Anheuser-Busch hopes after several false starts – and with a fresh mind – it’s not too late to tap what the growth market has been
Brendan Whitworth, who took charge of Anheuser-Busch InBev’s North American business in July, said the brewer is remaking itself, taking both its operations and brains back to market a wider range of drinks.
To this end, for the past three years Anheuser-Busch has been working to improve its consumer research, build new product-development capabilities, and change the culture in the company and its wholesale network.
“I would give us a six out of ten, in terms of progress,” said Mr. Whitworth, a 45-year-old maritime veteran and former US intelligence officer who likes to use military analogies. “It’s hard to turn the ship.”
“Bud Light is an amazing brand that plays an important role in everything we do, but we have a portfolio that will take us into the future,” he said. “You have to bring along a lot of people who have done certain things in certain ways for extended periods of time, and it’s not easy.”
Seltzer’s explosive growth since 2016 has been a bright spot for the challenging beer industry, but the beverage’s growth has declined sharply this year. Industry experts say factors contributing to the slowdown include slower-than-expected reopening of bars and restaurants, confusion in store aisles as shoppers face a plethora of new seltzer options. and some seltzer drinkers migrate to canned cocktails.
This month, Boston Beer Co.
It withdrew the financial outlook it gave in July, saying it had underestimated demand for its hard seltzer brand Truly, the No. 2 US seltzer behind White Claw. Molson Coors Beverages Co.
Earlier this year it discontinued its Coors Seltzer brand in the US, though its Vizi and Topo Chico brands continue to grow.
Industry executives and analysts say a major setback is on the way for the segment. White Claw’s chief marketing officer John Shea said White Claw expects hard seltzer sales to increase and the top two or three players will continue to dominate. He said hundreds of seltzer brands have taken off store shelves, and the market can’t keep up with them.
Anheuser-Busch, after several false starts, now says it is optimistic it can increase its hard seltzer sales, even as spirits makers are adding to the competition with vodka- and tequila-based seltzer. Like High Noon, a fast-growing vodka-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 notice. Sales of big beer brands such as Bud Light were declining as drinkers moved to beer, Mexican imports, wine and spirits. Hard seltzer was malt-based, similar to beer, and appealed to those looking for a low-alcohol, low-calorie beverage. The category was small but its sales were increasing.
Anheuser-Busch rebranded the product as Bon & Viv in 2019. Targeting women, the brand aired a Super Bowl ad that featured two mermaids pitching their bubbly drink to a panel of shark investors. It failed to make a splash. Later that year, the company took another run in the buzzy category with Natural Light Seltzer, a drink aimed at legal college-age drinkers of cheap beer.
According to Goldman Sachs analyst Bonnie Herzog, Bon & Viv, which will be renamed Bon V! V, now represents 0.5% of the US seltzer market and has seen its retail-store sales decline 70% over the past year. Natural Light Seltzer has a 0.8% market share and its sales are down 52%, she said.
Mr. Whitworth and other Anheuser-Busch executives said Natural Light seltzer continues to play an attractive role for drinkers in their 20s and support the Natural Light beer brand. Describing Spiked Seltzer’s failure to become a significant national brand, Mr. Whitworth said Anheuser-Busch was organized in 2016 to endorse its core brands. It did not have the R&D capabilities for Seltzer, nor did it have the consumer insights required.
“It was ahead of its time for us, as a company,” he said. “We didn’t have the structure to focus on it. We didn’t really have the right insight to say what it could have been, and we didn’t have the capability that we now have to produce the amazing fluids.” is for those who are unmatched.”
That has changed, he said.
In early 2018, Mr. Whitworth’s predecessor, in her role, Michelle Douceris, expanded her analytics capabilities to broaden the brewer’s portfolio, improve R&D, and better understand rapidly changing consumer trends. introduced a strategy to build. He created a Beyond Beer business unit to further develop products such as seltzer, canned wine and cocktails. Brewmasters learned to work with new types of flavorings. And the company built new production lines capable of producing a variety of packs—something it previously hadn’t been able to make in-house.
Mr. Doukeris is now the Global CEO of AB InBev.
As of late 2019, the company still didn’t have a strong hard seltzer contender. So last year, Anheuser-Busch brought its biggest brand to the ring, launching the Bud Light seltzer. The company introduced Michelob Ultra Organic Seltzer in January of this year, a high-priced option with 80 calories and no added sugar, and in May launched Cacti, a fruitier and boozier agave-made with rapper Travis Scott. It was a sweet mix.
Officials said Anheuser-Busch has spent a significant amount of money on marketing and promoting the Bud Light and Michelo Ultra Seltzer. Andy Goyler, Bud Light’s vice president of marketing, said a key part of their strategy for Bud Light seltzer is frequently introducing new flavor and variety packs. For example, this year’s fall additions include maple pear, toasted marshmallow and pumpkin spice flavors.
Bud Light seltzer is now ranked No. 3 in US retail stores tracked by Nielsen, with 9.6% of hard seltzer sales, according to Ms. Herzog. Michelob Ultra Organic Seltzer ranks seventh from High Noon. In recent weeks, however, as US seltzer sales fell below 2020 levels, Bud Light seltzer’s market share has slipped.
Mr Whitworth said slippage is a concern but he remains optimistic. According to Anheuser-Busch, Seltzer is driving growth for the Bud Light franchise, which had the highest sales volume in five years last year.
Jennifer Maloney [email protected] . Feather