Case 9.1 International marketing at beer brewer Anheuser Busch – InBev[i]
Anheuser Busch (AB) – InBev is the largest beer brewing company and was formed in 2008, when InBev acquired St. Louis-based Anheuser-Busch to become one “of the world’s top five consumer products companies”.[ii] Belgium-based InBev, at that point in time, the world’s number one brewer, was itself formed in 2004 through a complex merger arrangement between Interbrew of Belgium and Companhia de Bebidas das Américas (AmBev) of Brazil. Interbrew (we will use ‘Interbrew’ to refer to the period before the AmBev acquisition, ‘InBev’ to refer to activities prior to the Anheuser-Busch acquisition, and ‘AB InBev’ to refer to events thereafter) traces its origins to a brewery called Den Horen, established in 1366 in Leuven, Belgium. In 1717, the brewery changed its name to Artois when it was acquired by Sebastien Artois, its master brewer. In 1987, Brasseries Artois, then the second largest brewer in Belgium, and Brasseries Piedboeuf, then the largest brewer in Belgium, merged to create Interbrew. In 1988, Interbrew was the 17th largest brewer in the world.[iii]
Before the 1987 merger, both Brasseries Artois and Brasseries Piedboeuf had expanded through acquisitions. Brasseries Artois acquired the Leffe brand in 1952, the Dommelsch Brewery in the Netherlands in 1968 and the Brasseries Motte Cordonier in France in 1970. Similarly, Brasseries Piedboeuf purchased the Lamot brewery in Belgium in 1984.
Interbrew continued with this acquisition strategy. It acquired Belgian brewers Hoegaarden in 1989 and Belle-Vue in 1990. In the early 1990s, Interbrew expanded extremely rapidly, pursuing more than 30 acquisitions and strategic joint ventures throughout the world. Examples of such acquisitions included Labatt in Canada in 1995, SUN Interbrew in Russia and Ukraine in 1996, Oriental Breweries in South Korea in 1999, and Diebels and Beck & Co. in Germany in 2001. In addition, in the early 2000s the Malaysian Lion Group in China and the Apatin Brewery in Serbia were acquired. In 2016, one of the largest acquisitions in history took place when the $100 billion merger with SABMiller was finalized.[iv] More recent acquisitions include the Craft Brew Alliance in Portland, Platform beer in Cleveland and BABE in New York City.[v]
Interbrew’s traditional brand strategy: Local branding
As a way of managing its large number of acquired firms, Interbrew traditionally left most decisions to local managers, and it even intentionally prohibited the usage of ‘Belgium’ in its ads. Its slogan was ‘the world’s local brewer’.
Traditionally, Interbrew applied a geographic structure with major decision-making power decentralized to local managers. Following the acquisition of Labatt in 1995, Interbrew managed the group through two geographic zones: the Americas and Europe/Asia/Africa. Although it shifted to an integrated structure in 1999, in less than a year it switched back to a geographic structure with five regions reporting directly to the CEO. Interbrew allocated major decision-making responsibilities in each country to the individual country teams. Such a decentralized approach was viewed as crucial to Interbrew’s strategy. In 2022, the company still utilized a geographic structure, though it decided in 2018 to simplify the organization by reducing its geographic zones from nine to six. This resulted in a few zones being combined for more effective management.[vi]
Interbrew’s corporate strategy in the 1990s was to develop a complete portfolio in both mature markets and growth markets through acquiring and developing existing local brands. In both markets, whenever possible, Interbrew focused on acquiring established, high-quality local brands, such as Labatt Blue in Canada. In some cases, Interbrew acquired local brands, upgraded their product quality and developed them into strong local brands, such as Borsodi So in Hungary and Ozujsko in Croatia. Essentially, the international expansion was “brand, rather than brewery, driven”.
In addition, Interbrew identified certain local brands with regional potential and developed them across a group of markets. For example, Hoegaarden and Leffe became leading brands in France and the Netherlands.
Interbrew adds global brands
In 1998, the executive management committee decided to change strategy and add some global brands to its portfolio, for three reasons.
First, consumer demand was expected to converge on a global basis. There was growing demand for premium beers from the rising number of affluent consumers worldwide, as well as increasing demand for low-priced beers from the rising number of poorer consumers. In contrast, the market for mainstream (i.e., expensive and local) beers was expected to shrink gradually. Although the market for global brands was still small, this market was expected to grow in the next few decades.
Second, the beer business was becoming more international, and the international media had made it more viable to build global brands than in the past. For example, Heineken, Budweiser and Corona had become global brands. Interbrew believed that a global strategy would add synergies through global advertising and marketing, thereby improving operating efficiency.
Third, it was thought that a global brand would raise the company’s profile, which in turn would boost the company’s stock performance. As a downside of its strategy of being ‘the world’s local brewer’, Interbrew’s profile was so low internationally that “some beer analysts nicknamed the company ‘Interwho’?”[viii] This low profile was thought to damage Interbrew’s stock performance, with Interbrew’s stock trading 10 per cent below that of rival Heineken.
Thus, reducing its sole emphasis on local strategy and developing some global brands seemed to be the solution to fix the firm’s problems on the stock market and to anticipate expected market changes. An Interbrew annual report explained the new core strategy well:
Beer is a business of local brands, so brewers need to be big in local brands, culturally adept at being local. That is the basis of our strategy. Yet if all we had was strong local platforms, it would be good – but not great. And if all we had was globally famous names, it would be pleasing – but not good enough. With no local platforms, an international brand has to pay its own infrastructure costs. The picture brightens considerably if you have strong local brands with critical scale, which covers overhead costs, then add premium brands on top. This is the more profitable way – the local platform plus the premium portfolio. In other words, the Interbrew model.[ix]
In 1998, the executive management committee chose Stella Artois as Interbrew’s global flagship brand.
Launching Stella Artois as the global flagship brand
Tracing its origins back to 1366, Stella Artois was launched as a Christmas beer in 1920 in its home market of Belgium. In the 1970s it became a strong market leader in Belgium. By the 1990s, though, Stella Artois was considered somewhat old-fashioned within Belgium, and it experienced declining domestic sales. However, Stella achieved great success in two international markets, namely the UK and France. Performance in the UK was particularly strong, and by 1998 Stella occupied 7.6 per cent of the lager market share. In 1998, the UK market accounted for 49 per cent of Stella’s total brand volume, France 18 per cent and Belgium 13 per cent. Besides these three markets, Stella was also sold in Italy, Sweden, Australia, Croatia, Hungary and Romania through licensing agreements, joint ventures and Interbrew subsidiaries.
The initial stage
In September 1998, Interbrew started to apply a centralized Stella brand management approach, which quickly faced implementation barriers.
Interbrew had operated on a regional basis, and country management teams had become used to making most decisions by themselves. Not all country management teams were convinced it was a good idea to adopt a global approach, especially in those countries where they had already established an image for Stella Artois. For example, in the UK market, Interbrew’s licensee Whitbread did not want to change its successful ‘reassuringly expensive’ advertising slogan. In Belgium, Interbrew’s local advertising programme had carefully positioned Stella Artois as a mainstream lager, rather than a premium lager, as designed by the centralized Stella brand management team.
Moreover, even for those countries most likely to adopt the global approach for Stella Artois, Interbrew still needed time to improve the coordination system between the centralized management team and country management teams.
For the above reasons, Interbrew included only the less established markets in its initial global campaign. The campaign intended to position Stella Artois as a sophisticated, contemporary European lager with an important brewing heritage. The global advertising framework included a television concept and a series of print and outdoor executions that had been researched to be effective across borders. In 1999, with both local and corporate funding, the advertising campaign was rolled out in 15 markets, including the US, Canada, Italy, France and Croatia.
In 1999, Stella grew strongly. For example, sales rose by 14 per cent in Croatia, 37 per cent in Hungary and 88 per cent in Romania.[x]
Switch to a new branding plan
Despite making good progress, establishing Stella Artois as a global brand experienced a major challenge in early 2000. Rolling out the brand at the global level required a huge amount of funding – in the US market, Interbrew’s corporate marketing department allocated several million dollars to Labatt USA for launching Stella Artois within the single year 1999. Further market development in the next few years would require additional funding, thereby leading to substantial financial pressures. At the same time, the benefits of a global brand did not appear to materialize in the short run, at least not consistently in every market.
Thus, in 2000, Interbrew revised its initial approach to global branding, deciding to be more selective when identifying its global target market for Stella Artois. Interbrew established four strategic filters. First, any potential market targeted had to be a large and/or growing market with a current or potential premier lager segment no less than 5 per cent of the total market.
Second, Interbrew’s resources and commitment had to be sufficient to make Stella one of the top three brands in the local market, and achieve attractive margins after an initial period of around three years.
Third, a committed local partner had to be available both to provide high-quality distribution and to invest in the brand.
Fourth, the success in the chosen markets had to have potential spillover effects benefiting the firm in other national or regional markets.
These market selection criteria shifted what was included in the ‘global’ markets for Stella Artois from national markets to around 20 international cities, such as London, New York, Hong Kong, Moscow and Los Angeles. These major cities had a concentration of affluent consumers, potentially allowing Interbrew to benefit from scale and scope economies in sales and marketing. The new city-by-city global branding plan required a new management approach.
Interbrew established a corporate marketing group, comprised of the brand management team, a customer service group, regional sales managers, a cruise business management group and a Belgian beer café manager. These group members worked together to identify top cities, develop brand positioning for local execution, design marketing programmes and allocate resources. Because the corporate marketing group was responsible for both the development of core marketing programmes and local support, Interbrew brought all crucial resources under the global brand development director to ensure an integrated effort. Still, the central marketing group had to rely on the commitment of local managers. This was relatively easy to achieve in the case of wholly owned subsidiaries, but not so for licensees and joint ventures.
The new global plan also incorporated the launch of Stella in other countries. In the late 1990s, Stella had already been successfully introduced in various central European urban centres, such as Budapest and Sofia, with a large presence of the targeted group of consumers of premium beer. In these cities, Interbrew strictly controlled the choice of distribution channels and promotion programmes, choosing only a few high-end bars in order to build up Stella’s premium image. Further, Interbrew opened Belgian Beer Cafés in these markets to showcase how to serve Stella Artois, e.g., to serve Stella at 38 degrees Fahrenheit in branded glasses and shaving off foam with a spoon. The Beer Cafés greatly helped Stella Artois build up a reputation as a premium beer. In addition, the stature of Stella Artois in the UK and its marketing programmes there also helped, as the image in the UK was very similar to the global positioning of Stella intended by the corporate marketing team.
The new global plan copied this strategy in other markets. For example, in New York, Interbrew chose around 20 of the most exclusive bars, including Madonna’s favourites, Chez Esaada and Markt. Stella was priced at about US $100/keg, much higher than Heineken’s US $85/ keg, and the media campaign included only prestigious outdoor advertising (e.g., a Times Square poster) and high-end celebrity events. In Chicago, Interbrew opened ‘beer academies’ to showcase Stella etiquette.
These marketing efforts seemed to work very well around the world. Although Stella Artois cost only US $1.10 a pint in Belgium in 2002 and was sold in plastic cups, it successfully established its image as a modern, sophisticated lager, selling for as much as US $8 a glass in Manhattan. Interestingly, Belgians were surprised by Stella’s international image. One Belgian, a 62-year-old Mr De Boek, commented in 2002, “In Belgium, Stella is a beer fit for old peasants … Americans must be insane.”[xi]
The Stella Brand in 2022
In 2022, Stella was still as popular as ever and in 2021 placed in Untappd’s – a highly influential beer social networking app – top ten most popular beers.[xii] Despite its popularity in the UK, Stella has faced some difficulty with its image supposedly due to its higher-than-average alcoholic content. In the UK, Stella began to be associated with binge drinking, aggression and the term ‘wife beater’. To avoid such negative associations InBev lowered the alcohol percentage and hired a Public Relations company to help improve its reputation.[xiii] Though many consumers were infuriated by this change, the firm has managed to mitigate the negative image and Stella remains a particularly popular brand.[xiv] The beer brand has entered the mature stages of its lifecycle and the firm is working hard to maintain sales volumes. It has created advertisements with popular celebrities and has even paid for advertisements in the US Superbowl.
In addition, InBev formed a partnership in 2015, named ‘Pour it Forward’ with Water.org that still operates today. This partnership is dedicated to providing clean water supplies to developing countries in need of fresh water. In 2019, the campaign revolved around the limited-edition chalice. With every purchase of the Stella chalice (a glass with a curved shape to enhance the beer’s flavor, and with an ad for the beer on front of the glass), around $3.13 was donated towards the clean water initiative. In 2021, the campaign focused on the slogan ‘Give the Gift of Time’ which supported women around the world who spend a significant portion of their day retrieving water for their families.[xv] The firm is determined to keep Stella relevant by keeping up to date with emerging trends and marketing this beer as a socially conscious brand, aligned with current concerns about humanitarian and environmental issues.[xvi]
Anheuser-Busch
The history of Anheuser-Busch dates back to 1852 when German immigrant Eberhard Anheuser invested in a local brewery in St. Louis, Missouri. By 1957, it had become the leading brewery in the United States and has continued to hold that position in 2021. The success of the company created an attractive target for InBev, which was looking to expand its global position. An acquisition would create the world’s largest brewing company and provide InBev with access to Anheuser-Busch’s established markets. The takeover process resulted in a long battle between the two firms. When InBev’s initial offer was rejected, InBev moved to take over the board. The acquisition was finally completed on November 1, 2008 with Anheuser-Busch becoming a wholly owned subsidiary.
Selling the American dream
Budweiser, the ‘American style lager’, was introduced to America in 1876 by Adolphus Busch. Brewed in St. Louis, Missouri and known for its ‘American’ lager characteristics of being a light and thin brew, Budweiser gradually became the bestselling beer in America. However, its popularity in its home market eventually started to fade, with volume sales decreasing from 1988 on. This trend can be attributed to Americans’ increasing demand for lower caloric alcoholic beverages and the rising popularity of micro brews.[xvii]
Thus in 2010, AB InBev responded by launching a new campaign to push Budweiser into international markets. In the past, Budweiser had encountered difficulties in European markets as American beer had a reputation for being ‘watery’.[xviii] However, this quality was appealing to other international markets such as Asia and South America. AB InBev adopted a strategy for marketing Budweiser internationally that was similar to Interbrew’s promotion of Stella Artois as a premium beer. Capitalizing on its American roots, AB InBev promoted Budweiser as the ‘American dream in a bottle’ to appeal to international consumers.[xix] The global ‘Grab Some Buds’ campaign used optimism to create a sense of promise even if it was just a great night out with friends. The success of this campaign in foreign markets was astounding giving rise to double-digit growth in sales volume in 2010 and 2011.[xx] The campaign managed to be relatively cohesive across international borders with only minor changes required to address cultural preferences. For instance, in Canada, the slogan was reworked as “Why Not Grab Some Buds” in response to research indicating that Canadians were less comfortable with being instructed to drink.[xxi]
Budweiser continued to grow in foreign markets; AB InBev launched Budweiser in Russia (2010) and Brazil (2011). In Brazil, AB InBev was attempting to respond to the demand for premium beer, since it already controls 70 per cent of the market for lower priced brews. Chris Burggraeve, Chief Marketing Officer, foresaw that Brazilians will take a liking to the American lager, stating “We’re bringing abroad to them. They’re hungry for the world.”[xxii]
Budweiser remains a popular choice of beer and was ranked as the world’s most valued beer brand in 2021 with sales of 16+ billion US dollars.[xxiii] The beer brand is heavily associated with sporting events, as illustrated by multiple US Superbowl advertisements in the recent past, and it was also the official beer of the FIFA world cup.[xxiv] Budweiser has held this unique position since 1986 and it has allowed the company to reach billions of fans across the globe, with its FIFA commercial ‘Light Up the FIFA World Cup’ running in over 50 countries. Its contract with FIFA has been associated with large growth in revenues outside of the United States.[xxv]
Global marketing with social media
Social media has become a useful tool for managing brand health. The creation of an interactive medium for AB InBev to communicate with consumers has had a significant impact on how the company markets to global consumers.[xxvi]
In this era of social media, AB InBev has started to put a heavier focus on its digital platforms and has moved away from traditional TV advertising platforms. In particular, the pandemic caused a huge shift in AB InBev’s marketing strategy. In 2020, AB InBev implemented an ‘Ideas For Good process,’ which took place every week over the course of three months. Teams from all over the world would meet to brainstorm and pitch ideas on how best to help customers during the trying times of Covid 19. These sessions resulted in breweries starting to produce hand sanitizer and fill oxygen tanks, and jump-started programs such as ‘Rally for Restaurants,’ which provided grants to restaurants in over 20 different countries. The company even cancelled a Superbowl ad so it could allocate the related funds to social causes. During the pandemic, AB InBev put a heavy emphasis on social marketing utilizing its social media pages to promote its new initiatives.[xxvii]
In 2019, AB InBev launched its highly successful, digital ordering platform in the Dominican Republic. The app has grown to become one of the most successful business-to-business online platforms and has over 1.5 million users each month. AB InBev describes the app as a place where “small and medium-sized retailers can browse products, place orders, earn rewards, arrange deliveries, manage invoices, and access business insights all from one place.” The app is available and widely used in many major cities in South America and Mexico. China, South Africa and the US are more recent additions to the popular platform. Jean Jereissati, the CEO of Ambev, says “BEES is leading the way in digital transformation for our clients. With BEES, our clients’ lives become much easier, they can make an order in three clicks, any day, any time.” The app’s rapidly growing popularity and users is a testimony to its convenience and unique functionality.[xxviii]
AB InBev way of marketing
The effectiveness of InBev’s present global marketing strategy requires a cohesive integration of three pillars: brand portfolio management, consumer connection and consistent innovation.[xxix]
Any marketing concept must pass through these three pillars, which encompass 23 different modules to create effective marketing. Mr Burggraeve sums up the AB InBev Way of Marketing as ‘art, science, and discipline’ to deliver successful brand health.[xxx]
To manage its portfolio of international brands, AB InBev applies a strategy known as ‘Freedom in a Framework’. This strategy stipulates that, for a given brand, the positioning, the campaign and the look and feel of the product are controlled, with some flexibility being allowed between countries.[xxxi] For ‘local jewel’ brands the framework is less stringent and local marketing executives have substantial control over how the brand is marketed.
Regardless of the brand level, AB InBev is committed to marketing that exemplifies a ‘fans first approach’.[xxxii] This approach ensures that marketing investment connects first with those consumers who are loyal to their brews. CEO Carlos Brito describes this approach as “helping [AB InBev] to stay relevant to beer lovers around the world and sustainably grow [its] business”.[xxxiii]
AB InBev has largely adopted Interbrew’s branding strategy, offering more than 200 regional and local brands. By 2012, AB InBev had developed three global brands: Stella Artois, Beck’s and Budweiser. The firm aims to have its global, regional and local brands “work cohesively together to optimize relevance for different consumers”.
QUESTIONS
- How did Interbrew view consumers’ demands across different markets? What changes occurred to Interbrew’s perspective? What would be Levitt’s perspective?
- Did Interbrew offer high-quality, cost-efficient, globally standardized Stella Artois in a global market?
- What were the differences in Stella Artois’ positioning in Belgium, the UK and the US? What issues did Stella face in the UK? How did it combat these challenges?
- To what extent did the firm’s administrative heritage affect the global launch of Stella Artois?
- What was the source of Interbrew’s knowledge for the ‘global marketing’ of Stella Artois? What would Levitt’s model suggest?
- What happened with the firm’s international branding strategy after AB Inbev was formed?
- Give two reasons why AB InBev’s app, BEES, has been a success. Focus on the timing, when it was launched and the locations it was launched in.
- Can you provide an update on AB InBev’s branding strategy, using materials available on the Web?
Notes
[i] Paul Beamish and Anthony Goerzen, ‘The global branding of Stella Artois’, Ivey Case 9B00A019 (2000); Dan Bilefsky, ‘How Belgium’s “peasant” beer became “premium” in U.S. – Stella Artois’s shrewd marketing in hip New York bars boosts draw; a “reassuringly expensive” brew’, Wall Street Journal (Eastern Edition) (12 April 2002), A.13.
[ii] ‘InBev completes acquisition of Anheuser-Busch’, AB InBev press release. www.ab-inbev. com/press_releases/20081118_1_e.pdf. (18 November 2008)
[iii] Bob Hagerty, ‘Recognition for Belgium beer is sought – Artois Piedboeuf aims to be among top 10 world brewers’, Wall Street Journal (Eastern Edition) (8 January 1990), 5.
[iv] Tara Nurin, ‘It’s Final: AB InBev Closes On Deal To Buy SABMiller’, Forbes (10 October 2016).
[v] ‘Acquisitions by Anheuser-Busch InBev’, Tracxn. https://tracxn.com/d/acquisitions/acquisitionsbyAnheuser-Busch-InBev. (25 January 2022).
[vi] Sarah Vizard, ‘AB InBev brings together marketing and innovation in new global CMO role’, MarketingWeek (26 July 2018).
[vii] Interbrew, Annual report (1999), 24.
[viii] Bilefsky, ‘Stella Artois’s shrewd marketing’, A.13.
[ix] Interbrew, Annual report (2000), 12.
[x] Interbrew, Annual report (1999).
[xi] Bilefsky, ‘Stella Artois’s shrewd marketing’, A.13.
[xii] Christian Smith, ‘The 10 most popular beers in the world in 2021, according to Untappd’, the drinks business (21 December 2021).
[xiii] Katie Weston, ‘Stella Artois LOWERS its alcohol strength to 4.6% in health drive by Belgian brewers – but drinkers are left furious over its ‘bland and insipid’ taste’, Daily Mail (19 February 2021).
[xiv] Ben Mcfarland, ‘The Oxford Companion to Beer definition of Stella Artois’, Craft Beer & Brewing.
[xv] ‘Little known facts about Stella Artois, the ultimate holiday beer’, AB InBev News and Media. https://www.ab-inbev.com/news-media/brands/little-known-facts-about-stella-artois-the-ultimate-holiday-beer/. (23 December 2021).
[xvi] Jordanne Christie, ‘beer through the ages’, OpenLibrary.
[xvii] Simon Zekaria, ‘Anheuser-Busch upbeat as profit jumps’, Wall Street Journal (Online) (8 March 2012).
[xviii] Carter Dougherty, ‘How well will Budweiser Travel’, The New York Times (27 June 2008).
[xix] Mike Esterl, ‘Sudsy American dream sells abroad’, The Wall Street Journal (9 March 2012). B1.
[xx] Ibid.
[xxi] Ibid.
[xxii] Clementine Fletcher, ‘Rihanna to help sell Budweiser to Brazil as AB InBev aims for margin boost’, Bloomberg (21 September 2011).
[xxiii] Jan Conway, ‘Most valued beer brands worldwide 2021’, Statista (4 May 2022).
[xxiv] ‘Qatar World Cup: FIFA, tournament organisers agree to serve alcoholic beer at matches’, ESPN (3 September 2022).
[xxv] Rachel Arthur, ‘World Cup boost for Budweiser: ‘Football is a passion point in the new markets we’ve expanded in’’, BeverageDaily (26 July 2018).
[xxvi] Ken Beaulieu, ‘AB InBev CMO on marketing globally’, Marketing Daily (2 March 2012).
[xxvii] Paul Talbot, ‘How AB InBev Is Transforming Its Marketing’, Forbes (17 June 2021).
[xxviii] ‘BEES: The fast-growing e-commerce platform that has more than a million retailers buzzing’, AB InBev News and Media. https://www.ab-inbev.com/news-media/innovation/bees-is-the-fast-growing-e-commerce-platform-that-has-more-than-a-million-retailers-buzzing/. (26 May 2021).
[xxix] Chris Burggraeve, ‘St. Louis Investor Conference – World Class FMCG: Marketing @ Ab InBev’ AB InBev (2 June, 2010)
[xxx] Chris Burggraeve, ‘St. Louis Investor Conference – World Class FMCG: Marketing @ Ab InBev’ AB InBev (2 June, 2010)
[xxxi] Ken Beaulieu, ‘AB InBev CMO on marketing globally’, Marketing Daily (2 March 2012).
[xxxii] ‘World’s largest brewer is a fan of real-life social networks’, Marketing Week (14 March 2012).
[xxxiii] Ibid.
[xxxiv] InBev company information, inbev.com, accessed on 5 March 2007.
[xxxv] AB InBev, ‘Annual Report 2021’, 2021.
[xxxvi] Vanessa Alviarez and Keith Head and Thierry Mayer, ‘Global giants and local stars: How changes in brand ownership affect competition’, (July 2021).
[xxxvii] AB InBev, ‘About out new identity’, 2012.