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Anheuser-Busch case study
Launching low carbohydrate alcoholic drinks

Reference Code: BPCS45
Publication Date: 11/04

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Anheuser-Busch case study BPCS45
Datamonitor (Published 11/2004) Page 2
This brief is a licensed product and is not to be photocopied
ABOUT DATAMONITOR
Datamonitor plc is a premium business information company specializing in industry
analysis.
We help our clients, 5000 of the worlds leading companies, to address complex
strategic issues.
Through our proprietary databases and wealth of expertise, we provide clients with
unbiased expert analysis and in-depth forecasts for six industry sectors: Automotive,
Consumer Markets, Energy, Financial Services, Healthcare, Technology.
Datamonitor maintains its headquarters in London and has regional offices in New
York, Frankfurt, Hong Kong and Japan.

WHAT IS THIS REPORT ABOUT?
This report forms part of Datamonitor's case studies series, which explores business practices
across a variety of disciplines and business sectors. The series covers a range of markets
including food and drink, retail, banking and insurance, pharmaceuticals and software.

Each case study provides a concise evaluation of a company that stands out in some area of
its strategic operations, highlighting the ways in which the company has become one of the
best in its field or how it deals with different problems encountered within that sector.

Who is the target reader?
This case study is designed for industry executives, consultants, analysts and researchers,
providing them with a useful benchmarking tool and offering a blueprint for potential
improvements.

It provides valuable insight into the methods used by important industry players that give them
a competitive edge, allowing the reader to capitalize on the knowledge of experienced
companies when, for example, entering a new niche or market.

Report content
The report is divided into three main parts Introduction, Case Study and Conclusion
followed by Research Methodology and Related Research sections:

Introduction: provides historical background on the company and explains how the
company has responded to a particular business challenge.
Case study: provides the main body of text, detailing the company's approach to a
particular challenge; for example, superior customer relationship management, use of
technology, sales and marketing techniques, etc.
Conclusion: highlights the main findings of the report, summarizing the key
strategies the company has employed.
Research Methodology: details when research was carried out and the approach
used in writing the report.
Related Research: lists a number of reports on a similar theme to the case study,
which may assist the reader in further research.

Table of Contents

TABLE OF CONTENTS
ABOUT DATAMONITOR 2
WHAT IS THIS REPORT ABOUT? 3
INTRODUCTION 6
CASE STUDY 7
First low-carbohydrate beer in the US 7
UK launch natural progression 8
New product development Anheuser-Busch low carb products 9
CONCLUSIONS 14
RESEARCH METHODOLOGY 15
RELATED RESEARCH 16
Table of Contents

LIST OF FIGURES
Figure 1: Michelob Ultra Light Beer - Low Carbohydrate US launch 9
Figure 2: Michelob Ultra Light Beer - Low Carbohydrate - UK launch 10
Figure 3: Michelob Beer Ultra (new packaging) 11
Figure 4: Bacardi Silver Low Carb Premium Malt Beverage - Black Cherry 12
Figure 5: "Doc's" Malt Beverage - Hard Lemon 13

Introduction

INTRODUCTION
Major brewers in the US and Canada have embraced the challenge to launch lower
calorie and carbohydrate beers. Molsons version, Molson Ultra, has a 4.5% alcohol
content, 97 calories and 2.5g of carbohydrates per bottle. Coors has also entered the
market with Aspen Edge, which has with just 2.6g net carbohydrates and 94
calories per bottle.
In the spirits category, U.S. vodka brand Skyy, owned by Campari, has teamed up
with brewing company Miller to market a low-carbohydrate bottled malt alcoholic
beverage with fewer carbohydrates than its main competitor, Smirnoff Ice.
Meanwhile, the wine category has seen Diageo embark on a new initiative to provide
information about calorie and carbohydrate content on its U.S. wine brands, following
a decision by the Alcohol and Tobacco Tax and Trade Bureau to encourage alcoholic
drinks manufacturers to state accurate nutritional labeling on their products.
This case study focuses on Anheuser-Busch's low carbohydrate products. It has
launched products with a low carb content both within its beer brands (Michelob Ultra)
and ready-to-drink spirits (Bacardi Silver low carb black cherry and Doc's Malt
Beverage Hard Lemon). Michelob has been especially successful in entering the
low carb market, benefiting from being first to market in the US, and from launching a
successful marketing campaign in the UK.

Case Study

CASE STUDY
First low-carbohydrate beer in the US
Anheuser-Busch launched its low carb beer onto the US market in September 2002.
Since then, the brand has gained a 3.4% market share, profiting from its status as the
first low-carbohydrate beer. Competitors such as Coors have rushed to launch
competing products in the wake of its launch. Michelob Ultra Light beer contains only
3.0g of carbohydrates per 330ml, compared to, for example, Stella Artois 11g.
US consumers appetite for lighter beers has grown in the past 15 years and
Michelob wanted to capitalise on this. Added to this is the fact that 21 to 29 year-olds
account for more than 24% of total beer sales in the U.S. According to US census
figures, this drinking segment will grow by nearly four million adults by the year 2010.
The idea of a co-branded beer with Atkins was rejected and the company does not
market Michelob Ultra as a diet beer, or as one related or linked to any diet.
After establishing that the Michelob brand would be the best suited to extend with a
low-carbohydrate variant, the product was developed over 18 months. It achieves its
low-carbohydrate status through an extended brewing process. The mashing
process, when malted barley and grains are added to water and heated, is
lengthened from the conventional process to allow the carbohydrates present to
break down into simple sugars. This mixture is then strained and boiled with hops,
and when this is cool, yeast is added to convert the simple sugars into alcohol and
carbon dioxide.
Testing in the US took place in three states, Florida, Arizona and Colorado, in
December 2001, opening out to include the rest of Florida as well as Chicago,
Washington DC and Baltimore in May 2002 before a national rollout in September
2002. Anheuser-Busch claims the brand has quadrupled its projections since initial
rollout and is now proving to be one of the most popular brands in the country. It
outsells Smirnoff Ice by double.
Case Study

UK launch natural progression
Launching in the UK was a natural progression, according to Randall Blackford,
Anheuser-Buschs UK marketing director, as there was a clear gap in the market for a
low-carbohydrate and low-calorie beer. He cites research stating that 45% of UK
consumers are concerned about their carbohydrate intake, with over 13 million
people trying to lose weight. Over 2.4 million UK consumers are active gym
members, with 6,000 fitness centers operating around the country.
Anheuser-Buschs internally conducted research also showed that 62% of 25 to 34
year-old males and 66% of 24 to 34 year-old females were likely to buy the product if
it were launched in the UK.
Michelob Ultra was launched in bars and pubs across the UK and in four- and 10-
packs in Tesco, Waitrose and Asda, as well as convenience stores and off-licenses.
On-trade distribution is focused on free trade, franchised and mainstream high street
bars and pubs.
The launch was supported by heavy advertising and promotional activity to ensure
maximum impact of the new brand onto UK consumers. October 2003 saw the launch
of Michelob Ultra Resolution, a nationwide promotion that challenged UK drinkers to
live life to the full by carrying out their most wild resolutions. Spanning several
months, the promotion built up a momentum and encouraged active participation from
the brands consumers.
Michelob Ultra was also an official sponsor of the 2004 Flora London Marathon and
the London Triathlon, emphasizing its appeal as a go-getting, aspirational beer to the
target audience of young drinkers. The company declined to quote its marketing
budget for the launch, but includes television, radio, outdoor, local and national print
advertising, PR, point of sale material as well as sponsorship.
After becoming the top selling four-pack in Tesco by the end of 2003, Michelob Ultra
is also set for launch in Northern Ireland.
Case Study

New product development Anheuser-Busch low carb
products
This section describes the low carbohydrate products Anheuser-Busch has launched
in the US and the UK since 2000.
Figure 1: Michelob Ultra Light Beer - Low Carbohydrate US launch

Image:

Name: Michelob Ultra Light Beer - Low Carbohydrate
Manufacturer: Anheuser-Busch
Country: USA
Package tags: Fresh; Upscale; Low Calories; Low Carbohydrates
Description: Presented in a 12 fl. oz. glass bottle, the "smooth & refreshing
lager beer" is sold in a cardboard 6-pack carrier priced at
$4.49. The beer is said to have 2.9 grams of carbohydrates
and 96 calories per bottle. Available from St. Louis, MO-based
Anheuser-Busch, Inc., a round seal on the bottle label states,
"Guaranteed fresh everytime."

Source: Productscan D A T A M O N I T O R

Case Study


Figure 2: Michelob Ultra Light Beer - Low Carbohydrate - UK launch

Image:

Name: Michelob Ultra Light Beer - Low Carbohydrate
Country: UK
Package tags: Low Carbohydrates; Low Calories
Description: Targeting weight-conscious beer drinkers, Michelob Ultra has
recently been introduced to consumers in the United Kingdom
by USA-based Anheuser-Busch, Inc. This Low Carbohydrate
Light Beer contains 2.5g of carbohydrates and 88 calories per
275ml bottle. Featuring five percent alcohol by volume, this
lager is described as a smooth, refreshing beer and is for
consumers who "enjoy a great tasting beer but are attracted to
lower carbohydrates and calories."


Case Study


Figure 3: Michelob Beer Ultra (new packaging)

Image: Non available
Name: Michelob Ultra Beer
Country: USA
Package tags: Single Serving; Low Carbohydrates
Description: Anheuser-Busch, Inc. is launching Michelob Ultra Beer in new
can packaging. The low carb beer will be introduced in 12 fl.
oz. cans.


Case Study


Figure 4: Bacardi Silver Low Carb Premium Malt Beverage - Black Cherry

Image:

Name: Bacardi Silver Low Carb Premium Malt Beverage - Black
Cherry
Country: USA
Package tags: Upscale; Low Carbohydrates; Low Calories; Single Serving
Description: Bacardi Silver Low Carb Premium Malt Beverage has been
introduced in a Black Cherry variety. Sold in a 6-pack of single
serving 12 fl. oz. glass bottles, it is manufactured by
Anheuser-Busch, Inc., located in St. Louis, MO. Said to be a
blending of sweet and tangy black cherries with a hint of
vanilla into a flavored malt beverage, with sucralose, the low-
carb, low-calorie beverage has 2.6g of carbs and 96 calories.


Case Study


Figure 5: "Doc's" Malt Beverage - Hard Lemon

Image:

Name:
"Doc's" Malt Beverage - Hard Lemon
Manufacturer:
Anheuser-Busch
Country:
USA
Package tags: Single Serving; Low Alcohol; Natural; Low Calories; Low
Carbohydrates
Description: The new "Doc's" Hard Lemon Malt Beverage is manufactured
by Anheuser-Busch, Inc. Full page ads promote the new
beverage in a 12 fl. oz. glass bottle. The label is flagged, "Malt
beverage with natural flavors - Alcohol 5 percent by volume."
"Doc's" is said to have been reformulated with lower calories
and lower carbs, while containing a great taste and lemon
refreshment. It is claimed to have 165 calories and 16.5 grams
of carbs per twelve fluid ounces. The "old" Doc's had 253
calories and 39 grams of carbs.


Conclusions

CONCLUSIONS
Anheuser-Busch has successfully rolled out its low carb products in both the US and
the UK by carefully researching its markets. For both nations, the company took its
time to interview and access the opinion of its target audiences.
The company has been careful not to advertise its Michelob Ultra brand as a diet
beer, rejecting affiliation with Atkins Nutritional in favor of marketing it as a lifestyle
brand. It therefore extends its target audience from those on an Atkins diet, to those
people watching their diet, but who are more focused on a good tasting product.
Selected areas were chosen to be the first to introduce the brands, before a national
rollout commenced. This allowed the company to verify that it had selected the
correct marketing strategy for this product before a nationwide launch.
Despite meticulously planning the launch of Michelob Ultra, the company was the first
to market a low carb beer in the US. It therefore benefited from first to market status,
gaining loyal consumers before its rivals could get on the market.
Heavy advertisements in the UK and a sponsorship of the London Marathon ensured
that the UK roll out of Michelob Ultra succeeded. The company has the budget and
consumer support to continue to launch the brand, and its other low carb products, in
other markets and succeed in these markets too.

Research Methodology

RESEARCH METHODOLOGY
This case study was derived from Datamonitor's study of diet and health foods which
was carried out between May and November 2004. The hypotheses presented in this
report were supported by a series of interviews with industry executives, in addition to
secondary literature and in-house sources of information.
Related Research

RELATED RESEARCH
Obesity, low-carb diets and the Atkins revolution

This report analyses the obesity, low-carb diets and Atkins revolution, enabling you to
adapt your products ingredients, labeling and marketing strategy to maximize sales in
this new marketplace.
Published: May 2004
Case Profile: Catering for the Atkins Dieter

This case profile provides details of the trend for low carbohydrate products and
outlines how forecourt players are advised to respond to it.
Published: September 2004
Mealtime Behaviors and Occasions 2004

This report provides a comprehensive analysis of European and American eating
habits, providing the hard numbers on the shifting of traditional meal patterns and
digs deep into the consumer insights and needs driving food choices.
Published: August 2004
Kids and Health: Obesity issues and ethical food and drinks marketing
to children under 16 years old

This report examines the profit opportunities and threats that companies which
manufacture and market food and drinks products to children face over the next three
years.
Published: July 2004

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