Anheuser-Busch Companies, Inc. continually seeks opportunities to maximize shareholder value and increase efficiency. Through their extremely effective marketing strategies Anheuser-Busch has gained control of over 47% of the global market share. In the process of doing this, Anheuser-Busch has become one of the most recognizable trademarks. This is not without faults though. Anheuser-Busch’s aggressive advertising campaign has targeted more than who they bargained for. Through Anheuser-Busch’s catchy advertisements, they have attracted customers other than the 21+ age group, and recreational drinkers.
The company has made significant marketing investments to build Budweiser brand recognition outside the United States and operates overseas breweries in China and the United Kingdom. The company also has a significant influence on Mexico’s largest brewer and producer of the Corona brand. With an estimated 47.5% of the total market share for 1999, Anheuser-Busch continues to widen the gap separating them from their nearest competitors. Budweiser and Bud Light are the No.1 and No. 2 best-selling beers in the world. Miller, their closest rival maintains 22.1% of the market share. In 1999, they achieved record sales and earnings, selling over 100 million barrels of beer worldwide for the first time in history.
August A. Busch III, Chairman of the Board and President, says his company owes its success to, “The combination of outstanding domestic beer industry fundamentals, the highest quality and freshest beer in the industry and exceptional marketing and sales execution.” According to Fortune Magazine, the company applies venerable marketing techniques more vigorously and imaginatively than the competition. The company’s most important technique is target marketing.
Anheuser-Busch sponsors’ events and runs advertising specifically aimed at all sorts of consumers: blacks, whites, blue-collar workers, computer-buffs, and sports fans. Sports fans make up a large, diverse population. The company has strategically positioned themselves to promote to this target audience, with 70% of their advertising dollars going towards sports programming. They have exclusive deals with 21 of 24 major league baseball teams, 21 of 28 National Football League franchises, 300 college sports teams, and most professional basketball, hockey, and soccer teams. Anheuser-Busch has been very effective in maintaining a competitive advantage over its fellow rivals.
The primary economic issue affecting this company’s environment is taxation. The company is significantly impacted by federal, state and local taxes, including beer excise taxes. Beer excise taxes are a sin tax, which raise revenue for the government. The national median is 18 cents per gallon of beer (St Louis Post, 98). An increase in taxes effects costs to the company, hence, costs to the wholesalers and consumers. The economic constraints beer excise taxes make a huge affect the company’s overall performance.
The social environment plays a key role in how Anheuser-Busch effectively markets their product to its consumers. For apparent reasons, such as, alcohol abuse, underage drinking, and drunk driving, not everyone is in favor of promoting alcoholic beverages. Many individuals and organizations lobby against the brewing industry and have a strong voice in the political arena. MADD, (Mothers Against Drunk Driving) is well known for its prominent position in the fight to end alcohol abuse. There has been much talk on how Anheuser-Busch chooses to advertise its beer products.
Over the years, some of their most successful advertising campaigns have been targeted for promoting underage drinking. Anheuser-Busch Super Bowl Ad encourages parents to talk to teens to prevent illegal drinking. It is evident; alcohol advertising is subject to serious debate. These issues may place constraints on marketing activities and must be taken into consideration.
In contrast, this company owes its success to its product’s popularity. A large majority of the adult population enjoys alcoholic beverages, drinks responsibly and is strongly in favor of promoting alcoholic beverages. Anheuser-Busch must be prepared to effectively handle the social controversy, which arises with the sale of their product.
The political environment is very influential on the brewing industry. Often, social issues affect the political realm, consequently, placing more restrictions on the sales or consumption of alcohol. For instance, MADD seeks support from politicians during election time. Political leaders may then fight to increase alcohol taxes, as well as, place more restrictions on the marketing and consumption of alcohol. In 1993, Senator Paul Simon, of Illinois, introduced legislation that would require all liquor advertising to carry a Surgeon General’s warning. Also, due to the serious problems of drunk driving, efforts were made by state and federal officials to lower the blood-alcohol limit to .08 for offenders. With community programs across the United States, they lead the industry in the promotion of alcohol awareness and education.
The legal environment in the brewing industry is often affected by social and political attitudes. There has been much controversy over the advertising of alcohol products through various forms of media. For instance, Anheuser-Busch and Miller Brewing Co., ceased advertising on the MTV network after the FTC launched an investigation into the airing of beer commercials to an audience consisting of mostly underage viewers. The White House has requested the FCC investigate possible restrictions on liquor advertising on TV. Although, there are no federal regulations that apply to alcohol advertising, local governments have placed restrictions on alcohol advertising. Alcohol ads were recently banned from billboards in Baltimore, and other cities are planning similar actions (Journal of Advertising, 1998). These legal restrictions impact on Anheuser-Busch markets its product.
Anheuser-Busch prides themselves on using the most modern equipment in the industry to ensure the highest level of quality beer is processed. As indicated in the Annual Report for 1999, “our beers use only the highest quality ingredients, such as barley and hops…building in quality at each step of the brewing process, and having twelve strategically located breweries in the United States forming the most extensive production network in the industry, ensure that the freshest beer reaches consumers.” This company is aware of the importance of technological improvements to enhance their growth.
A look at their annual report shows that they achieved their best results of the decade. Earnings per share increased 16.2%. Sales to retailers increased 3% over the year. They also received 3% more revenue per barrel due to more cost-effective manufacturing. Sales for all of Anheuser’s major brand families increased, and Bud Light continued with its eighth consecutive year of double-digit growth. Anheuser has strength in other areas to. Budweiser controls 70.1% of the domestic beer market. Their nearest competitor is Miller Genuine Draft with 11.2% of the market share. Anheuser’s distribution also gives them more power in the industry.
Anheuser has an advantage because of their name. Budweiser is one of the most valuable trademarks in the world today. This is due to the large number of promotions they have each year. Every company regardless of the size has certain weaknesses. When dealing with a company of Anheuser’s size it is hard to pinpoint exactly what the problems are. Typically there are a few common problems that every organization has. They range from management to distribution. Even though they offer great incentive programs for their wholesalers they may not have the proper direction to sell the product efficiently. If the wholesaler is not promoting, sales in the area will be hurt.
Poor marketing can reduce the market share of a company by losing it to others in the industry. Management within the company can also be a problem that could affect future projects. If the management is not focused and on track the projects will not receive the results they expect. It is also important that they have people with the necessary skills to do the job. With out the proper input, projects could be slowed down substantially. Research and development is also a key to an organizations success. If the proper research is not done for a project they may go in with higher expectations and fail.
Alcohol advertising’s most powerful role is in helping to sustain an environment in which drinking and heavy drinking are seen as normal activities. As many researchers have shown (Gerbner, 1990), most alcohol advertising seeks to associate drinking with possessing desirable qualities or experiencing pleasurable sensations. Advertising attempts to make alcohol a pursuit of the good life, the American dream, man-hood, and other common reasons.
Recent literature reviews (Atkin 1993) state that a large body of research indicates that exposure to or awareness of advertising contributes to an increase in drinking. For example, Atkin found that greater exposure to advertising stimulates drinking, excessive drinking, and drinking and driving (or riding with a driver who has been drinking).
A recent study conducted by the Association for Consumer Research revealed a startling link between exposure to alcohol advertising and youth drinking, drinking by adults, and heavy drinking. Asserting that “there is little doubt that alcohol advertising exerts an influence on the frequency and quantity of adult alcohol consumption,” the researchers estimate that people consume between 10% and 30% more alcohol after seeing alcohol ads than if they saw none. The report also presents data on brand awareness and preference, attitudes toward drinking, and responses to selected advertisements (Atkin, 1993). The findings are based on survey and experimental research with a sample of 1,227 people of “diverse backgrounds from different regions of the country” conducted in 1992-93.
It is clear that alcohol advertising has very serious detrimental effects on its target audience. While advertising is an integral part in every organization’s ability to market its products, we need to be more conscious of the message that is being sent out to potential consumers of alcohol. While the current ads are very effective in marketing alcohol, they need to focus more on the product and less on the lifestyle. There also needs to be defined limits on how much advertising can be done, where it can be done, as well as what time the ads can be run, ultimately avoiding the underage and underprivileged audience. Also, there needs to be a clear message of drinking responsibly in every single ad that markets alcohol. For this to be done fairly and effectively, it should be the responsibility of a government body to impose these new regulations. That way the same rule would be applied to all alcohol brewing companies.
References
1999 Annual Report, Anheuser-Busch Companies “Anheuser-Busch Announces Record
Sales and Earnings for the Fourth Quarter and Full Year 1999; Worldwide Anheuser-Busch Brand Shipments Exceed 100 Million Barrels.” Business Wire, 2/2/2000.
Online. Electric Library. Atkin, C.K., “The Role of Alcohol Advertising in Excessive and
Hazardous Drinking.” Journal of Drug Education 1993, p.313-325
Best, Kathleen. “Simon Wants Warning on Liquor Ads.” St. Louis Post-Dispatch, 3/31/93, p. 15A.
Online. Electric Library. Fox, Richard J.Krugman, Dean M.; Fletcher, James E.Fischer,
Paul M., “Adolescents’ attention to beer and cigarette print ads and associated product warnings.” Journal of Advertising, 9/22/98. vol. 27. p. 57.
Online. Electric Library. Gerbner, G., “Stories That Hurt.” Journal for Substance Abuse
Prevention, 1990, p. 53-57
Saffers, H., “Alcohol Advertising and Motor Vehicle Fatalities.” Review of Economics
and Statistics. 1993, p.431-442
Sellers, Patricia. “Selling: How Busch Wins in a Doggy Market.” Fortune Magazine, 6/22/87, p. 99.
Electric Library. “Tax and Sin in Moderation.” St. Louis Post-Dispatch 2/26/98.
