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Anheuser-Busch case study

Launching low carbohydrate alcoholic drinks

Reference Code: BPCS45

Publication Date: 11/04



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Anheuser-Busch case study BPCS45

© Datamonitor (Published 11/2004)

This brief is a licensed product and is not to be photocopied

ABOUT DATAMONITOR

Datamonitor plc is a premium business information company specializing in industry

analysis.

We help our clients, 5000 of the world’s leading companies, to address complex

strategic issues.

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WHAT IS THIS REPORT ABOUT?

This report forms part of Datamonitor's case studies series, which explores business practicesacross a variety of disciplines and business sectors. The series covers a range of marketsincluding food and drink, retail, banking and insurance, pharmaceuticals and software.

Each case study provides a concise evaluation of a company that stands out in some area ofits strategic operations, highlighting the ways in which the company has become one of thebest in its field or how it deals with different problems encountered within that sector.

Who is the target reader?This case study is designed for industry executives, consultants, analysts and researchers,providing them with a useful benchmarking tool and offering a blueprint for potentialimprovements.

It provides valuable insight into the methods used by important industry players that give thema competitive edge, allowing the reader to capitalize on the knowledge of experiencedcompanies when, for example, entering a new niche or market.

Report contentThe report is divided into three main parts – Introduction, Case Study and Conclusion –followed by Research Methodology and Related Research sections:

Introduction: provides historical background on the company and explains how the

company has responded to a particular business challenge.

Case study: provides the main body of text, detailing the company's approach to a

particular challenge; for example, superior customer relationship management, use of

technology, sales and marketing techniques, etc.

Conclusion: highlights the main findings of the report, summarizing the key

strategies the company has employed.

Research Methodology: details when research was carried out and the approach

used in writing the report.

Related Research: lists a number of reports on a similar theme to the case study,

which may assist the reader in further research.



Table of Contents




TABLE OF CONTENTS

ABOUT DATAMONITOR 2

WHAT IS THIS REPORT ABOUT? 3

INTRODUCTION 6

CASE STUDY 7

First low-carbohydrate beer in the US 7

UK launch – natural progression 8

New product development – Anheuser-Busch low carb products 9

CONCLUSIONS 14

RESEARCH METHODOLOGY 15

RELATED RESEARCH 16



Table of Contents




LIST OF FIGURES

Figure 1: Michelob Ultra Light Beer - Low Carbohydrate – US launch 9

Figure 2: Michelob Ultra Light Beer - Low Carbohydrate - UK launch 10

Figure 3: Michelob Beer – Ultra (new packaging) 11

Figure 4: Bacardi Silver Low Carb Premium Malt Beverage - Black Cherry 12

Figure 5: "Doc's" Malt Beverage - Hard Lemon 13



Introduction




INTRODUCTION

Major brewers in the US and Canada have embraced the challenge to launch lower

calorie and carbohydrate beers. Molson’s version, Molson Ultra, has a 4.5% alcohol

content, 97 calories and 2.5g of carbohydrates per bottle. Coors has also entered the

market with Aspen Edge, which has with just 2.6g “net carbohydrates” and 94

calories per bottle.

In the spirits category, U.S. vodka brand Skyy, owned by Campari, has teamed up

with brewing company Miller to market a low-carbohydrate bottled malt alcoholic

beverage with fewer carbohydrates than its main competitor, Smirnoff Ice.

Meanwhile, the wine category has seen Diageo embark on a new initiative to provideinformation about calorie and carbohydrate content on its U.S. wine brands, following

a decision by the Alcohol and Tobacco Tax and Trade Bureau to encourage alcoholic

drinks manufacturers to state accurate nutritional labeling on their products.

This case study focuses on Anheuser-Busch's low carbohydrate products. It has

launched products with a low carb content both within its beer brands (Michelob Ultra)

and ready-to-drink spirits (Bacardi Silver low carb – black cherry and Doc's Malt

Beverage – Hard Lemon). Michelob has been especially successful in entering the

low carb market, benefiting from being first to market in the US, and from launching a

successful marketing campaign in the UK.



Case Study




CASE STUDY

First low-carbohydrate beer in the US

Anheuser-Busch launched its low carb beer onto the US market in September 2002.

Since then, the brand has gained a 3.4% market share, profiting from its status as the

first low-carbohydrate beer. Competitors such as Coors have rushed to launch

competing products in the wake of its launch. Michelob Ultra Light beer contains only

3.0g of carbohydrates per 330ml, compared to, for example, Stella Artois’ 11g.

US consumers’ appetite for lighter beers has grown in the past 15 years and

Michelob wanted to capitalise on this. Added to this is the fact that 21 to 29 year-olds

account for more than 24% of total beer sales in the U.S. According to US census

figures, this drinking segment will grow by nearly four million adults by the year 2010.

The idea of a co-branded beer with Atkins was rejected and the company does not

market Michelob Ultra as a diet beer, or as one related or linked to any diet.

After establishing that the Michelob brand would be the best suited to extend with a

low-carbohydrate variant, the product was developed over 18 months. It achieves its

low-carbohydrate status through an extended brewing process. The mashing

process, when malted barley and grains are added to water and heated, is

lengthened from the conventional process to allow the carbohydrates present to

break down into simple sugars. This mixture is then strained and boiled with hops,

and when this is cool, yeast is added to convert the simple sugars into alcohol and

carbon dioxide.

Testing in the US took place in three states, Florida, Arizona and Colorado, in

December 2001, opening out to include the rest of Florida as well as Chicago,

Washington DC and Baltimore in May 2002 before a national rollout in September

2002. Anheuser-Busch claims the brand has quadrupled its projections since initial

rollout and is now proving to be one of the most popular brands in the country. It

outsells Smirnoff Ice by double.



Case Study




UK launch – natural progression

Launching in the UK was a natural progression, according to Randall Blackford,

Anheuser-Busch’s UK marketing director, as there was a clear gap in the market for a

low-carbohydrate and low-calorie beer. He cites research stating that 45% of UK

consumers are concerned about their carbohydrate intake, with over 13 million

people trying to lose weight. Over 2.4 million UK consumers are active gym

members, with 6,000 fitness centers operating around the country.

Anheuser-Busch’s internally conducted research also showed that 62% of 25 to 34

year-old males and 66% of 24 to 34 year-old females were likely to buy the product if

it were launched in the UK.

Michelob Ultra was launched in bars and pubs across the UK and in four- and 10-

packs in Tesco, Waitrose and Asda, as well as convenience stores and off-licenses.

On-trade distribution is focused on free trade, franchised and mainstream high street

bars and pubs.

The launch was supported by heavy advertising and promotional activity to ensure

maximum impact of the new brand onto UK consumers. October 2003 saw the launch

of Michelob Ultra Resolution, a nationwide promotion that challenged UK drinkers to

live life to the full by carrying out their most wild resolutions. Spanning several

months, the promotion built up a momentum and encouraged active participation from

the brand’s consumers.

Michelob Ultra was also an official sponsor of the 2004 Flora London Marathon and

the London Triathlon, emphasizing its appeal as a go-getting, aspirational beer to the

target audience of young drinkers. The company declined to quote its marketing

budget for the launch, but includes television, radio, outdoor, local and national print

advertising, PR, point of sale material as well as sponsorship.

After becoming the top selling four-pack in Tesco by the end of 2003, Michelob Ultra

is also set for launch in Northern Ireland.



Case Study




New product development – Anheuser-Busch low carb

products

This section describes the low carbohydrate products Anheuser-Busch has launched

in the US and the UK since 2000.

Figure 1: Michelob Ultra Light Beer - Low Carbohydrate – US launch

Image:

Name: Michelob Ultra Light Beer - Low Carbohydrate

Manufacturer: Anheuser-BuschCountry: USAPackage tags: Fresh; Upscale; Low Calories; Low CarbohydratesDescription: Presented in a 12 fl. oz. glass bottle, the "smooth & refreshing

lager beer" is sold in a cardboard 6-pack carrier priced at$4.49. The beer is said to have 2.9 grams of carbohydratesand 96 calories per bottle. Available from St. Louis, MO-basedAnheuser-Busch, Inc., a round seal on the bottle label states,"Guaranteed fresh everytime."

Source: Productscan D A T A M O N I T O R



Case Study




Figure 2: Michelob Ultra Light Beer - Low Carbohydrate - UK launch

Image:

Name: Michelob Ultra Light Beer - Low CarbohydrateManufacturer: Anheuser-BuschCountry: UKPackage tags: Low Carbohydrates; Low CaloriesDescription: Targeting weight-conscious beer drinkers, Michelob Ultra has

recently been introduced to consumers in the United Kingdomby USA-based Anheuser-Busch, Inc. This Low CarbohydrateLight Beer contains 2.5g of carbohydrates and 88 calories per275ml bottle. Featuring five percent alcohol by volume, this

lager is described as a smooth, refreshing beer and is forconsumers who "enjoy a great tasting beer but are attracted tolower carbohydrates and calories."




Case Study




Figure 3: Michelob Beer – Ultra (new packaging)

Image: Non availableName: Michelob Ultra BeerManufacturer: Anheuser-BuschCountry: USAPackage tags: Single Serving; Low CarbohydratesDescription: Anheuser-Busch, Inc. is launching Michelob Ultra Beer in new

can packaging. The low carb beer will be introduced in 12 fl.oz. cans.




Case Study




Figure 4: Bacardi Silver Low Carb Premium Malt Beverage - Black Cherry

Image:

Name: Bacardi Silver Low Carb Premium Malt Beverage - BlackCherry

Manufacturer: Anheuser-BuschCountry: USAPackage tags: Upscale; Low Carbohydrates; Low Calories; Single ServingDescription: Bacardi Silver Low Carb Premium Malt Beverage has been

introduced in a Black Cherry variety. Sold in a 6-pack of singleserving 12 fl. oz. glass bottles, it is manufactured by

Anheuser-Busch, Inc., located in St. Louis, MO. Said to be ablending of sweet and tangy black cherries with a hint ofvanilla into a flavored malt beverage, with sucralose, the low-carb, low-calorie beverage has 2.6g of carbs and 96 calories.




Case Study




Figure 5: "Doc's" Malt Beverage - Hard Lemon

Image:

Name: "Doc's" Malt Beverage - Hard LemonManufacturer: Anheuser-BuschCountry: USAPackage tags: Single Serving; Low Alcohol; Natural; Low Calories; Low

Carbohydrates

Description: The new "Doc's" Hard Lemon Malt Beverage is manufacturedby Anheuser-Busch, Inc. Full page ads promote the newbeverage in a 12 fl. oz. glass bottle. The label is flagged, "Maltbeverage with natural flavors - Alcohol 5 percent by volume.""Doc's" is said to have been reformulated with lower caloriesand lower carbs, while containing a great taste and lemonrefreshment. It is claimed to have 165 calories and 16.5 gramsof carbs per twelve fluid ounces. The "old" Doc's had 253calories and 39 grams of carbs.




Conclusions




CONCLUSIONS

Anheuser-Busch has successfully rolled out its low carb products in both the US and

the UK by carefully researching its markets. For both nations, the company took its

time to interview and access the opinion of its target audiences.

The company has been careful not to advertise its Michelob Ultra brand as a diet

beer, rejecting affiliation with Atkins Nutritional in favor of marketing it as a lifestyle

brand. It therefore extends its target audience from those on an Atkins diet, to those

people watching their diet, but who are more focused on a good tasting product.

Selected areas were chosen to be the first to introduce the brands, before a nationalrollout commenced. This allowed the company to verify that it had selected the

correct marketing strategy for this product before a nationwide launch.

Despite meticulously planning the launch of Michelob Ultra, the company was the first

to market a low carb beer in the US. It therefore benefited from first to market status,

gaining loyal consumers before its rivals could get on the market.

Heavy advertisements in the UK and a sponsorship of the London Marathon ensured

that the UK roll out of Michelob Ultra succeeded. The company has the budget and

consumer support to continue to launch the brand, and its other low carb products, in

other markets and succeed in these markets too.



Research Methodology




RESEARCH METHODOLOGY

This case study was derived from Datamonitor's study of diet and health foods which

was carried out between May and November 2004. The hypotheses presented in this

report were supported by a series of interviews with industry executives, in addition to

secondary literature and in-house sources of information.



Related Research




RELATED RESEARCH

Obesity, low-carb diets and the Atkins revolution

This report analyses the obesity, low-carb diets and Atkins revolution, enabling you to

adapt your product’s ingredients, labeling and marketing strategy to maximize sales in

this new marketplace. Published: May 2004

Case Profile: Catering for the Atkins Dieter

This case profile provides details of the trend for low carbohydrate products and

outlines how forecourt players are advised to respond to it.

Published: September 2004

Mealtime Behaviors and Occasions 2004

This report provides a comprehensive analysis of European and American eating

habits, providing the hard numbers on the shifting of traditional meal patterns and

digs deep into the consumer insights and needs driving food choices.

Published: August 2004

Kids and Health: Obesity issues and ethical food and drinks marketing

to children under 16 years old

This report examines the profit opportunities and threats that companies which

manufacture and market food and drinks products to children face over the next three

years.Published: July 2004

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