Sales were down only 4.4%, according to Beer Marketer’s Insights data.
Rob McCarthy, Anheuser-Busch vice president for Budweiser, called it “an amazing year. We actually cut our market share decline in half.”
Down so long, it looks like up
When Budweiser’s hometown paper, the St. Louis Post-Dispatch, wrote that “Budweiser has a bit of a problem,” they were grossly understating things.
Sales have been slumping for 25 years straight. At the peak of its popularity, in 1988, more than one in every four beers sold in this country bore the iconic red-and-white label. Last year, it was one in 12. For the first time ever, it’s being outsold by Coors Light.
In the future, things may only get worse, because largely through inertia the brand has let itself lose a key demographic segment — young, male beer drinkers.
The lost generation
Two important characteristics affect long-term sales of beer more than other categories.
The first is the Pareto principle, also known as the 80-20 rule. This is named in honor of Italian economist Vilfredo Pareto, who in 1906 discovered that 20% of Italy’s population owned 80% of its land and that 20% of the pea pods in his garden contained 80% of the peas.
In terms of beer marketing, this means that a disproportionately small segment of the consuming public consumes a disproportionately large share of the product. They are, for the most part, men. And this brings the second characteristic into play.
Like soda, beer drinkers develop brand preferences when they’re young. For soda, that means childhood or teens. For beer, which you need to be at least 21 to legally drink, this means 20-something men. Once those preferences are set, they’re almost impossible to change. So if Budweiser doesn’t build share with this cohort now, they may have to wait until their sons reach drinking age.
Errors of omission
Consumer tastes and product competition have changed since 1988. Budweiser hasn’t.
“[W]ith a generation accustomed to a cornucopia of craft beer, weened [sic] on sweeter flavored malt beverages and content to swig retro brews like Pabst Blue Ribbon,” says the Post-Dispatch, “it can be hard for a brand that’s just sort of always been there to break in.”
It’s even harder for a beer that’s been the same while consumer tastes have been changing.
“They had an opportunity to jump on the rising sensibilities of craft beer,” said Tom Pirko, managing director of consulting firm Bevmark. “Budweiser could have been the one beer that was loaded with taste. It could have been the brand that outshined the rest. But it’s not.”
Nobody drinks nostalgia
Over the decades, Budweiser has sold itself as the historic American beer, with the Clydesdales, commercials about the end of Prohibition and other forms of good ol’ American nostalgia. Young beer drinkers couldn’t care less about this, especially since Bud’s parent company has been owned since 2008 by InBev of Belgium. (And if they do, Budweiser isn’t exactly as red-white-and-blue a name as, say, Samuel Adams.)
They’ve also been long-term sponsors of Major League Baseball, with whom they just renewed their contract through 2018. Baseball isn’t exactly a young man’s spectator sport.
Now, Budweiser is starting to reach out to the younger generation of beer drinkers before they’re lost forever.
Too little, too late?
One way they’re doing this is with small — maybe too small — steps to update their product.
At each of their 12 breweries throughout the country, brewmasters are creating special-edition versions of Bud. All summer, the company’s been serving samples and collecting feedback on these “Project 12” beers at small concerts, with an eye to packaging the three most popular in a mixed 12-pack about a month from now. What effect, if any, this will have on the brand’s overall sales is anybody’s guess.
When you have nothing to say, say it with music
Since his arrival as Anheuser-Busch marketing vice president in early 2011, Paul Chibe has been rolling the dice on getting music to sell beer.
Over Labor Day weekend, the brand sponsored a two-day Made in America Music Festival in Philadelphia, “curated” by hip-hop star Jay-Z. Since the Olympics, Jay-Z has also been the voice-over for Budweiser commercials about “the diversity of the American experience” — just the thing one looks for in a beer.
Before he started work at A-B in 2011, Chibe apparently didn’t read the results of an Ace Metrix study about the effectiveness of celebrities in commercials that ran in 2010.
As we noted in January of last year,
While non-celebrity commercials, as a group, averaged 8% above the Ace Score norms for attention, persuasiveness, comprehension, likeability and other characteristics, celebrity commercials, as a group, averaged 1.4% below. Fewer than one out of eight celebrity ads scored as much as 10% above norm, while one in five scored in negative territory.
Tiger Woods, for Nike, was 30% below norm. Lance Armstrong for Radio Shack was minus 28%. Dale Earnhardt Jr. for Nationwide Auto Insurance was at negative 27%. And though Donald Trump for Macy’s was no bargain, he, too, was in the basement with minus 24%. So it’s not just Tiger’s marital problems that were the problem.
Ace Metrix CEO Peter Daboll could very well have had Budweiser’s lost generation in mind when he described today’s consumers as “informed, time-compressed, and difficult to impress,” “more likely to be influenced by someone in their social network than a weak celebrity connection,” “only influenced by ads that are relevant and provide information,” and not wanting “to have products pushed at them, even from a celebrity.”
So will a campaign trying to influence time-compressed, difficult-to-impress young men with a weak celebrity connection help Budweiser lose its staleness in the marketplace?
So far this year, their sales are down another 5.6%.