Bud Light: What goes around finally comes around

August 13, 2009

At last
month’s beer summit it was the brew of choice for the leader of the free world, Barack Obama. It is the best-selling beer in the United States and a close
relative of the world’s best-selling beer.

Yet, the
headlines this week have been decidedly negative.

“How Bud
Light lost its sense of humor-and, subsequently, sales. Wary of 3% drop for its
biggest brand, A-B dials down ‘drinkability’” reported Advertising Age.

“Anheuser refreshes
Bud Light campaign. Taking on weaker sales, brewer seeks buzz by pouring more
humor into new round of TV ads” said The Wall Street Journal.

First of
all, was it really humor that built the Bud Light brand? No.

Second of
all, have Bud Light sales really fallen? No.

Lastly,
should Bud Light switch its strategy away from drinkability? No.

 

What is a Bud Light?

 Bud Light is
just a watered down version of Budweiser. That is what the average consumer
thinks.

That is why line
extensions are always intrinsically cannibalistic. The best prospective customer
of Bud Light is a Budweiser drinker who wants to avoid the calories and bloat
of regular Budweiser.

By drinking
Bud Light, Joe Six-Pack gets to keep his Budweiser & Clydesdales and just loses some calories.
Same applies to Jane Six-Pack.

Since all major
beer brands used line-extensions to move into the emerging light-beer category,
the leader of the light category is obviously a line-extension.

And because
no pure light-beer brands were launched, the consumer sees light beers as a
flavor variation rather than a different brand. Much like what has happened in
cola with Diet Coke and Diet Pepsi.

Being first
is usually best, but not always. Even though Bud Light was one of the last line-extensions
launched, it has become by far the most successful. Which is exactly the same
as what happened with Diet Coke. The last of the diet-cola line extensions
became the leader.

But is the
success of Bud Light driven by its advertising? I say no. The success of Bud
Light is a direct reflection of the power and leadership of Budweiser, the world’s
best-selling beer brand.

The formula
is easy. Take the best-selling brand, line extend it into a hot new emerging category
with no competition except for other line extensions and voila! A winner is
born.

Let’s be
real. It was not Spuds Mackenzie that built Bud Light, it was Budweiser.

But success has
come at a great cost to Budweiser. After the 1981 launch of Bud Light, initially
both Budweiser and Bud Light grew in sales. But the party didn’t last. In 1988,
seven years later, Budweiser hit its high-water mark of 50.6 million barrels in
the U.S. Every year since, for the past 21 years in a row, Budweiser sales have
declined.

People don’t
change quickly; it took twenty years for light beer to fully catch on. In 2001,
Bud Light overtook Budweiser and since then hasn’t looked back.

Every year
since its launch, Bud Light has posted sales increases. And currently Bud Light
is coming close to being twice as big as its namesake. In 2008, Budweiser sold
23.5 million barrels and Bud Light sold 44.6 million barrels.

 

 Bud Light is still King.

Bud Light
has been on fire since its launch. The decline of Budweiser has been overshadowed
by the raging success of Bud Light. In 2008, Bud
Light sold 44.6 million barrels up from 42.7 million barrels in 2007, a gain of
4.4 percent.

What the recent
articles citing Bud Light’s so-called decline fail to mention is the raging
success of Bud Light’s own line-extension brand, Bud Light Lime.

Bud Light
Lime has been growing rapidly. In 2008, it sold 3.3 million barrels. If you add
the 3.3 million to the 44.6 million accounted for by Bud Light you get 47.9
million. So the two brands together would have grown 12.2 percent last year, an
astounding rate.

Given that
Bud Light Lime has been a blockbuster, it’s no wonder that Bud Light went down
in 2009.

After all,
who is the best prospective customer for Bud Light Lime? A Bud Light drinker
that wants a twist of lime for a change.

That’s the
classic pattern of a successful line extension. The line extension kills the
base brand.

So perhaps
we are seeing the same thing with Bud Light and Bud Light Lime.

What all this
proves is that Bud Light (with all its variations counted) is still the King of
Beers and far ahead of the other beer brands.

 But it also
proves that line-extension is dangerous and hurts the base brand. What Bud
Light did to Budweiser, Bud Light Lime is doing to Bud Light. What goes around
finally comes around.

(And Select is doing nothing to nobody since nobody is drinking it. )

 

Dumping Drinkability is Dumb.

With “drinkability,”
Bud Light finally found a word to own in the mind. “Drinkability”
is not exciting or funny or creative but it is a powerful strategy.

Drinkability
communicated the brand’s core benefit. It connects the Budweiser brand with the
drinkability of a light beer.

Why do
people choose Bud Light anyway? Because it is funny? No. Just ask Obama why he choose it. Obama picked Bud Light because it
is a light beer and the leading brand.

Powerful
strategies are usually not very exciting. Driving for BMW. Reliability for
Toyota. Cowboys for Marlboro.

What makes a
strategy powerful is a narrow focus over an extended period of time.

A-B InBev has
claimed it’s not dropping drinkability altogether, they say they are just dialing
down the word drinkability. CEO Dave Peacock says they “going back to that
familiar Bud Light voice and that the work will reference drinkability, but it
won’t be as drinkability heavy.”

Sounds
pretty watered down and weak to me.