The maker of Budweiser tried to jump on the alcoholic seltzer craze years ago and failed. The problem, according to Anheuser-Busch’s new CEO: he was too focused on Bud Light.
Today, the White Claw brand dominates the seltzer water market and the category’s growth is slowing. But Anheuser-Busch says it’s not too late to cash in. He aims to do so using the marketing weight of his brands Bud Light and Michelob Ultra, as well as a new seltzer created with rapper Travis Scott.
The brewer is redesigning itself, reorganizing both its operations and its mindset to market a wider range of beverages, said Brendan Whitworth, who took over the North American business of Anheuser-Busch InBev in July.
To this end, Anheuser-Busch has strived over the past three years to improve its consumer research, develop new product development capabilities, and change the culture across the company and its wholesale network.
“I’m going to give us, in terms of progress, a six out of ten,” said Mr. Whitworth, a 45-year-old Navy veteran and former US intelligence officer who likes to use military analogies. “It’s hard to turn a ship around. “
“Bud Light is an amazing brand that plays a key role in everything we do, but we have a portfolio that will take us into the future,” he said. “You have to bring in a lot of people who have done certain things in a certain way for a long period of time, and it’s not easy.”
Seltzer’s explosive growth from 2016 was a bright spot for the struggling beer industry, but the beverage’s growth this year has slowed sharply. Factors contributing to the slowdown include slower than expected reopens of bars and restaurants, confusion in store aisles as shoppers face a plethora of new seltzer choices, and the migration of some seltzer drinkers to cocktails. canned, according to industry experts.
This month, Boston Beer Co.
withdrew the financial outlook it gave in July, saying it overestimated demand for its hard seltzer water brand Truly, America’s No.2 in seltzer water behind White Claw. Molson Coors Drink Co.
earlier this year, discontinued its Coors Seltzer brand in the US, although its Vizzy and Topo Chico brands are growing.
Executives and industry analysts say a bigger reshuffle is coming for the category. White Claw expects hard seltzer sales to increase and expects the top two or three players to continue to dominate, said John Shea, White Claw’s chief marketing officer. Hundreds of seltzer brands have filled store shelves and the market cannot support them, he said.
Anheuser-Busch, after several false starts, now says it is optimistic that it can increase its sales of seltzer, even as spirits makers add vodka and tequila-based seltts such as High Noon, a fast-growing vodka to the competition. . based drink made by E&J Gallo Winery.
Anheuser-Busch acquired Connecticut-based Boathouse Beverage LLC in 2016 after its SpikedSeltzer brand caught the beer giant’s attention. Sales of major beer brands like Bud Light plummeted as drinkers turned to craft beers, Mexican imports, wine and spirits. Hard salt was malt-based, similar to beer, and appealed to people looking for a drink that was low in alcohol and calories. The category was small but its sales were growing.
Anheuser-Busch renamed the product in 2019 as Bon & Viv. Targeting women, the brand ran a Super Bowl ad featuring two mermaids tossing their sparkling drink to a panel of shark investors. He failed to create a sensation. Later that year, the company stepped into the buzz category again with Natural Light Seltzer, a beverage aimed at legal low-cost college-age beer drinkers.
Bon & Viv, renamed Bon V! V, now accounts for 0.5% of the US seltzer market and its retail sales fell 70% last year, according to Bonnie Herzog, analyst at Goldman Sachs. Natural Light Seltzer represents 0.8% of the market and its sales have fallen 52%, she said.
““We just didn’t have the structure to focus on this. ““
Mr Whitworth and other Anheuser-Busch executives said Natural Light Seltzer plays an attractive niche role for drinkers in their twenties and supports the Natural Light beer brand. Explaining SpikedSeltzer’s failure to become a significant national brand, Mr Whitworth said Anheuser-Busch in 2016 was organized around supporting its core brands. He didn’t have the R&D capabilities for Seltzer, nor the consumer information he needed.
“It was right, for us as a company, ahead of its time,” he said. “We just didn’t have the structure to focus on this. We didn’t have the right ideas to really say what it could have been, and we didn’t have the capabilities we now have to produce incredible liquids that are unmatched.
This has changed, he says.
In early 2018, Mr Whitworth’s predecessor in his role, Michel Doukeris, presented a strategy to expand the brewer’s portfolio, improve R&D and strengthen its analytical capabilities to better understand the rapidly changing consumer trends. He created a Beyond Beer business unit to pursue products such as seltzer, canned wine, and cocktails. Master brewers have learned to work with new types of aromas. And the company built new production lines capable of producing a variety of packaging, which it had not previously been able to manufacture in-house.
Mr. Doukeris is now AB InBev’s Global CEO.
At the end of 2019, the company still did not have a serious competitor for seltzer. So last year Anheuser-Busch launched their biggest brand in the ring, launching Bud Light Seltzer. In January of this year, the company introduced Michelob Ultra Organic Seltzer, a more expensive option with 80 calories and no sugar, and in May launched Cacti, a more fruity, boozy agave sweet concoction created with Travis Scott, the rapper.
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Anheuser-Busch has spent a significant amount of money on the marketing and promotion of Bud Light and Michelob Ultra seltzers, executives said. Andy Goeler, vice president of marketing for Bud Light, said a key part of his strategy for Bud Light Seltzer was to frequently introduce new flavors and new strain packs. For example, a fall offering this year includes flavors of maple pear, toasted marshmallow and pumpkin spice.
Bud Light Seltzer now sits in third place with 9.6% of hard seltzer sales in US retail stores followed by Nielsen, according to Ms. Herzog. Michelob Ultra Organic Seltzer is in seventh place behind High Noon. In recent weeks, however, as US seltzer sales have fallen below 2020 levels, Bud Light Seltzer’s market share has plummeted.
Mr Whitworth said the slippage was a concern, but he remains optimistic. Seltzer is driving the growth of the Bud Light franchise, which last year recorded its highest sales volume in five years, according to Anheuser-Busch.
Write to Jennifer Maloney at [email protected]
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