InBev faces in making the 139-year-old brand more appealing to U.S. millennials while not sacrificing its blue-collar heritage.
To boost its beers and reverse a decade-long decline in Bud's market share, the Leuven, Belgium-based owner of the label plans to increase sales and marketing spending by as much as 9 percent this year, three times the increase analysts expected. While the world's largest brewer said Thursday that an improving U.S. economy will help beer sales, Bud's prospects remain cloudy as drinkers migrate to craft beers and bourbon.
"We do not expect to stabilize Bud in the U.S. in the short-term," Chief Financial Officer Felipe Dutra told reporters Thursday. "We have been repositioning the brand and making it more relevant for younger adults, but it's not an easy task."
Bud's market share in the U.S. was 8.7 percent in 2013, down from 14.3 percent in 2005, according to data tracker Euromonitor. While volume of beer sold nationwide declined 1.9 percent in 2013, craft beer rose 17 percent, according to the Brewers Association, a Boulder, Colo.-based trade group representing smaller brewers.
AB InBev said Thursday that Bud's U.S. market share declined further in 2014, weighing on fourth-quarter earnings growth that missed analysts' estimates. The company, which bought Anheuser-Busch in 2008, also makes Corona and Stella Artois.
Anheuser-Busch plans to buy back $1 billion of shares after fourth-quarter earnings missed estimates.
AB InBev will repurchase the shares this year, the brewer said Thursday in a statement. Earnings before interest, taxes, amortization and depreciation, excluding some items, were $5.07 billion, missing the $5.27 billion median estimate in a Bloomberg survey.
Global sales of Bud rose 5.9 percent last year as the company has expanded its distribution in countries such as China and Brazil. Now sales outside the U.S. account for about 60 percent of Bud consumed, the company said.
AB InBev increased sales and marketing spending 11 percent to $7 billion in 2014. Several million dollars of that went to the company's Super Bowl ads.
Later on during the game, Bud showed craft-beer loyalists drinking out of fancy glasses, and mocked craft varieties like peach pumpkin ale.
The craft-brewing community responded with outrage and irony in social networks such as Twitter. Brian Owens, head brewer at O'Fallon Brewery near St. Louis, which brews beers with the flavors mocked in the ad, tweeted: "Did Budweiser just air a pumpkin and peach commercial? Really? Thanks."
Budweiser responded to the criticism by tweeting, "We're not anti-craft. Just pro-Bud."
Dutra said the ad's intention "was not to directly attack craft" yet he "appreciated the fact that it was considered controversial."
AB InBev has recently acquired several craft brewers, including Elysian Brewing Co. of Seattle and 10 Barrel Brewing Co. of Bend, Ore. Elysian makes Great Pumpkin ale.
"We respect small brewers," said Dutra.
Business on 02/27/2015