Sports sponsorship can lift Budweiser - analyst

Sports sponsorship can lift Budweiser - analyst

Several analysts agree with Anheuser-Busch InBev CEO Carlos Brito that all is not lost for the Budweiser brand in the stagnant US beer market.

Brito said in a rare interview last weekend that he did not believe so-called mega-brands like Budweiser were facing long-term decline in the US.

Consumers' growing thirst for wine and spirits, as well as for small-scale craft and imported beers, has dented the prowess of Budweiser in the US for several years. High unemployment following the US recession has exacerbated the problem by triggering a sharper recoil within the country's beer market.

InBev's reputation as a ruthless cost cutter did not initially inspire confidence in a turnaround for Budweiser following the firm's $52bn buyout of Anheuser-Busch.

However, analysts are increasingly optimistic that A-B InBev has the will and the means to stabilise and, gradually, reinvigorate the Budweiser label in the US.

"The Budweiser mother brand continues to haemorrhage," said Sanford C Bernstein's Trevor Stirling in a recent note.

But, he added: "Contrary to popular noise, AB has seen net share gains in the US from the launch of new innovations and line extensions. Core Bud Light is under pressure, but the broader franchise is up due to Bud Light Lime. Bud Select 55 is off to a good start."

While Stirling still sees the Budweiser original brand in long-term decline, new launches are holding up the brand equity as a whole. Budweiser accounts for 19% of A-B InBev's volumes, while Bud Light and its extensions account for 41%.

Gerard Rijk, of commercial bank ING, said that he expects A-B InBev to improve in the US as the company increases advertising and promotion spend.

"In marketing and A&P, there is a clear move towards and strong focus on sports marketing for the megabrands Bud Light and Budweiser," Rijk said in a note this month.

"In combination with improved execution and cooperation with wholesalers (reconnecting), the early signs of gaining back market share from MillerCoors in the premium/mainstream segment are visible," said Rijk.

A-B InBev has around a 49% share of the US beer market by volume, with MillerCoors its closest challenger on around 30%. 

"We see no reason why ABI USA will not return to a growth path of around 0.5-1% in volumes mainly based on demographics, a slight GDP recovery and stabilising employment," Rijk added.

Bernstein's Stirling predicted that the US beer market would grow by 1% annually in volume terms over the medium-to-long-term.

While A-B InBev seeks more stability for Budweiser in the US, the group has already begun stepping up efforts to increase the brand's international sales. The firm recently launched Budweiser in Russia and analysts expect that it will seek to push the brand in Brazil's premium beer category.

Those who hold that InBev's ethos revolves around trimming fat from its business, then, could be in for a surprise over the next couple of years.