No, seriously: That's what the company actually believes.
This month, when tipping its Super Bowl ad lineup to The New York Times, Anheuser-Busch InBev strongly suggested it would be going after Millennials (basically drinkers under the age of 30). If its ads featuring lost puppies and crazy bros up for anything fail, a spokesman suggested, the results for U.S. beer could be catastrophic.
“They are the future of the beer category,” Jorn Socquet, vice president for United States marketing at Anheuser-Busch, told the Times. “If we do not get Budweiser and Bud Light in the hands of those consumers, the beer category could become in serious trouble.”
If “the beer category” were strictly A-B, that might be true. At the end of 2013, A-B alone represented 45.6% of the U.S. beer market and 96.55 million barrels of U.S. production, according to Beer Marketer's Insights. However, that production was down 2.7% from 2012 and has declined nearly every year since the beginning of the economic downturn. In 2011, Budweiser was officially surpassed by Coors Light as the No. 2 beer brand in the nation and has remained in third place since.Read More: 5 U.S. Craft Beer Breweries With at Least Partial Overseas Ownership
Keep in mind that there were 50 million barrels of Budweiser produced at the beer's U.S. peak in 1988, when Budweiser alone was 25% of the U.S. beer market. Budweiser's 1988 barrel count was only 7 million less than all the beer MillerCoors (TAP) shipped in the U.S. in 2013. In the middle of its Spuds MacKenzie era and just before it launched its Bud Bowl game day ads, Budweiser was pretty much guaranteed to be one out of every three beers U.S. beer drinkers consumed on game day.
Bud has lost 68% of its sales since that time. Bud Light, the top-selling beer in the U.S. and A-B's biggest U.S. brand by far, holds an 18% share of the market that actually declined 4% in 2013 after years of slight declines after the recession.
Bud isn't alone in its misery. U.S. light lager brands including Coors Light and Miller Lite have lost sales and market share over the past few years as a result of economic conditions and changing tastes. But Anheuser-Busch InBev paid more than $1 billion to wrest the NFL's official beer sponsorship away from MillerCoors and its Coors Light brand and hand it to Budweiser. Also, since 1988, A-B has been paying an undisclosed amount of money to make Budweiser the exclusive beer sponsor of the Super Bowl. According to Kantar Media, Anheuser-Busch InBev spent $145.9 million on Super Bowl ads alone between 2009 and 2013. The next-biggest Super Bowl spender, Pepsico, only parted with $97 million during the same span.This year, ad time for Super Bowl XLIX on NBC on Feb. 1 is going for $4.5 million per 30-second spot — or $150,000 a second. That is up 12.5% from the $4 million for last year’s game on Fox and up 88% from $2.4 million a decade ago, according to Kantar Media, a research firm owned by ad conglomerate WPP. Even at the slightly discounted rate of $4.4 million for advertisers buying more than two ads, that's tough to sustain.
It's a burden that's giving even Budweiser's notoriously deep pockets signs of wear. This year, A-B's three minutes of Super Bowl ad time represent a 25% cut from the four minutes it ran in 2014. Though Anheuser-Busch InBev's North American profits were up during the first nine months of 2014, It shelled out some serious, undisclosed cash to take over craft brewers including Bend, Ore.-based 10 Barrel and Patchogue, N.Y.-based Blue Point. A-B InBev has also been putting more marketing muscle behind import brands including Stella Artois, which saw U.S. sales spike 13% last year after growing 20% in 2012 and 24% in 2011. The 1.6 million barrels of Stella shipped last year are bigger than the production of any craft brand short of Yuengling or Samuel Adams and just shy of the multiple Blue Moon varieties.Read More: 5 Craft Beer Brewers Who Have Lost Their Craft Privileges
Considering import brands fetch an average of $28.64 a case and super-premium brands such as A-B's Shock Top and Goose Island sell for $27 compared with just $20 for “premium” beers including Bud, according to IRI, A-B can keep ahead as long as high-margin growth outpaces low-margin losses. Oh, and it isn't as though the U.S. turn against domestic light lager has been all bad for A-B, either. The U.S. is still into light lager, but it tends to like them in the form of Stella or Mexican brands including Corona Extra and Modelo — whose sales have been climbing steadily since the end of the recession. A-B bought Corona and Modelo's parent company, Grupo Modelo, for $20 billion in 2013 and has been making money off those brands ever since. Though a federal antitrust decision gave Constellation Brands production and distribution rights to the Grupo Modelo brands here in the U.S., A-B has done fairly well for itself by selling those brands in growing markets around the world.
So, no, the beer market isn't going to collapse if Anheuser-Busch InBev can't get Millennials to drink Bud and Bud Light. Those brands' share of it certainly might. The overall U.S. beer market shrank 1.9% in 2013 and is slumping toward 50% of the overall U.S. alcohol market after topping 60% just 20 years ago, according to Euromonitor International. But the craft beer market grew more than 17% by volume and 20% in dollars in 2013 and now makes up roughly 8% of the entire beer market. There's also been a strong surge in sales of hard cider, which were up 75% in 2014 alone, according to IRI, as well as flavored malt beverages (think Mike's Hard Lemonade).
A-B is buying up craft brands and indicating it will buy more. In the meantime, its cider brands — Johnny Appleseed, Stella Cidre and Michelob Ultra Cider — account for more than 10% of the U.S. cider industry. That's roughly equivalent to the share held by Vermont Hard Cider and its Woodchuck brand — which have 10.5% and a multi-decade head start — but still well beneath the 57% held by Boston Beer's (SAM) Angry Orchard.
With Millennials 34% more likely to drink beer than the average U.S. consumer, 34% more likely to buy imports, 26% more likely to buy craft beer, 74% more likely to buy malt beverages and nearly twice as likely to buy hard cider, it's not beer that's being blindsided on Super Bowl Sunday. It's Bud, Bud Light and a company that's slowly starting to realize that the kids don't care what beer's in the multimillion-dollar commercials.
— By Jason Notte for MainStreet
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