Anheuser-Busch Inbev

Abstract

AB Inbev is a Belgium based publicly traded brewing company formed by process of joint venture and acquisition in the past and now holds the top position in global beer market. Its success lies in its adoption of strategies like customer focused, efficient planning, improved supply chain etc and many others which are needed to successfully market its brand globally. For example Stella Artois, a leading global brand, is marketed by AB Inbev. But AB Inbev had to face many macro and micro environmental factors which affect its marketing mix decision in marketing its product globally.

About AB Inbev

Anheuser-Busch Inbev is a publicly traded company which is formed when Interbrew combined with Brazil based Ambev to form Inbev in 2004 which later on acquired USA based Anheuser-Busch to form AB Inbev in 2008. The company is headquartered at Leuven Belgium and hold the top position as global brewer and one of the world's top five consumer products company. AB Inbev is a consumer centric and sales driven company that manages nearly 300 brands globally. The company acquired 22% of world market share and employs more than 120,000 employees in over 30 countries across the world with revenues generated of $39.2 billion according to pro-forma basis for 2008 (AB Inbev, Annual Report 2008). The beer brands that AB Inbev produces fall into 4 categories. They are

  • Global Brands: Stella Artois, Beck's
  • Multi-country Brands: Hoegaarden, Leffe
  • Local Brands: Belle-Vue, Jupiler, Piedboef, Safir
  • Recent Brand Innovations: Jupiler Blue, Leffe 9, Hoegaarden Rose,

Global Beer Market analysis

It's important to analyze beer market on global scale as it helps AB Inbev to develop marketing mix for its product in advance, gives idea of the economic changes taking place in global arena and so on.

Global beer market analysis falls into 4 segments.

Alcohol growth trend

From the overall alcohol categories, beer industries have experienced growth in market share by more than 200 basis points (bps) to 41.1%. This is due to changing customer tastes from high alcohol drink to high quality produced beer. (SABMiller plc Annual Report 2009)

Beer Growth trend

According to Figure 2 Beer market is growing at a compound annual growth rate (CAGR) of 4.8% globally. Asia, Central & South America, Africa and Eastern Europe market grew at a CAGR of 6 to 9%. In mature markets such as Western Europe and North America, factors like competitive environment and changing consumer tastes to substitutes of beer affected the sales of beer and as a result North America accounts for modest growth of 0.5% CAGR while Western Europe experiences negative CAGR. (SABMiller plc Annual Report 2009)

Beer Segment Trend

Beer industry is experiencing trends towards consumers trading for more expensive beer. As a result premium beer is gaining more than 40 bps and comprises 17.9% of total beer sales. (SABMiller plc Annual Report 2009)

Beer Industry consolidation trend

Beer industries are going through consolidation period where top players are adopting the process of joint venture and acquisition to compete for top position and as a result top 10 players in beer industry contributes for 65% overall sales as compared to 40% at the start of century.

Some of the recent major developments are

  1. Inbev acquired Anheuser-Busch to form AB Inbev
  2. SABMiller and Molson Coors formed Miller Coors through joint venture
  3. Scottish and New Castle's business division between Carlsberg and Heineken

(SABMiller plc Annual Report 2009)

Types of Beer Market

There are two types of beer market namely mature market and growth market. Both markets differ from each other in terms of growth rate and profit contribution.

Mature markets such as North America, Australia, New Zealand and Western Europe have shrinking beer market because of market saturation while Growth markets such as Asia, Central and South America, and Central and Eastern Europe are in early phase of development and still offers enormous potential for the beer brewers.

Factors affecting AB Inbev Market

Macro environmental factors

Other forces which indirectly affect AB Inbev's business globally are

  • Commodity cost fluctuation such variable growth of barley prices.
  • Relative strength of Euro against dollar as 85% of its operating income is outside Euro zone.

Micro environmental factors

Global Competitors

AB Inbev's leading position in global beer market is reflected by its product performance and using strategy of producing local favourite product in each market where it competes. AB Inbev's global competitors include

Customers

They are the important forces as loyal customers are likely to make profit to the business. For this AB Inbev organised IFRIF 13 customer loyalty programs.

Suppliers

AB Inbev relies on these forces for a range of raw materials for beer and soft drinks, as their failure could affect the company's production, distribution and sale of beer. (AB Inbev, Annual report 2008)

Other micro factors that AB Inbev can use to reach its target market are four P's of marketing mix process. For example AB Inbev made use marketing mix concept for marketing their international brand Stella Artois

Marketing Mix: Stella Artois

  • Price: As compared to other brand are relatively higher as it relies on its reputation of producing quality product
  • Place: It is very important as the more place it is available, the higher sales are likely to be. Moreover the combination of draught, bottles, cans, etc. Means it has wider accessibility.
  • Promotion: It can be consider as high profile as its overall sales depends on its promotions such as upmarket events such as the summer tennis championships, cultured adverts highlighting its quality.
  • Physical environment and people: It play a little role in the overall marketing mix of the product

AB Inbev Market Analysis and Strategies

Market Analysis

According the BCG matrix the market of AB Inbev is divided into 4 categories. They are:

  • Stars: This market category have very high growth rate, but the overall profit contribution is quite low.
  • Cash Cow: This market category have a restricted growth rate but contributes overall sales of 86% and hence also increases profit for AB Inbev
  • Question Mark: This market category is growing but the growth rate is not matching with industry growth rate.
  • Poor dogs: AB Inbev do not have any market that have relatively very low market share.

AB Inbev's global market strategy was to reduce the level of dependency in domestic markets such as Canada and Belgium while concentrate on mature market such as North America, UK etc to gain market share and improve margin (Jan-Daniel Laufhtte, London South Bank University, 2003). As a result, AB Inbev is now able to achieve considerable amount market of share in some key markets while at the same time trying for growth in market where its brand hasn't dominated yet.

Strategies for global growth

Factors that AB Inbev has adopted to increase its world class efficiency are

  • Use of improved production base and supply chain
  • Implementation of one global marketing language through world class commercial program in order to translate their marketing ability in each country and using best practices for training and development.
  • Efficient planning and sales cycle
  • Financial and operational efficiency
  • Customer Focused

Detailed marketing tactics of AB Inbev can be analyzed through a case study of global marketing of Stella Artois which is described in the following segment

Case Study: Global marketing of Stella Artois

Introduction

        Stella Artois, a premium lager beer, was first brewed in Leuven, Belgium in 1926 as a 'Christmas Beer'. It is consider as one of the world best selling beer and is enjoyed in more than 80 countries worldwide. Superior brewing process and use of finest ingredients assures its reputation as a high quality beer. Stella Artois is brewed and promoted internationally by its brewer AB Inbev Belgium.

Swot analysis

Overall strategic position of Stella Artois and its operating environment can be examined by swot analysis as shown in figure 8

Marketing objective

AB Inbev promotes Stella Artois globally with an objective to consider it as one of the leading global premium beer which is to be listed among the top 3 brands in premium segment in any country where the brand is marketed

Market Analysis and strategy for growth of Stella Artois

Stella Artois saw 2008, as an excellent year in terms of brand health, volume and share performance. Some of its critically important market such as UK, USA and Canada seem to be having a growing trend in 2008, where it reached a double digit growth in Canada and has created a sophisticated image in USA. Also due to the use of value based brand (VBB) approach and excellent in-market execution by its brewer AB Inbev, Stella Artois achieved the recognition of being a number one international beer brand in Argentina, just after 31 months of its launch. (AB Inbev, Annual Report 2008)

Moreover heavy weight marketing investment into advertising and use of visibility programmes as a new marketing strategy helped AB Inbev to increase sales of Stella Artois by 5% and Stella Artois 4% by 887% to retain its position as leading lager beer by 2009. In the competition of lager, Stella Artois expels Grolsch from the top 10 and is now worth £59 Million. List of top lagers of 2009 are shown in table1. (Nicola Collenette, Beer -report-2009)

That is Originally Stella Artois contains 5 to 5.2% alcohols, but as AB Inbev launched new brand, Stella Artois 4% that concentrates more on premium quality, the sale got increased by unbelievable 887% than the previous year.

The company adopts different marketing tactics in different markets according to the needs of consumer. Some of the marketing strategies that AB Inbev used in some key mature market for Stella Artois are as follows

  • US Market

Stella Artois is imported and distributed by Anheuser-Buschused in United States. Recently its brewer used the approach of joint venture with mobile augmented firm AcrossAir to use a mobile application to facilitate US drinkers to find their nearest Stella dispensing bar. (byStuart Dredge, Tuesday, 1st December 2009 at 11:56 am)

  • UK Market

Due to its past brand negativity as 'Wife beater', AB Inbev now is emphasizing on ingredients used in the production of the Stella Artois as their new marketing strategy. They started promoting this strategy by sponsoring the sports and film festival events which are now replaced by sponsoring the commercial airship offering flight over London with the motive of being consider as vehicle of new surprising experiences. (Publication: Brand Strategy, Date: Monday, October 6 2008)

Conclusion and Recommendation

AB Inbev made used of best marketing practices such as heavy weight advertisements, sponsoring sports and film festivals, use of ethical conducts in marketing its product etc and many more. As a result, the company acquired majority of world beer market share. But as major competitors such as SABMiller, Heineken and Carlsberg are also growing, AB Inbev need to find new ways to develop its product, such as use of innovation in developing its brand portfolio which AB Inbev lacks due to its belief in maintaining its old tradition of processing its product.

References

  • Annual Report 2008, Anheuser-Busch InBev [online] Available http://www.ab-inbev.com/pdf/AR2008_UK_WEB.pdf (14/01/10, 11:01)
  • Compiled by Nicola Collenette, Beer report-2009[online] available, http://hub.wrnewmedia.co.uk/pdflibrary/OLN/OLN-Beer-Report-2009.pdf (07/01/2010, 17:43)
  • GILLIGAN, C. / WILSON, R.M.S. (2003): Strategic Marketing Planning. Burlington: Butterworth Heinemann, p.455
  • Jan-Daniel Laufhtte, November 2003, THE GLOBAL BRANDING OF STELLA ARTOIS [online] available http://laufhuette.com/Documents/Cases/Int_Mktg_The_Global_Branding_of_STELLA_ARTOIS.pdf (29/12/2009, 20:40)
  • JOHNSON, G. / SCHOLES, K. (2002): Exploring Corporate Strategy. 6th edition, Harlow: Prentice-Hall, p.100.
  • KOTLER, P. et al (1999): Principles of Marketing. 2nd European edition, New Jersey: Prentice-Hall, p.627.
  • Press release, Brussels, 07 May 2009 [online] Availablehttp://www.ab-inbev.com/press_releases/20090507_2_e.pdf(07/01/2010, 19:57)
  • SABMiller plc Annual Report 2009, Global beer market trends [online] Available http://www.sabmiller.com/files/reports/ar2009/pdf/Global_beer_market.pdf (09/01/2010, 11:41)
  • Simon Warburton, December 2009, The just-drinks interview - Stella Artois' global brand director, Jorn Socquet [online] available. http://www.just-drinks.com/article.aspx?id=99298&d=1 (29/12/2009, 20:38)

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