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Rihanna to Help Sell Budweiser to Brazil as AB Inbev Aims for Margin Boost

Anheuser-Busch InBev NV (ABI), the world’s largest brewer, will take its Budweiser brand to nightclubs and American-inspired restaurants in Brazil as it aims to get drinkers there buying more expensive brands.

Budweiser, which was introduced in Brazil on Aug. 31, will be promoted at the venues with displays featuring the brand’s bow-tie shaped emblem, and advertised with the slogan “Great Times Are Coming,” Chris Burggraeve, AB InBev’s chief marketing officer, said in an interview in New York. He declined to comment on the amount spent introducing the brand.

AB InBev is aiming to increase its dominance in a country where it already controls about 70 percent of the market with the cheaper Skol and Brahma brands. So-called premium beers represent only 5 percent of the Brazilian market, according to AB InBev, compared with an average of 13 percent globally. Budweiser will appeal to consumers who are prepared to pay more to try beers from different countries, Burggraeve said.

“Many Brazilians have never been abroad,” he said. “We’re bringing abroad to them. They’re hungry for the world.”

AB InBev will also promote Budweiser through sponsorship of music events including concerts by singer Rihanna, and will work with so-called “Buddies,” well-known Brazilians, to help raise awareness of the brand, according to Burggraeve.

Budweiser is priced about 15 percent higher than Skol and Brahma and may appeal to drinkers who have higher disposable incomes as the local economy grows. Brazil’s gross domestic product is forecast to expand 3.8 percent in 2012 compared with 2.2 percent in the U.S., according to Bloomberg data.

‘No Crisis’
Burggraeve said there’s “no crisis” in the country, where AB InBev sold 2.6 percent less beer in the second quarter because of weaker growth in disposable incomes and the strength of a comparable period that included the soccer World Cup.

Planned minimum wage increases will lead to faster growth in consumer confidence, while the 2014 World Cup, which is being played in Brazil and will count Budweiser among its sponsors, should provide a further boost to the economy, he said.

A booming population and relatively low consumption rates may also spur beer sales in the Latin American country. The quantity of beer consumed in Brazil was about 65 liters per unit of population in 2010, AB InBev said, citing data from research company Plato Logic, compared with about 146 liters in the Czech Republic, the highest beer consumption in the world.

Growth in more-profitable premium beers won’t come at the expense of brands such as Skol and Brahma, said Burggraeve, though he expects Skol drinkers in particular -- and customers of its competitors -- to “trade up” and try Budweiser.

Expansion Plans
“The premium market is one that we can, and will, shape,” he said, declining to comment on the company’s targets for volume growth or market share growth.

AB InBev, which will open a new brewery in Pernambuco, northeast Brazil, in the fourth quarter of this year, plans to spend about $3.1 billion this year on expansion in “key growth markets” including Brazil and China, the company said in August. It started selling Budweiser in Russia last year, and the brand now has about 1 percent of the local market.

AB InBev aims to make Budweiser the “first and only true global beer brand,” Burggraeve said.

23 Sep. 2011

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