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AB InBev Rolling Out Black Crown for 2013

In 2013, U.S. drinkers will be able to taste Black Crown, a new, stronger version of Budweiser, said Bloomberg. The drink, which Anheuser-Busch InBev NV said has a more distinct flavor and taste than regular Budweiser, was selected for production from 12 experimental varieties submitted by head beermakers at each of the brand's U.S. breweries.

With an alcohol content of 6%, Black Crown will pack more of a punch than the standard brew's 5% and is scheduled to go on sale in the United States early next year.

(See Related Content below for previous CSP Daily News coverage of Project 12).

Attention-grabbing drinks are becoming more important for global brewers such as AB InBev as they seek growth in the face of competition from craft beers, wine and spirits, said the report. Changing the attitude of consumers toward established brands and keeping them interested is proving crucial.

"Black Crown's bringing Bud to a more sophisticated crowd and occasion," AB InBev chief marketing officer Miguel Patricio told the news agency. While the main purpose of innovation is to boost sales, it is also about creating "better brand health," said the 46-year-old executive, who started in the position in July.

AB InBev, created in 2008 when InBev NV bought Anheuser-Busch Cos. for $52 billion, has spent the last four years selling assets, stripping out costs from the combined business and paying down debt, the report said. Now, with the help of new brews including Bud Light Platinum and Bud Light Lime-A-Rita, the Leuven, Belgium-based brewer is honing its focus on selling more beer.

"When we bought A-B, our focus was much more on deleveraging," said Patricio. "This is behind us. Now we're focusing on what we've been seeding" in new products.

AB InBev has been struggling to stem declines in Budweiser sales and boost Bud Light revenue in the U.S., the world's second-biggest beer market. Sales of Budweiser to U.S. retailers fell 6% by volume in the nine months through September.

About 6% of AB InBev's beer volume globally last year was the result of innovation and "renovation initiatives," Patricio said. Bud Light Platinum, a higher-strength beer in a blue bottle, and the margarita-flavored Lime-A-Rita were introduced this year and helped add about 0.75 percentage point to the brand's 21.5% share of the U.S. market in the third quarter, AB InBev estimated.

"Platinum was by far the biggest source of growth for ABI in the last three months," Trevor Stirling, an analyst at Sanford C. Bernstein, said in a Dec. 11 note cited by Bloomberg.

For AB InBev, innovation isn't just about new brews, Patricio said. It's also about packaging and marketing initiatives.

AB InBev plans to introduce a new Budweiser can with a distinctive waistline shape in the United States, and has added different sized and shaped cans globally, including a red-and-gold dragon-patterned bottle in China to celebrate Chinese New Year. New Brahma cans in Brazil enable the entire lid to be peeled off instead of just a tab, creating a ready-made beer glass.

"We're feeding this funnel of innovation constantly," Patricio said, adding that new products typically take three or four years to develop.

Renovating or designing new varieties of established drinks, such as Stella Cidre and Lime-A-Rita, is more important than creating entirely new brands, though the company isn't avoiding the latter, Patricio said.

Known for its prowess in reducing costs, AB InBev is also seeking to sell more profitable drinks, said the report. Bud Light Platinum is priced about 35% higher than Bud Light, according to Stirling.

Still, the brewer is resisting cuts to sales and marketing spending, which climbed 7.7% in the first nine months of 2012, after rising 4.1% a year earlier. Patricio declined to comment on whether spending will continue to rise.

The executive told the news agency it is easier to be agile with innovation and marketing in the digital age because of better and faster consumer feedback. AB InBev is soliciting ideas from customers through the "open innovation" section of its website and is using technological innovation around gigs and sports events to drive interaction through social-media websites such as Facebook.

"It's much easier to make consumers loyal when they experience an event" with a company, Patricio said.

That's not to say that AB InBev has perfected the process. Profit this year was hurt by higher distribution and administration costs in the United States as the brewer struggled to keep up with demand for Platinum and Lime-A-Rita, which required extensive--and expensive--countrywide distribution.

"We have to be better" at planning, Patricio said. Still,"I wish we had that problem everywhere--of having innovation be so successful."

8 Jan. 2013

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