Category Management: Budweiser Beer - Assignment Example

Budweiser Beer Contents The Company............................................................................................................3 The Product...............................................................................................................5 SWOT Analysis.........................................................................................................6 Marketing Strategy....................................................................................................8 Global and Current Events........................................................................................9 References ................................................................................................................11 The Company: Budweiser is one of the most popular brands of beer especially in U.S. It is an American Style lager and is produced by Anheuser-Busch, Inc. Lager is a German word meaning – “Store house” or “Resting Place”. Lagering began in 1410 when a German brewer started placing his beer in a cool “lagerhaus” for a period to improve its taste and quality. Adolphus Busch and Carl Conrad (he was a liquid importer), developed a ‘Bohemian-style’ lager in 1876. (About Budweiser Beer, n.d). They developed this from the inspiration that they got from a trip to the Bohemian region. The logo of Budweiser is shown below. Anheuser-Bush, Inc is a subsidiary of Anheuser-Busch InBev. This company holds 48.8% of the beer sale in U.S. It has 12 breweries in U.S. and 20 in other countries. Anheuser-Busch began as a small brewery in St. Louis, Missouri. Eberhard Anheuser (Father-in-law of Adolphus Busch) becomes the owner of that brewery. Adolphus Busch the first brewer in U.S who introduced the use of pasteurization to keep beer fresh. He used artificial refrigeration and refrigerated railroad cars. He is the first to bottle beer extensively in United States In 1876. He introduced America’s first national beer brand: Budweiser. Busch introduced the companys first cola: King Cola in the year 1877. (Budweiser, Brewery-original offices, 2008). By 1957, Anheuser-Busch became the largest beer company in America. It now produces more than eleven billion bottles per year. Main breweries of the company in America are 1) St. Louis, Missouri ( It is the World headquarters of the company) 2) Baldwinsville, New York 3) Cartersville, Georgia 4) Columbus, Ohio 5) Fairfield, California 6) Fort Collins, Colorado 7) Houston, Texas 8) Jacksonville, Florida 9) Van Nuys, Los Angeles, California 10) Merrimack, New Hampshire 11) Newark, New Jersey 12) Williamsburg, Virginia (Welcome to Anheuser Busch, 2008). The Company has a brewery in U.K, and 15 breweries in China. It also has breweries in Canada, Russia, Ireland, Italy, Spain, Argentina, Japan and South Korea. The company product is categorized into alcoholic and non-alcoholic. The main brands produce by Anheuser-Busch are Budweiser, Bud Light, Budweiser Select, BL Lime, Budweiser American Ale, Chelada, Bud Dry, Bud Ice, Bud Ice Light, Michelob Lager, Michelob Light, Michelob Amber Bock, Busch beer, Bass, Becks, Kirin etc. (Welcome to Anheuser Busch, 2008). The main slogans used for the Budweiser beer are "The King of Beers", "The Great American Lager", "True", "This Buds For You", "Where Theres Life, Theres Bud", and "When You Say Budweiser, Youve Said It All." (Slogans, 2009). Anheuser-Busch has a market share of 50.9% of all the beers sold in America. In 2007, the total sale internationally is around 57 million barrels and is a 5.2 % increment over 2006. “Net income for the international segment has grown an average of 20 percent per year since 1999 and was up 13.4 percent for 2007.” (2007 annual report: International beer operations, 2007, p.14). The total asset of the company by June 30, 2008 is 17,712.7 million dollars. The company is famous for its advertisements in America. The advertising part includes a sports marketing division which creates advertising material for the Super Bowl and many other sporting events. In U.K, the Budweiser became a sponsor in the Premiership Football League. Anheuser-Busch delivers its products to retailers through a large network of wholesalers and distributors. In the United States, there are about 800 of distributors and the largest among them is Hensley & Co. in Phoenix, Arizona, with yearly sales of over 20 million cases of Anheuser-Busch beers. The Product: The Budweiser brand is introduced in 1876 in St. Louis, Missouri. It is an American-style lager with Premium Regular quality. The different taste brands in Budweiser beer family are Budweiser, Bud Light, Budweiser Light, Bud Light Lime, Budweiser American Ale, Bud dry, Bud Ice, Bud Ice Light, Budweiser & Clamato Chelada, Bud Light & Clamato Chelada. The beer is brewed using rice, barely malt, water, hops and yeast. Then it is lagered with beechwood chips in an aging vessel, which produce better taste. Fresh and subtle fruit notes blended with American and European hop aromas gives the beer the great flavor and taste. (Welcome to Anheuser Busch, 2008). “The nutritional composition of a 330ml bottle of Budweiser is: Calories: 133 Total fat: 0 (g) Cholesterol: 0 (g) Sodium: content varies with brewing location, but average weight is 6mg/330ml serving Carbohydrates: 9.8 (g) Protein: 1 (g) Alcohol/Vol: 5.0%” (FAQ: How many calories in a bottle of Budweiser, 2008). The Budweiser brand is very popular among the youth. But it is also a favorite drink among other age groups. SWOT Analysis: SWOT Analysis is a tool for auditing an organization and its environment. It is a first stage of planning and helps marketers to focus on key issues. SWOT stands for Strengths, Weakness, Opportunities and Threats. Strength and Weakness are internal factors and Opportunities and Threats are external factors. Strength could be 1) Specialist marketing expertise 2) Innovative product Weakness could be: 1) Location 2) Poor reputation Opportunities could be: 1) Joint ventures / Strategic alliance 2) New international market Threat could be: 1) A new competitor 2) Introduction of taxes on the product (Strategic management: SWOT analysis, 2007). Let us apply SWOT analysis to Budweiser Beer and two of its competitors – Miller Genuine Draft and Coors Banquet Beer. Classification Budweiser Beer Miller Genuine Draft Coors Banquet Beer 1. Strength 1.1. Quality High quality Optimum quality Average quality 1.2. Market Share 50.9% 21.8% 10.4% 1.3. Product Range Very Wide Wide Limited 2. Weakness 2.1. Net revenue per barrel Negative Positive Positive 2.2. Volume. Losing Gaining Gaining 3. Opportunity 3.1. Strategic alliance They already merged with world leader InBev, Belgium Already alliance formed Already alliance formed 3.2.International market Plants established all over the world Limited international market Very limited international market 4. Threat 4.1. Media Advertisement Campaigns against the alcoholic advertisement Campaigns against the alcoholic advertisement Campaigns against the alcoholic advertisement 4.2. Cost of Input Higher Lower Lower It may be seen that certain weaknesses of Budweiser beer are in reality strength for its competitors. Were as Budweiser has been loosing its revenue per barrel, the other competitors have been gaining on this account. Marketing Strategy: In the early 1970’s only four items were identified as critical items – product, price, plan and promotion. Marketing gurus in years of late 1990’s have added two more P’s – people and packaging. Decision Level: What industries to compete in is a corporate level strategic decision. The thing for which the product-maker to compete in is a business unit level strategic decision. What marketing program to implement in a given product market is a marketing level strategic decision. Let us analyze the six key elements in the marketing strategy of Budweiser. 1. Product: Both alcoholic and non-alcoholic products are being manufactured. The range and tastes of the products are wider. The quality is also better than its competitors. 2. Price: They have differential pricing for various products to suite the taste of different segments of the society. 3. Place: The market is international in character and their plants are distributed all over the world. 4. Promotion: Sales promotion is through media advertisement and their advertisements are targeting the people watching national and international sports events. 5. People: The Budweiser Beer aims to attract youth below the age level of 40 and they claim that consumption of beer is good for health. 6. Packaging: Packaging is an important factor in alcoholic products. They have attractive designs for the packages and eye catching words. Global and Current Events: The beer industry is growing at a fast rate. In many countries it is not considers as an alcoholic drink and used in place of drinking water. The growing economy of India and China has placed surplus wealth in the hands of employees who spend this surplus for travel and drinking. More and more new companies are entering in the field and this is a threat which market leaders like Budweiser beer should guard against. For this there is a necessity to bring down the cost of production to be competitive. The economic recession has its impact on Budweiser Beer also. The company has plans to reduce its company-wide U.S. full-time salaried workforce of 8,600 by 10 to 15 percent by 2009. ““To keep the business strong and competitive, this is a necessary but difficult move for the company,” said David A. Peacock, president of Anheuser-Busch.” (Budweiser announces massive layoffs, 2008). To be more competitive in international market, more and more companies are resorting to mergers and strategic alliance. The market leader in U.S.-Budweiser Beer has already merged with the world leader InBev, Belgium. The second and third leading manufactures in U.S.-Miller Brewing and Coors have already entered into a strategic alliance. The leading manufactures in Europe and Africa are opening new plants in Asia and Africa to cater to the emerging markets. The future of Anheuser-Busch lies in its three core brands - Budweiser, Bud Light and Michelob. “The "red beer," as it is often referred to, has been a product of Mexican culture, and A-B is marketing it to those consumers as a convenient way to get the traditional taste. Meanwhile, educational campaigns will be launched for the general market, touting it as a morning daypart beverage that can be an alternative to the bloody Mary, according to Vitrano.” (Belanger, 2008). The Here’s to Beer is a campaign launched by the company in 2008 to give wide publicity. The programs goal is to "generate positive publicity for the industry," and "encourages consumers to choose beer for more occasions. To encourage among vegetarians, company specifically confirms, state they do not use animal derived products, artificial ingredients, additives or preservatives at any stage of the brewing process or as part of the packaging in any of their range. “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.” (Marketing research and database management: The industry’s strongest wholesaler system, 2001). The heavy taxation I U.S, on alcoholic beverages has imposed severe constraints of the company to make profits on a desired scale. That is why the revenue per barrel continues to slide down. The drop in oil prices will give a boost to the beer industry as the cost of production is come down. The rate of pollution of the breweries is very high and the Govt. has formulated severe control measures in the interest of the public. The pollution and control measures are added the cost of production. References About Budweiser Beer. (n.d.). BeerGifts.com. Retrieved February 15, 2009, from http://www.beergifts.com/budweiser-beer-information.html Belanger, Mehgan. (2008). Category management: Anheuser-Busch Details Focus for 2008. Convenience Store News. Retrieved February 15, 2009, http://www.csnews.com/csn/cat_management/article_display.jsp?vnu_content_id=1003672078 Budweiser announces massive layoffs. (2008). RealBeer.com. Retrieved February 15, 2009, from http://www.realbeer.com/blog/?p=924 Budweiser, Brewery-original offices. (2008). Destination 360. Retrieved February 15, 2009, from http://www.destination360.com/north-america/us/missouri/budweiser-history.php FAQ: How many calories in a bottle of Budweiser. (2008). Budweiser: True Dedication. Retrieved February 15, 2009, from http://www.budweiser.co.uk/html/faq.aspx Marketing research and database management: The industry’s strongest wholesaler system. (2001). Retrieved February 15, 2009, http://www.mhhe.com/business/marketing/hair2e/student_center/ch_14/case_stud.mhtml Slogans. (2009). Mahalo: We’re Here to Help. Retrieved February 15, 2009, from http://www.mahalo.com/Budweiser Welcome to Anheuser Busch. (2008). Anheuser Busch. Retrieved February 15, 2009, from http://anheuser-busch.com/ABInc.html 2007 annual report: International beer operations. (2007). Anheuser Busch Companies. 14. Retrieved February 15, 2009, from http://www.anheuser-busch.com/Stock/2007/BUD07_Annual_Report_InterBeerOper.pdf Read More