BUD VERSUS MILLER

Level of Market Penetration among Major Brewers

Among the top three U.S. brewers shares are generally in equilibrium. The highly competitive nature of the beer industry, however, means that vendors are continually fighting for market share.

With regard to beer segments, the light category continues to experience the most growth for domestic beer, while microbrews and craft beers stabilize, and imports gain ground. Data from Information Resources Inc. show that in 2001 four of the top five brands of beer in supermarkets are light. Budweiser was the number one brand, with$762.2 million in sales, up 1.2 percent, for a 13.6 percent share of the market. Bud Light was number two, with $621.4 million in sales, up 15.2 percent, for an 11 percent share. Miller Lite was number three, with $419 million in sales, up 4.9 percent, for a 7.4 percent share.

Market Segments Served

The segment analysis focuses on the premium and light categories.

It is well known that the strongest demographic for beer is males, aged 21 to 24. In fact, in 2001 48 percent of supermarket beer shoppers were between the ages of 21 and 34. This was an increase of 15 percent over 2000.

Customers purchase microbrew and craft beers because they are looking for good quality. If they sample a few different brands and don't feel as through they are getting their money's worth, they are going to turn to another brand that they know will provide them with the quality they are seeking. It would appear the import category provides that comfort for them.

Strengths and Weaknesses of Anheuser-Busch
Strengths

1. Brand-name recognition.A strong brand is the key to staking a competitive advantage. Strong brand fosters consumer loyalty. Loyalty creates the opportunity for market share growth and above-average pricing flexibility and profitability. A strong brand also opens the possibility of extending product lines.

2. Market leader. Anheuser-Busch has the number one position by a wide margin, selling 70 percent more beer than its nearest rival in 2000. Their success is due to their raw materials procurement, manufacturing efficiency, and marketing.

3. Solid management team. They were slow to react (to the Miller price initiatives), but they certainly know the business. A noteworthy factor contributing to the success of Anheuser-Busch has been competent management. Since the time of Adolphus Busch the company has had good fortune to retain capable men of enterprise.

4. The industry's strongest wholesaler system. Approximately 900 independently owned beer wholesalers and 13 company-owned wholesale operations provide Anheuser-Busch with the most extensive beer distribution system in the brewing industry.

5. Effective marketing campaigns.Anheuser-Busch has the most effective marketing programs in the industry. In 2001, the company will increase its marketing spending, especially for the media. Its intent is to continue to build brand equity and generate renewed market share gains.

Weaknesses

1. Market share was down. The Miller-created discount environment forced Anheuser-Busch to respond. Anheuser-Busch volumes were affected and, most significantly, in the third quarter of 2001 its market share was down.

2. Net revenue per barrel in negative. Beer industry analysts predict that the year 1998 would be a very complicated year, and that major brewer Anheuser-Busch would start off with net revenue per barrel in the negative.

3. Losing volume. Budweiser has spent the past decade losing about a quarter of its volume. More alarming for Anheuer-Busch is that the combination of Bud and Bud Light barrelage was less in 2001 than it was in 2000. Most demographic growth in the beer industry in the next few years will come from brands stealing share from brands.

Given the data provided, address the following issues:

1. Design a questionnaire that would assess the current level of beer consumption in the United States, Construct this questionnaire as if you were preparing it for Anheuser-Busch.

2. In your questionnaire, be sure to provide questions about the level of competition that may exist for beer products, as well as questions that could assess the true state of strengths and weaknesses facing Anheuser-Busch.