A-B US CMO: Michelob Ultra Will Become Top Beer Brand by 2027; Company ‘Rediscovering Bud Light’
Bud Light, the country’s largest beer brand, is going to be rediscovered, Anheuser-Busch InBev U.S. CMO Benoit Garbe said during Beer Business Daily’s Beer Industry Summit.
“You cannot reinvent a brand from scratch,” he said. “We call it rediscovering Bud Light.”
With “one foot in the past, one foot in the future,” the company has been examining “the role of Bud Light in people’s lives,” and is leaning into the fact that the beer was “the first easy-to-drink beer,” Garbe said.
“We can bring enjoyment back to consumers’ lives,” he said. “This is what Bud Light will be about.”
In the first 11 months of 2022 through November 27, dollar sales of Bud Light declined -4.5% and volume declined -9.3% in multioutlet food and convenience stores tracked by market research firm IRI. Bud Light’s beer category dollar share declined -0.55 sharepoints to 10.55%.
Garbe attributed the declines to the brand’s deceleration among legal-drinking-age consumers between 21 and 35. As a result, Bud Light plans to develop a brand voice that is “younger and more vibrant,” as well as “more confident, more magnetic, more charismatic.”
Bud Light is embracing three tentpoles that drive its drinking occasions: sports, music and outdoor summertime gatherings. Specifically within sports, the brand is using boxing as a vehicle to engage with Hispanic consumers, Garbe said.
Even as A-B hopes for a rediscovery of Bud Light, the company is preparing for Michelob Ultra, its second best-selling brand, to overtake Bud Light as its best-selling brand within the next five years, Garbe said.
“Michelob Ultra will become the No. 1 brand in the industry, and we are very excited about that,” he said. He noted that the brand is “growing well” among Hispanic drinkers and in the southern U.S.
Through November 27, off-premise dollar sales of Michelob Ultra have increased +9.4% and volume has grown +4.9%, according to IRI. The brand’s share has increased +0.59 sharepoints to 7.29% of beer category dollar sales.
As A-B enters 2023, the company is focused on its “6-pack” of growth brands: Michelob Ultra; Stella Artois; Kona Big Wave; spirits-based, ready-to-drink (RTD) canned cocktail brand Cutwater Spirits; Busch Light; and vodka seltzer NUTRL. A-B is taking a defensive stance for Budweiser and Bud Light to protect those brands’ shelf space, Garbe said.
On the innovation front, A-B plans to “launch small before scaling,” with a focus on flavors, Garbe said. The company uses one of three methods when growing its portfolio: brand creation, partnership, as it has done with the forthcoming Cantaritos Hard Soda via a partnership with Jarritos maker Novamex, or M&A, such as its acquisitions of Cutwater Spirits and NUTRL.
For Bud Light Seltzer, Garbe said a focus in 2023 will be clarifying consumer confusion that the product is distinct from Bud Light and does not contain beer. After consumers taste the product, there is an “extremely high repeat rate.” Both dollar sales (-18.9%) and volume (-23.2%) of the Bud Light Seltzer brand family have declined in the first 11 months of 2022 compared to 2021, according to IRI.
Asked what happened with Bud Light Next, the zero carb beer that A-B invested heavily behind in 2022, Garbe said some people were overconfident in the brand at the outset. Building brands takes time, he stressed, and the company needs to be patient and disciplined with its new products. As Next moves forward, the focus will be on its strongest markets to continue to build the brand, he added.
In IRI tracked channels, Bud Light Next posted more than $67.8 million in sales, making it A-B’s 18th best-selling brand in off-premise retailers.
Heineken USA CEO Maggie Timoney: NA Beer Could Reach 2% of US Beer Market
Led by Heineken 0.0, the U.S. non-alcoholic beer segment could become as large as 2% of the total beer category, Heineken USA president and CEO Maggie Timoney said.
Both dollar sales (+5.7%) and volume (+4.9%) of Heineken 0.0 increased in the first 11 months of 2022 compared to 2021, according to IRI. The brand’s beer category dollar share increased +0.01 sharepoints to 0.16%.
The non-alcoholic beer segment overall gained +0.07 sharepoints in the same time period and accounted for 0.61% of all beer dollars at off-premise retailers tracked by IRI. Timoney said the NA segment in total is about 0.8% of beer. Shifting consumer perception and behavior could more than double its share.
“Non-alcoholic beer was more of a substitute, like you didn’t drink alcohol if you drank non-alcoholic beer,” Timoney said. “Now, it’s a complement.”
To bolster the Heineken 0.0 brand, the company has unveiled a cross-promotional campaign with Marvel Studios ahead of the February 17 release of Ant-Man and The Wasp: Quantumania in which star Paul Rudd drinks a Heineken 0.0. The campaign’s commercial debuted during the NCAA College Football National Championship Game.
“We’re very excited,” Timoney said. “And it’s their first collaboration with an alcohol beverage company.”
This spring, the company will introduce Dos Equis Lime & Salt 0.0, a non-alcoholic version of its popular Dos Equis line extension.
Heineken USA’s innovation slate for 2023 also includes Heineken Silver, the low-calorie, low-carb entrant the company is backing with a $100 million investment, which Timoney called the company’s “big bet” for the year.
After a successful test launch in Summer 2022, Heineken USA is releasing tequila-based Dos Equis margarita more widely and adding a mango-flavored SKU to the 10% ABV RTD brand.
Post-Competition Report Enforcement
The focus of regulators is shifting at the federal level as future trade practice rulemaking is under review by the Alcohol and Tobacco Tax and Trade Bureau (TTB), Alva Mather, partner at McDermott Will & Emery, shared.
On the heels of the competition report issued by the Department of Treasury and the TTB seeking comments on future rulemaking, the focus of investigations is shifting from giving things of value – such as equipment and exclusivity sponsorships of sports and music venues – to category management and tie-in sales, Mather said.
Mather described the Treasury report on competition as a “bomb dumped on us.” The report was notable for what wasn’t in it, namely sponsorships. However, the report focused more on category management, an area on which the TTB hasn’t offered feedback since 2016, and tie-in sales — requiring a retailer to buy one product to get a more desirable one — which the TTB hasn’t provided guidance on since 2012.
The next step now is the request for comment on future rulemaking, Mather said. The TTB is seeking comments through early June. The public comments that have come in have covered a large swath of areas, including digital marketing, slotting fees, category management and more.
Even as the TTB reviews trade practice rules, Mather said changing regulations takes time. It’ll also be a wait and see if TTB investigators’ focus areas really do change.
Even as the attention seems to be shifting at TTB, Mather said there remains “a lot of pressure” to get six- and seven-figure offers in compromise — a negotiated public settlement — for trade practice violations.
There is a dedicated team focused on trade practice with a $5 million allocation to work on enforcement actions, Mather said. The goal of the team is to home in on those investigations but also prepare for future ones, at times asking those under investigation if others are potentially skirting trade practice regulations, Mather said.
As convergence overtakes the industry, Mather said investigators could take notice of alcoholic beverage companies that are leveraging non-alcoholic beer to take advantage of legal pay-to-play opportunities on the non-alc side.