Late within the sport, AB InBev nonetheless sees the win in Selters
© Reuters. FILE PHOTO: The AB InBev logo in front of the brewer's headquarters in Leuven
By Richa Naidu and Philip Blenkinsop
CHICAGO / BRUSSELS (Reuters) – After missing out on the hottest new alcohol trend in the US, Anheuser-Busch InBev (BR 🙂 assumes that it can still overtake its competitors by innovating, marketing and leveraging its top Bud Light brand.
White Claw and Boston Beer Company (N 🙂 built really strong leads in the US hard seltzer market – sparkling water with alcohol and flavor.
But AB InBev has been growing rapidly since Bud Light Seltzer was launched earlier this year, and the world's largest brewer believes that over time it can become the U.S. market leader by growing twice the industry average.
"The winners are not necessarily the ones who get there first, but the winners are those who manage to scale their initiatives better and bigger," said Marcel Marcondes, US chief marketing officer, in an interview with Reuters.
He drew a parallel with light beers, which first came onto the market around 1970. Anheuser-Busch didn't launch Bud Light until 1982, but with three other brands and big marketing muscles, it now has more than 60% of the US light beer market.
"That's how we want to play the game here. We weren't the first, but we expect to be the greatest," said Marcondes, adding that this would likely take more than a few years.
AB InBev needs its seltzer strategy to work.
The United States is the company's largest market and consumers have steadily turned their backs on Bud Light and her colleague Budweiser.
According to Euromonitor International, AB InBev's share of the US market fell by around 50% to 42% last year. In terms of value, that was 35%.
The lagers have lost ground to artisanal beers, which began to rise in popularity about a decade ago. Even late at the party, AB InBev went on to buy 20 craft tokens and say it's now the single biggest player in a fragmented category.
The seltzer market picked up in 2016 and in-store sales have roughly doubled each year, according to Nielsen, and even accelerated during the COVID-19 pandemic.
AB InBev entered the category in late 2016 by purchasing SpikedSeltzer, the original 2013 tough seltzer, but has been overwhelmed by competitors offering more variety in taste and packaging with sleek cross-gender marketing.
This time it will be different, believes AB InBev.
Jake Kirsch, vice president of innovation at the company's US subsidiary, said it had abandoned a risk-averse approach where new product launches could take 18 to 24 months.
Now the average time is 5-1 / 2 months.
After Bud Light Seltzer in January, the Social Club was introduced in the classic cocktail style in May, in September a "Platinum" Seltzer with a higher alcohol content and now a Bud Light Seltzer line for the festive season "Ugly Sweater" with aromas of " Ginger Snap "to" Peppermint "Patty".
According to research firm IRI, a seltzer version of Michelob Ultra will be available in January from AB InBev, the second largest US light beer brand in US dollars.
Marcondes said there has been a "significant" increase in digital marketing, with sponsorship of e-gaming and music and coupons for people who can try drinks for free.
The company is also spending $ 150 million to expand its Cartersville, Georgia brewery. Rival seltzer manufacturers have suffered from capacity constraints and a shortage of cans.
The signs are promising.
AB InBev increased its market share for selters in the USA from 9% in 2019 to 14% and with the help of Bud Light Seltzer increased its total market share in the USA for the first time since the end of 2012.
VODKA AND MOUTHWASHING?
As with craft beer, selters is not just about quantities, but margins as well, as the higher cost of production is more than offset by the premium that wealthier young consumers are willing to pay.
But it's a crowded room. The number of brands has grown from 10 at the beginning of 2018 to more than 100 now, with White Claw still claiming about half of the market.
At a Jewel Osco supermarket in Chicago, 34-year-old alcohol gang manager Chad said the only thing hindering White Claw sales was the ability to secure and fill cans.
White Claw did not respond to requests for comment on this story.
Don Lane, Vice President Marketing at Truly, which accounts for roughly a quarter of the US seltzer market, recognized the challenge from AB InBev.
"We'll be consistent though and play our own game and not try to mimic what they're doing," he told Reuters, adding that Truly is slated to launch hard iced tea and a higher alcohol seltzer next year bring to.
Trevor Stirling, beverage analyst at Bernstein Research who has written extensively on the seltzer boom, sees AB InBev as more of a strong number two or three in the market, with Michelob Ultra potentially increasing its stake to around 30%.
Much could be luck.
White Claw profited when comedian Trevor Wallace posted his parody of a White Claw drinker on YouTube in June 2019, with the tagline: "There are no laws when you drink claws."
Bud Light's "Ugly Sweater" launch this month was spotted on hit comedy show Saturday Night Live, where the taste of "peppermint patties" was comparable to vodka and mouthwash.
That has caused quite a stir on social media and a desire for some to test it.
"I'm always ready to try something new, especially if it's a product I already like," responded Erin Tolbert, 23, a digital marketer in Dallas, Texas, to a message from Reuters.