Anheuser-Busch Companies, Inc.

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Anheuser-Busch Companies, Inc.

BEER … OR MICHELOB? CAMPAIGN
FROGS CAMPAIGN
I LOVE YOU, MAN CAMPAIGN
LOUIE THE LIZARD CAMPAIGN
OH, AND BEWARE OF THE PENGUINS CAMPAIGN
REAL AMERICAN HEROES/REAL MEN OF GENIUS CAMPAIGN
WHASSUP?! CAMPAIGN

1 Busch Place
St. Louis, Missouri 63118
USA
Telephone: (314) 577-2000
Fax: (314) 577-2000
Web site: www.anheuser-busch.com

BEER … OR MICHELOB? CAMPAIGN

OVERVIEW

In 1998 Anheuser-Busch Companies, the Saint Louis, Missouri-based brewery best known for its premium Budweiser and Bud Light beers, greatly increased the advertising budget of its Michelob line of superpremium beers. After spending just over $17 million in 1996 and even less in 1997 on promoting Michelob, Anheuser-Busch devoted an estimated $30 million to the brand in 1998, primarily for a television-based campaign created by Leap Partnership of Chicago. Using the tagline "Beer … or Michelob?" the campaign sought to differentiate Michelob from a confusing plethora of super-premium, specialty, and microbrewery brands flooding the U.S. market. It placed particular emphasis on publicizing Michelob Light, which was widely seen as having more potential for sales growth than its full-calorie Michelob siblings.

The humor-based television spots broke during CBS's broadcast of the Winter Olympics from Nagano, Japan, in February 1998 and continued with little conceptual modification through 2001. One characteristic spot featured an actor unwilling to order a beer in a scene that called for him to do so; instead, he insisted on ordering a Michelob. Other prominent spots in the campaign focused on a negligent grocery-store employee whose bagging technique changed radically for the better when a customer purchased Michelob Light. The campaign began to focus more on Michelob Light, and the tagline was adjusted to "Beer … or Michelob Light?" Print gradually became a more prominent element of the increasingly robust campaign; by 2001 Anheuser-Busch had boosted its budget for the Michelob brand family's marketing to an estimated $50 million.

Michelob Light sales grew each year that "Beer … or Michelob?" ran. Although it was true that the brand had been growing since 1993, increases in sales growth closely mirrored increases in Michelob's advertising budget.

HISTORICAL CONTEXT

In 1852 George Schneider founded the Bavarian Brewery in St. Louis, but in 1860 he sold it to Eberhard Anheuser. The latter hired his son-in-law, Adolphus Busch, in 1864, and in 1872 they first used the "A and Eagle" trademark that would evolve into the logo of Anheuser-Busch. The U.S. centennial year of 1876 saw the introduction of Budweiser, a brand created to resemble beers from Bohemia in Central Europe. Twenty years later, in 1896, the company introduced Michelob as "a draft beer for connoisseurs."

The company took the name Anheuser-Busch in 1919, the same year the Eighteenth Amendment outlawed the production and sale of alcoholic beverages in the United States. For the next 14 years, as America underwent Prohibition, the company turned to a variety of enterprises such as bottling soft drinks and selling yeast. It even produced a nonalcoholic version of Budweiser. But when Prohibition was repealed in 1933, August Busch, son of Adolphus, personally delivered a case of Budweiser to President Franklin D. Roosevelt in a carriage pulled by a team of Clydesdale horses. The latter would become the Anheuser-Busch symbol, and their use would be closely tied to the Budweiser brand in coming years.

By 1957 Budweiser had become the nation's most popular brand of beer, a position it still held more than 40 years later. Anheuser-Busch diversified its holdings into a number of nonbeverage enterprises and expanded internationally during the 1970s and 1980s. In 1981, responding to the growing market for light beers, it introduced the first extension in what would become the Michelob family of beers: Michelob Light. The latter became America's first brand of superpremium light beer. Three years later, in 1984, the brand added Michelob Classic Dark, which it billed as "the ultimate in dark beers." Finally, as part of yet another industry-wide trend, in 1988 Michelob presented Michelob Ice, for which it also claimed status as the nation's first super-premium dry beer.

TARGET MARKET

Michelob's 1998 advertising placed an emphasis on Michelob Light, part of a larger light-beer category that had grown by 3 percent in the preceding year. By contrast, Anheuser-Busch's Budweiser Light—better known as Bud Light—had seen its revenues grow by more than 16 percent in the same period. And because Michelob Light had performed better than any brand in the Michelob family during the preceding year, accounting for 50 percent of Michelob revenues, Anheuser-Busch elected to divert much of its Michelob budget toward the light brand.

"Beer drinkers may be couch potatoes," a supermarket category manager told Chain Drug Review in March 1998, "but if they can't rouse themselves to shed their fat with exercise, at least they want to slow the weight gains. If they drink a light beer with their baked chips, they can tell themselves they're not neglecting their health." This somewhat derogatory assessment carried more than a grain of truth: light beers appealed to a category of buyer that on the surface might seem like a contradiction in terms—beer drinkers concerned about health and fitness. But of course at heart there was nothing truly contradictory about the desire to enjoy a premium beer on the one hand and the desire not to gain excess pounds on the other. Thus a large portion of the nation's top-selling brands were light beers. Furthermore, the association of beer and sports, symbolized by Michelob's launch of its campaign with the Winter Olympics in February 1998, was an old one.

What was new, however, was Michelob's thrust: along with a drastic increase in spending for the brand's advertising, spots drew attention to Michelob's traditional image in a way that many Michelob ads in recent years had not. "In 1896," Michelob brands vice president David English told Chain Drug Review, "Adolphus Busch created Michelob as a beer for connoisseurs—a step above the ordinary. That image has been blurred by the proliferation of micros [beers marketed by micro-breweries], specialties, and imports in today's market. Our new campaign returns to Michelob's 102-year heritage as the worldwide symbol of brewing excellence."

COMPETITION

Anheuser-Busch and Michelob were not the only ones profiting from the steadily increasing interest in light beers. Miller Brewing Company's Miller Lite, as well as Coors Light, a product of the Adolph Coors Company, had also shown noticeable increases during 1997. But data presented in Prepared Foods in March 1998 showed that Anheuser-Busch held a formidable share of the top brands.

First, of course, was Budweiser, followed by Bud Light. Fifth and sixth places belonged to Busch and Natural Light, and Busch Light was in ninth place, bringing Anheuser-Busch's holdings to a total of 5 out of 10 slots on the top-10 list. Miller held three spots with Miller Lite, Miller Genuine Draft, and Miller High Life. The other two spots belonged to Coors Light and Milwaukee's Best. Michelob Light stood in 13th place, followed by Michelob.

As a superpremium beer, Michelob was hardly likely to make the top-10 list, which in fact included no super-premium brands. Among its prominent competitors were Heineken from Holland and Lowenbrau and Beck's from Germany. Closer to home was Samuel Adams, which used marketing tied to American heritage themes in order to establish a link between itself and the Founding Father whose name it had adopted as its own. In 1997 Anheuser-Busch ran an ad in the Boston area, drawing attention to the fact that, whereas Samuel Adams used images of Revolutionary War—era Boston in its advertising, it was Michelob that actually had a bottling plant in that city.

Michelob also competed with a number of other superpremium brands as well as specialty beers and microbrews. The latter were extremely small operations that typically sold their products only in local markets.

MARKETING STRATEGY

In 1995 Michelob had ended a long relationship with the ad agency D'Arcy Macius Benton & Bowles and selected Glennon Company of St. Louis as its primary agency—though not necessarily its agency of record, since Anheuser-Busch had recently adopted a policy of working with several firms. Among Glennon's spots had been the "Gimme Guys," a May 1997 campaign tied to a golf-ball giveaway promotion.

Such advertising, based as it was in a raucous brand of humor more typical of Budweiser, was at odds with the strategy Michelob had employed in the 1980s, when its television spots had carried the tagline "Some things just speak for themselves." The latter campaign had stressed the image of quality associated with the brand; and for its 1998 advertising Michelob sought to use both quality and humor.

In the fall of 1997 Anheuser-Busch replaced Glennon with Leap Partnership as the lead agency on its Michelob account. It also announced, at the end of the year, a decision to raise its overall advertising budget 22 percent, or $70 million. As 1998 rolled around, Anheuser-Busch let it be known that it would invest a full $30 million on a brand-family campaign for Michelob. This represented a significant jump over previous years: in 1996 the parent company had devoted about $17 million to advertising for its superpremium beer, and during the first half of 1997 it spent only $3.7 million on Michelob. With "Beer … or Michelob?" the company presented what Anheuser-Busch vice president for brand management Bob Lachky called "situational spots" designed to emphasize the brand's quality image while using humor. Thus, James B. Arndorfer reported in Advertising Age, "The TV spots will be similar in spirit to those for Bud Light, but less wacky."

"Beer … or Michelob?" was launched with two commercials that first aired during the CBS broadcast of the 1998 Winter Olympics from Nagano, Japan, in February. One showed a movie actor in the middle of a scene in which his script called on him to ask for a beer; however, he could not seem to restrain himself from asking specifically for a Michelob Light—much to his director's consternation. Another spot, targeting female viewers, was entitled "Surprise." In it, a woman returned home from a shopping trip—during which she had bought a sexy item of lingerie—to find a note from her husband suggesting that she grab two Michelobs and meet him in the living room. Before doing so, however, she put on her new purchase, then tiptoed into the darkened and quiet living room. Suddenly, the lights came on, and she found herself surrounded by a crowd of family and friends shouting "Surprise!" Painfully embarrassed, she saw her parents among the group and said timidly, "Hi, Daddy." Outdoor, radio, and point-of-purchase advertisements supplemented the TV spots.

A 'Kinder, Gentler' Olympics

"I think you'll find a lot of kinder, gentler advertising in the Winter Olympics," Advertising Age sports-marketing writer Jeff Jensen told Keith J. Kelly of the New York Daily News. The phrase "kinder, gentler," of course, was borrowed from Vice President George Bush's successful 1988 campaign for the White House, but Jensen was referring to the 1998 Nagano Winter Olympics' emphasis on advertising geared toward women. With events that tended to be more popular among female viewers than male, the Winter Games typically drew a much larger ratio of women viewers than did the Summer Olympics. Hence advertising tended to be more specifically geared toward women.

A Michelob Light spot, part of Anheuser-Busch's "Beer … or Michelob?" campaign, was to be directed toward the female demographic group, as was a Ford Taurus commercial showing a female doctor driving a Taurus to a hospital to deliver a baby. Ford spokesman Joe Koenig said, "In years past, that might have been a man driving the car." Nike ran spots that included poetry written by female high school athletes, and other Nike commercials featured female athletes such as skier Picabo Street and hockey player Cammi Granato.

A John Hancock Mutual Life spot, while not geared specifically to female viewers, certainly carried a serious, thoughtful message. In fact, the commercial was not a pitch for John Hancock so much as a plea for viewers to donate to the Sarajevo Olympic Children's Fund. Visuals were made up of footage from the 1984 Winter Games, held in that city, which was then part of Yugoslavia. This was combined with scenes of war-torn Sarajevo, which, as the capital of independent Bosnia and Herzegovina since 1992, had been the site of bitter ethnic fighting. A voice-over by actress Sigourney Weaver stated, "The children of Sarajevo never forgot the Olympics. Please don't forget them."

The campaign's creative strategy remained consistent throughout its three-year run, with later TV spots continuing to use situational humor reminiscent of other Anheuser-Busch brands' marketing. One well-known commercial that first ran in late 1999, for instance, showed a grocery-store bag boy handling a customer's purchases with exaggerated carelessness. After shoving a potted plant upside-down into a bag and ruining a loaf of French bread, the bag boy came to the customer's six-pack of Michelob Light and changed his behavior radically, packing the beer in bubble wrap, bagging it with care, and marking the bag "Fragile." The bag boy was used again in TV spots that aired in 2000, and the same concept was applied to commercials featuring a bartender.

The "Beer … or Michelob?" TV spots typically appeared during prime-time sports programming, and print ads in sports magazines became an increasingly prominent element of the campaign beginning in 1999. The campaign's emphasis on Michelob Light resulted in a gradual tagline modification to "Beer … or Michelob Light?" and Anheuser-Busch continued attempting to drum up interest in the brand among women, most notably through sponsorships of women's professional tennis and women's professional golf. There was also a 2000 print element that specifically targeted women. The campaign's budget consistently increased as Michelob Light experienced sales growth each year after it began. The previously unprecedented $30 million budget of the campaign's first year grew to an estimated $34 million in 1999. The next year the budget increased by an additional 20 percent, and in 2001, the campaign's final year, Anheuser-Busch spent an estimated $50 million on advertising for Michelob beers.

OUTCOME

In 1998 Michelob Light sales topped the 2.6 million barrel record that the brand had reached in 1996, up from a sales low of 2 million barrels in 1992. As Advertising Age noted, demographics, distributor interest, and economic factors also converged to aid the brand's resurgence, but the disparity between the brand's 1997 and 1998 sales levels corresponded clearly with the 1998 increase in the Michelob advertising budget. Indeed, sales of Michelob Light had grown every year since 1993, with the exception of 1997, when Anheuser-Busch spending on behalf of the brand was at its low ebb. Anheuser-Busch accordingly continued to ratchet spending higher in subsequent years, and sales of Michelob Light continued to grow.

In 2001 Anheuser-Busch asked the numerous advertising agencies on its roster, including Leap Partnership, to pitch new Michelob campaign ideas. The brewer eventually awarded the account to Goodby, Silverstein & Partners, the San Francisco agency that shared the primary advertising duties for Anheuser-Busch's Budweiser brand. The resulting 2002 Michelob Light campaign, "Nice Finish," marked a departure from the humor-based approach with which Leap Partnership had found success. That year also marked the introduction of Anheuser-Busch's enormously popular low-carb offering, Michelob Ultra, which overshadowed Michelob Light amid the growing consumer obsession with low-carbohydrate diets.

FROGS CAMPAIGN

OVERVIEW

Founded in St. Louis, Missouri, in 1860, Anheuser-Busch rose to become the largest brewing company in the world, largely because of the success of its flagship brand, Budweiser. But Budweiser's sales began to slow in the late 1980s. Indeed, the three largest beer makers in the United States—Anheuser-Busch, Miller Brewing Company, and Coors Brewing Company—realized with dismay that Americans were drinking less alcohol. Moreover, consumers aged 21 to 27—the key market for beer sales—were turning away from these three traditional breweries and were instead embracing the beers produced by smaller, often local microbreweries. In 1994 Anheuser-Busch responded to these challenges by firing its ad agency of 79 years, D'Arcy, Masius, Benton, & Bowles. Anheuser-Busch wanted to craft a new image for Budweiser that would appeal to younger consumers without alienating loyal Budweiser drinkers.

After hiring a new advertising agency, DDB Needham, Chicago, Anheuser-Busch launched its Budweiser "Frogs" campaign. The commercials featured animatronic (a form of animation) frogs who croaked out the brand's name one syllable at a time: "Bud"-"Weis"-"Er." The original frog spot debuted during the 1995 Super Bowl and showed the amphibians on lily pads. At first it sounded as if the frogs were making nonsensical noises, but eventually the three distinct syllables came together to form the brand's name. A neon Budweiser sign hung in the background. "Frogs II," the second commercial in the campaign, showed the frogs waiting by the side of a road as they croaked out the brand's name. As a Budweiser truck passed by, they latched onto the side with their tongues. "Frogs III," which was first aired on ABC's Monday Night Football, introduced a female frog. The commercial began with the male and female calling back and forth "Bud" and "Weis" respectively, as the male sought to hone in on the sultry female's location. The "Er" was provided in a sort of chuckle by the male as he finds the female. "Frogs IV" took the amphibians to a snowstorm, where they continued to call out "Bud"-"Weis"-"Er" undeterred by the cold that froze their tongues.

Although Anheuser-Busch took strong criticism during the "Frogs" campaign from groups such as Mothers Against Drunk Driving (MADD), who claimed the commercials were targeting children, the campaign was immensely popular. The commercials topped USA Today's Ad Track, a poll that measured the popularity and effectiveness of ad campaigns. According to Advertising Age, the "Frogs" campaign resulted in a tripling of the younger target group's awareness of Budweiser. In 1997 Anheuser-Busch phased out the "Frogs" campaign by introducing two lizards to replace the frogs. The company did not want to overexpose the concept. "We expect our advertising to stay ahead of the curve," said August A. Busch IV, Anheuser-Busch's vice-president of marketing, in Advertising Age. During their run, the frogs had proved to be a great success for the company. They were able to effect a dramatic change in the way consumers, particularly the coveted young adult market, viewed Budweiser.

HISTORICAL CONTEXT

In 1860 a German immigrant named Eberhard Anheuser bought the Bavarian Brewery in St. Louis, Missouri. Four years later, his son-in-law, Adolphus Busch, began working there, and in 1876 the two introduced Budweiser Beer to the world. Renamed Anheuser-Busch in 1879, the company grew to become the largest brewer in the world. By 1986 Anheuser-Busch had brewed a billion barrels of beer.

Anheuser-Busch also had a long history of distinctive advertising. Pre-Prohibition ads sought to appeal to various ethnic groups and featured figures such as Otto Von Bismarck and the Scottish folk hero William Wallace. The famous Clydesdale horses, which became the company's symbol, were first used to sell Budweiser in 1933. At their first public appearance they delivered Budweiser to the White House. In the 1940s and 1950s brewers strove to gentrify their products; Anheuser-Busch used the slogan "Beer Belongs" in ads picturing middle-class families sipping beer from Pilsner glasses. By the 1970s, however, beer ads were omnipresent on televised sports programs, and brewers began to "celebrate the traditional values of the American male: sports, camaraderie, and hard work," according to the Wall Street Journal. In 1979 Anheuser-Busch's long-time ad agency, D'Arcy, Masius, Benton, & Bowles, conceived of the "This Bud's For You" campaign, which featured construction workers, lumberjacks, and laborers. These men were saluted "for being on the job and working hard all day long." The company stayed with this advertising theme throughout the 1980s, often running ads portraying manly Bud drinkers surrounded by women in various states of undress. By 1994 Budweiser maintained a market share of 21.9 percent of all beer sales, but sales growth was flattening and Anheuser-Busch realized that a new marketing approach was needed.

TARGET MARKET

As the nation's largest brewery, Anheuser-Busch was hit hard by some shifts in American drinking habits and demographics. The number of 21- to 27-year-olds, historically the group who drank the most beer, fell by about 3 million between 1990 and 1998, from 27.6 to 24.6 million. Not only did this group consume more beer than others but they also formed their beer brand loyalty during this period of their lives. For the most part, what they learned to drink during these years was what they continued to drink throughout their lives. These "entry-level drinkers" of the 1990s were media-savvy and, according to the Sacramento Bee, "both highly brand conscious and notoriously lacking in brand loyalty." Compounding these challenges was the fact that this segment of the population was increasingly turning to trendy microbreweries instead of the established giants such as Anheuser-Busch for their beer. These smaller breweries tended to produce darker, richer beers, sometimes with more exotic flavors that included essences of fruits and nuts.

Anheuser-Busch crafted the "Frogs" campaign specifically to appeal to this demographic group. According to the St. Louis Business Journal, "Budweiser needed to regain trends with 20—somethings to maintain and grow its total share. No normal Generation X campaign would work." Nor would the company's traditional marketing style. As the Wall Street Journal noted, "Anheuser-Busch was concerned that [its] image was getting stale, with its ads featuring scantily clad women and gritty blue-collar workers." Although D'Arcy, Masius, Benton, & Bowles first developed the concept of the beer-hawking frogs, its was DDB Needham, Chicago, that brought the idea to its full fruition.

In order to recapture this group that avoided "drinking their father's beer," Anheuser-Busch wanted the Budweiser campaign to captivate its audience. The "Frogs" commercials were meant to entertain the viewer with a more ironic sense of humor. A Manhattan analyst told the Sacramento Bee that the ads had a "twisted, childish humor" that appealed to the under-30 set. The ads were intended to project a fresher, more youthful image, with a sensibility that was more modern than some of the older themes commonly perceived as sexist by the younger generation.

The resulting commercials were noticeably devoid of any "hard sell" tactics. For a generation raised on sitcoms and commercials, image was often an end in itself. "They look at advertising and marketing as almost a spectator sport," a marketing analyst told the Sacramento Bee. The "Frogs" campaign also appealed to its target market because of its inclusiveness. Using animals as the new beer mascots allowed Anheuser-Busch to step away from earlier campaigns with their pervasive bikini-clad barflies and all-American tough guys that frequently offended women. As late as the 1970s, beer was characterized as a "20/80 product," which meant that 20 percent of the population drank 80 percent of the beer. Women were not a part of that 20 percent. As time passed, women accounted for greater percentages of beer sales. Young men, however, still comprised the core of the beer-drinking market. The quirky "Frogs" campaign allowed Anheuser-Busch to "communicate with young men without offending women," according to the Milwaukee Journal Sentinel. The ads could imbue Budweiser with an off-beat personality without risking going overboard. "Animals don't focus on gender. Advertisers don't have to worry if it's a man or a woman or how the man or woman is behaving," the Journal Sentinel noted. As the success of the amorous amphibians in "Frogs III" demonstrated, this campaign was also able to play on the traditionally sexist slant of beer advertising.

Additionally, the "Frogs" campaign enabled Anheuser-Busch to include minorities in its marketing message. Traditionally, beer advertising shunted minorities over to "malt liquor" products, such as Anheuser-Busch's own King Cobra malt liquor, Michelob Malt, and Hurricane Malt Liquor. By 1996 Anheuser-Busch had begun to dedicate separate Budweiser ad campaigns featuring rap stars and R & B music to appeal to African American and Hispanic markets. Census data in the mid-1990s predicted that the number of African Americans and Hispanics would grow at a much greater rate than the white population and that combined the two minorities would represent nearly a quarter of the U.S. population by 2000. Given this information, Anheuser-Busch recognized the advantages of a campaign that did not turn away any potential consumers.

As much as it needed to update Budweiser's image for a new generation of beer drinkers, Anheuser-Busch and DDB Needham understood that the "Frogs" campaign had to walk a fine line. In seeking out a new market, they could not alienate loyal Budweiser drinkers—those over the age of 30 for whom Budweiser was clearly the beer of choice. For this reason Anheuser-Busch continued to release other advertising targeting a more traditional audience at the same time that the "Frogs" campaign was aired. For example, August Busch III, chairman of the company, appeared in one series of commercials that stressed Anheuser-Busch's century-old heritage and its exacting standards of quality. But the St. Louis Business Journal found that Budweiser was such "an elite brand" and was "so well entrenched that [it could] step outside the traditional rules."

COMPETITION

Anheuser-Busch was not the only large brewery to grasp the potential impact of shifting demographics and new marketing needs. In 1995 beer sales declined 1.5 percent, a figure that reflected a decade of stagnant beer sales. Budweiser's most significant mainstream competitor, Miller Brewing Company, took note of Budweiser's success in building a brand personality through quirky advertisements such as those in the "Frogs" campaign. The advertising agency Wieden & Kennedy oversaw the marketing efforts for Miller Genuine Draft, the brand that competed most directly with Budweiser. Miller's new campaign featured grainy black and white images of young people drinking beer and dancing. The scenes presented stylized images reminiscent of the early 1970s, and in fact one commercial borrowed heavily and deliberately from the classic film A Clockwork Orange. Under the tag line of "It's Time to Drink Beer," the Miller ads asserted the implicit "hipness" of drinking a "good old-fashioned macro-beer" (in the words of one of the commercials).

Miller intended its campaign to reach the same demographic target as Budweiser's "Frogs" campaign. "The greatest opportunity to influence your business—the most evolving dynamic—is in the 21- to 30-year-old group," a spokesperson for Miller told Beverage World. Like Anheuser-Busch, Miller recognized the need to reach out to previously neglected segments of the American beer-drinking market by designing spots that did not exclude women or minorities. As Tom Dudrek, a senior vice president ad the advertising agency Leo Burnett, told Crain's Chicago Business News, "[Beer advertising] is not as Neanderthal. I don't think you see the Swedish Bikini Team anymore."

In addition to facing competition from other large-scale breweries, such as Coors, Stroh, Pabst, and Genesee, Budweiser was also losing business to smaller breweries that claimed to produce a higher-quality beer. These more expensive labels, including Samuel Adams and Pete's Wicked Ale, could not hope to approximate the sheer volume of Budweiser's sales. But the higher-end beers did appeal disproportionately to younger consumers, who liked the cache of these more elite brands. Even smaller regional breweries, such as Henry Weinhard of Portland, Oregon, developed strong local followings based on word-of-mouth reputation, not glitzy advertising campaigns. Anheuser-Busch was thus in danger of having its market share eroded from all sides.

MARKETING STRATEGY

Anheuser-Busch, however, could not rely on word-of-mouth to update Budweiser's image as the "King of Beers." Instead, the company pumped millions of dollars into a media blitz for its "Frogs" campaign. Although the company was unwilling to disclose how it allocated its nearly half billion dollar annual advertising budget among its various products, company publications termed the "Frogs" campaign a "total advertising effort" encompassing radio, print, and television ads. The frogs also appeared on billboards, hats, t-shirts, and other paraphernalia. In addition, their biographies were recounted on Budweiser's web site.

The most attention was devoted to the "Frogs" television commercials, however, because they could reach the greatest number of consumers. The "Frogs" spots each debuted during prime-time, "event" sports broadcasting. The first ad in the campaign premiered during the 1995 Super Bowl. The Super Bowl was generally the most-watched television program of the year, and this status has made it the launching pad for some of the highest-profile advertising campaigns in television history. In fact, the commercials have been known to eclipse the game itself in terms of stimulating viewer interest. Anheuser-Busch's goal was to use this huge stage to create a "buzz" around the unique "Frogs" spot, which would in turn generate more attention for the Budweiser brand. When this approach proved successful, Anheuser-Busch decided to continue its launch strategy. "Frogs III" was introduced during ABC-TV's popular Monday Night Football broadcast, while the fourth installment in the campaign debuted during the 1996 Super Bowl.

KIDS AND FROGS

Anheuser-Busch's advertising blitz impressed its frogs deep into the consciousness of American consumers. In fact, a survey done by the Center for Alcohol Advertising, based in Berkeley, California, revealed that children between the ages of 9 and 11 years old could more readily identify the Bud frogs than other advertising icons such as Tony the Tiger and Smokey Bear (as well as the Mighty Morphin' Power Rangers). Only Bugs Bunny was more recognizable to this age group than the frogs. Some commentators took this survey as evidence that Anheuser-Busch was targeting underage drinkers. Others, however, attributed this result simply to Budweiser's heavy marketing. "If Tampax Tampons advertised as much as Budweiser, they'd have the same product recognition," wrote columnist Tom Jackman in the Kansas City Star. Anheuser-Busch firmly denied that its ads were intended to encourage underage drinking and noted that it spent over $20 million per year to discourage alcohol and drug abuse.

Because the campaign was designed to change the image of the tremendously well-known product rather than introduce it to consumers, the ads did not contain a great deal of specific information about Budweiser. Instead, the commercials sought to create a hip status for the brand in order "to fashion a more positive consumer attitude to [the beer]," as Anheuser-Busch executive Robert Lachky told the Chicago Tribune. By using humor, entertainment, and sheer exposure, Anheuser-Busch strove to forge a more emotional connection with its target audience through the "Frogs" campaign.

The company also wanted to ensure that virtually every consumer in America would be exposed to its message. To achieve this end, Anheuser-Busch saturated the market with a barrage of television and radio spots, as well as billboards, print ads, and special promotions. The frogs' ubiquity and immense popularity was a great boon to Budweiser (nearly 50 percent of consumers surveyed by USA Today's Ad Track poll after the campaign's debut said they like the ads "a lot"—the highest mark recorded by the survey in 1995).

OUTCOME

Anheuser-Busch executives declared the "Frogs" campaign to be a success. Lachky told USA Today that "Budweiser was losing market share and the new ads helped to turn the brand around." He further emphasized that the commercials were "especially popular among core 21- to 27-year-old consumers." Industry analysts agreed with Anheuser-Busch's assessments. Advertising Age asserted that the campaign tripled its targets' awareness of the brand. Consumers seemed to concur. The ads topped USA Today's Ad Track poll for three months straight. Other USA Today surveys revealed that the "Frogs" campaign appealed to viewers across income and age lines. The ads were well received in the advertising industry as well. The campaign won a slew of awards, including several Clio Awards and the prestigious Silver Lion Award at the 1995 Cannes Film Festival.

Not everyone commended the "Frogs" campaign, however. According to USA Today, elementary school children were quite familiar with the campaign and its famous frogs. Critics alleged that this demonstrated that these "critter" campaigns actually targeted children, thereby encouraging underage drinking (and building a future market for beer sales). Anheuser-Busch denied that the Budweiser ads were designed to draw in children. "Watching a beer ad does not cause a kid to drink," Anheuser-Busch's head of consumer awareness told the newspaper.

Eventually Anheuser-Busch did end the "Frogs" campaign—at least those ads that exclusively featured the frogs. Company officials denied that the decision was related in any way to pressure exerted by children's interest groups. Instead, Anheuser-Busch stated that it did so in order to ensure that the campaign, and thus the image of the brand it supported, remained fresh and positive in consumers' minds. In subsequent ads, two lizards with Brooklyn accents were introduced. Frank and Louie, as they were called, plotted to overthrow the frogs' successful reign as Budweiser "spokesfrogs."

I LOVE YOU, MAN CAMPAIGN

OVERVIEW

Anheuser-Busch Companies, the largest beer maker in the world, introduced Bud Light to its product line in 1982. In those days the light beer market was relatively young and was dominated by Miller Lite, a beer made by Anheuser-Busch's main competitor, the Miller Brewing Company. "Light" beers are so named because they contain fewer calories (and less alcohol) than "regular" beer. To create a market niche for its new product, Anheuser-Busch relied heavily on creative advertising campaigns to generate consumer awareness about its new brand and to alter the perception that Miller Lite was the only reduced-calorie beer available on the market. This approach proved to be quite successful, and Bud Light steadily gained in sales and market share at the expense of Miller Lite. By 1993 Bud Light had overtaken Miller Lite to become the best-selling light beer in the United States.

In the mid-1990s, however, the entire beer market had begun to slump as American alcohol consumption declined overall. Moreover, demographic trends indicated a decrease in the number of consumers between the ages of 21 and 30, the prime beer-drinking years. Bud Light was particularly affected by this decline. It lost its number-one position in the light beer market back to Miller Lite and struggled to create an advertising campaign that could reinvigorate its sales figures. To halt this decline, Anheuser-Busch turned to the DDB Needham advertising agency, the shop that had created the initial Bud Light campaign in 1982 that launched the brand to prominence.

DDB Needham sought to craft a campaign that would appeal to a generation of young men raised on sitcoms and commercials but that would also not alienate either older drinkers or women, who might prefer a light beer because of its lower calorie count. The "I Love You, Man" campaign, which debuted in 1995, was designed to serve these multiple goals. The first spot of the campaign featured "Johnny," a scruffy-looking man in his mid- to late thirties fishing off the end of a pier with his father and brother. Saucer-eyed, Johnny looks over to his father and says, in a voice redolent with emotion, "Dad. Well, you're my dad. And I love you, man." His father eyes him coolly and responds, "You're not getting my Bud Light, Johnny." Subsequent commercials showed Johnny pulling similar faux-sincere beer scams on his brother and girlfriend, always without success.

Anheuser-Busch ran the commercials heavily during major sporting events, including Major League Baseball's World Series and the Super Bowl, generally the highest-rated television broadcast of the year. Marketing surveys revealed the campaign's popularity. A poll conducted for USA Today by the Louis Harris Company revealed that 34 percent of those surveyed liked the "I Love You, Man" spots "a lot," which compared quite favorably with the 23 percent average for other commercials rated. As the "I Love You, Man" tag line insinuated its way into popular culture (actor Rob Fitzgerald, who played Johnny, appeared on David Letterman's latenight show), Anheuser-Busch sought to expand the campaign's appeal. Fitzgerald was featured in profiles in People magazine and USA Today, and DDB Needham strove to develop new scenarios in which Johnny could beg for Bud Light.

The fourth and final "I Love You, Man" commercial debuted during the 1996 Super Bowl and featured actor Charlton Heston. In it Johnny crashes a Hollywood party and meets the Bud Light-drinking Heston, who is perhaps best known for his roles as Moses and in the movie Planet of the Apes. Heston coaches Johnny on how to say the famous line but remains immune when Johnny turns the appeal on him. "Since the viewers already know the punch line, we needed to take Johnny's character someplace bigger," campaign creator David Merhar told Life magazine. "Everything leading up to the line had to be the funny part."

The campaign was a resounding success. Bud Light sales rose 12 percent while the "I Love You, Man" commercials ran, recapturing the number one slot in the light beer market and rising to become the second best-selling beer in the United States, behind only Anheuser-Busch's flagship brand Budweiser. Wary of overexposing the premise, Anheuser-Busch quietly ended the campaign in 1997.

HISTORICAL CONTEXT

When Anheuser-Busch brought out Bud Light in 1982, the light beer market was dominated by Anheuser-Busch's closest competitor, the Miller Brewing Company, and its Miller Lite beer. Miller's advertising campaign, featuring famous retired athletes and other well-known personalities debating whether Miller Lite was a superior beer because it tasted great or because it was less filling, established the brand as a major feature of the beer landscape. Miller Lite's success demonstrated the impact a popular advertising campaign could have on sales volume in the highly competitive beer market and the growth potential for light beers in general. Anheuser-Busch wanted to tap into this growing market with Bud Light.

Anheuser-Busch's first ad campaign in support of its new offering focused on generating name recognition for the brand and altering the consumer's assumption that light beer meant Miller Lite. This television campaign presented various people walking into bars and saying "Gimme a light." In response, they were offered items ranging from neon signs to dogs jumping through flaming hoops to blowtorches. "No," the surprised consumers would respond, "Bud Light." The humorous ads were quite successful, and Bud Light gradually began to erode Miller Lite's commanding share of the market.

Bud Light's advertising success continued with the 1987 launch of its Spuds McKenzie campaign. This series, featuring a bull terrier dubbed "the original party animal," followed the exploits of this ladies' hound as he celebrated life and Bud Light in the company of skimpily dressed women. Boosted by the popularity of this campaign (which generated an entire subindustry of Spuds paraphernalia, including tee shirts and hats), Bud Light sales continued to climb. However, the Spuds ads also drew heavy criticism from parents and anti-alcohol groups concerned that the use of the endearing canine was intended to appeal to children under the legal drinking age. Anheuser-Busch adamantly denied any intent to target people under age 21, but the company also responded by recasting Spuds as a youthful executive striving to spread a message encouraging responsible drinking. This shift did not placate the critics, and the campaign was discontinued in 1989. Anheuser-Busch rejected the notion that the Spuds ads were eliminated because of outside pressure. But as a senior executive at DDB Needham, the agency that created the ads, told the Wall Street Journal, "You have to pay attention to what's being said. If you don't, the heat gets hotter."

Bud Light's strong growth continued through the early 1990s. By 1993, Bud Light had overtaken Miller Lite as the best-selling light beer in the United States. Moreover, the light beer market as a whole continued to expand. "Unlike the diet segment in soft drinks," Beverage Marketing Corporation chairman Michael Bellas said in Beverage World, "the light category is a significant [part of the entire beer market,]" rather than just a small subcategory of its own. By 1997 three of the five best-selling beers in America were light beers: Bud Light, Miller Lite, and Coors Light.

Bud Light could not afford to rest on its laurels, however. While light beer's share of the beer industry grew, total beer sales volume flattened throughout the early and mid-1990s. According to the Milwaukee Journal-Sentinel, this stagnation could be attributed to "the changing tastes of baby boomers … and lack of enough 21 year olds to take their place." Bud Light was hit particularly hard in the mid-1990s, ceding its newly acquired primacy back to Miller Lite.

TARGET MARKET

Anheuser-Busch targeted its Bud Light advertising predominantly to the 21 to 30-year-old market. Twenty-somethings consumed more beer than people in any other age bracket. As the Milwaukee Journal Sentinel noted, "Beer consumption declines with age. The biggest drop occurs when a person reaches 34, [but] with a majority of the population over 30, the [beer] industry has reached a glass ceiling." Moreover, drinkers in their twenties were more liable to form their lifelong brand preferences during this decade of their lives. A spokesman for Miller Brewing Company concluded in Beverage World that "the most evolving dynamic is the 21- to 30-year group…. It would take a lot of pounding away to try to accomplish a [brand] switch [after that]."

Although not wanting to ignore older consumers, especially the increasingly health-conscious baby boomers who might be more drawn to a lower-calorie beer, the company recognized the significance of the youth market. "Marketing, and 21- to 30-year-old men's receptivity to it, is absolutely critical to a beer brand's success," Budweiser's vice president of brand management Bob Lachky told the Dallas Morning News. DDB Needham attempted to reach this market by crafting ads that were irreverent and entertaining. This approach was a necessary one to reach this audience. As Mark Johnson, director of brand management for Miller Lite told the Sacramento Bee, "This is a savvy audience. They started shopping earlier, they've had candy marketed to them, they've had Channel One in their classrooms. They've been there, they've done that, they've bought the t-shirt."

As Anheuser-Busch learned from its "Gimme a Light" campaign, humor was a very effective way of reaching its preferred audience. However, the sort of humor employed was quite significant. The company could not afford to alienate potential customers—particularly women, who were often ignored in traditional beer advertising. Jim Schumacker, a vice president of Bud Light marketing, recognized the challenge posed by creating Bud Light promotional spots in USA Today: "Bud Light advertising is more difficult to create than Budweiser's because Light's customers are more diverse…. That means ads must appeal to both sexes." Anheuser-Busch had received a great deal of criticism for the sexism implicit in the Spuds McKenzie campaign. After an outcry from women (who were drinking more beer with each passing year of the 1980s and 1990s) and even from trade such publications as Ad Age (which in 1993 condemned most beer ads for using women to "represent sexual imagery and nothing else"), Anheuser-Busch recognized a need for care in its selection of promotional messages. "Treating women as objects is not in tune with today's markets," Lachky told the Milwaukee Journal Sentinel.

The "I Love You, Man" campaign sought to appeal to its target audience by tweaking on a familiar cultural trope. The opening scenes of emotional bonding were designed "to pull people in like a Hallmark card," David Merhar, the DDB Needham creative executive who devised the "I Love You, Man" concept, explained to the Wall Street Journal. Media-literate 20—somethings were quick to grasp the reference and adored the concluding twist where the smarmy appeal for Bud Light was resoundingly rebuffed. In fact, the spots were so popular among their chosen demographic that "I Love You, Man" became a cultural catchphrase, being recited on talk shows, comedy routines, and even casually among beer drinkers. "I have definitely said 'I love you, man' to my friends," reported one consumer interviewed by the Wall Street Journal.

COMPETITION

Bud Light's main competitors in the light beer market were Coors Light, made by the Adolph Coors Company, which was the third-largest brewer in the United States, and Miller Lite. Although Coors Light's sales were good (revenue generated by the brand surpassed the Coors Company's flagship brand Original Coors in 1987 and increased every year for the next decade), Bud Light had its sights set squarely on surpassing Miller Lite. In 1990 Bud Light controlled 19 percent of the light beer market, while Miller Lite retained a strong 33 percent. Three years later Bud Light surpassed Miller Lite as the best-selling light beer in America, as its light beer market share rose to 30 percent while Miller Lite's dropped to 22 percent. This lead was short lived, however, as Miller Lite rebounded to first place during a period in which sales volumes for both competitors decreased. But the "I Love You, Man" campaign elevated Bud light sales and restored the Anheuser-Busch brand to primacy, frustrating the Miller Brewing Company so much that it pulled its advertising account from the Leo Burnett agency in December 1996 and gave it to the Minneapolis-based Fallon McElligot firm.

Fallon McElligot recognized the necessity of appealing to the under-30 market and devised offbeat anti-ads attributed to the fictional account executive superstar "Dick." These "Ads by Dick" had an ironic sensibility designed to reach the younger target market. Early spots in the campaign were introduced by a 1970s-style year book picture displayed on the screen, while the voice-over declared: "This is Dick. Dick is a creative superstar and the man behind the advertising you are about to witness. We gave Dick a six-pack of Miller Lite and some money and asked him to come up with a commercial for Miller Lite." This inside-jokey style continued throughout the ads. One of the first of the more than 50 "Ads by Dick" Fallon McElligot produced showed a group of Lite-drinking cowboys slowly sauntering into the men's room of their rustic bar to the strains of "Adios Amigos." Another portrayed a rancher trading a truckload of Miller Lite to a turncoat steer in exchange for information about a planned stampede. In a third spot, a group of professional wrestlers were shown faking their moves in the ring. Later, they adjourned to a bar where they poured their cans of Miller Lite right past their mouths without making contact.

Miller Brewing Company hoped the new ad campaign would reinvigorate its flagging sales and increase the favorable impression of its brand among consumers. "We wanted to redefine the brand and do it quickly," Mike Johnson, Miller Lite's brand director told Adweek. "We wanted something that would shake up the system to say it's not the same old Miller Lite." To ensure its message reached the widest possible distribution, Miller tripled its advertising budget to support the "Ads by Dick" campaign, spending $38.7 million dollars during the first quarter of 1997 alone, nearly 70 percent of Miller Brewing Company's total beer advertising budget. The campaign proved successful, as Miller Lite's sales in supermarkets rose 13 percent and total sales rose 1.7 percent overall in 1997. "Awareness of the brand is high, recall is high, and sales are up," Johnson said. The popularity of the campaign forced Anheuser-Busch to increase its own advertising budget to retain its lead in the market.

MARKETING STRATEGY

Anheuser-Busch employed its tried-and-true strategy of high-profile athletic event advertising for the "I Love You, Man" campaign. The commercials ran during major sporting events, such as the National Basketball Association's playoffs and telecasts and Major League Baseball's World Series. They appeared during regular-season broadcasts as well. The Charlton Heston "I Love You, Man" commercial debuted during the 1996 Super Bowl.

At least as important as placement, however, was the tone Anheuser-Busch sought to strike in the ads. By using humor and an absence of sexual messaging, the company was able to avoid alienating potential consumers who did not happen to be men between the ages of 21 and 30. But by making the commercials entertaining and ironic, Anheuser-Busch was still able to play directly to the sensibilities of its desired audience. As Beverage World noted, "[Generation] X-ers also appreciate marketing with a sense of humor. Bud Light's 'I love you, man' commercials offer an astute marketing approach to Generation X-ers."

I LOVE YOU, DAD

The inspiration for the "I Love You, Man" campaign came from the real-life experience of David Merhar, the DDB Needham associate who conceived of the ads. After a dinner at home with his 61-year-old father, Merhar hugged his dad and uttered the now-famous words, "I love you, man." As Merhar explained to USA Today, "This is how guys say 'I love you,' with a little disclaimer."

Once Anheuser-Busch recognized the popularity of the "I Love You, Man" campaign, it strove to expand on it, pushing the campaign beyond traditional advertising formats. "The question became, 'How can I take an idea that's going to be on paid media and get some extra boost out of it?'" Bob Lachky, Anheuser-Busch's director of brand marketing explained to the Wall Street Journal. To accomplish this goal, the company arranged for profiles of Rob Fitzgerald, the actor who played Johnny, to appear in such publications as People and USA Today. Fitzgerald also made other public appearances on behalf of the brand and was twice invited onto Late Night with David Letterman.

OUTCOME

The "I Love You, Man" campaign was a tremendous success. Immediately prior to the campaign, Bud Light had been struggling. During its run, however, Bud Light became the fastest-growing beer in America, with its market share topping 10 percent of the total U.S. beer market. "Years from now, this will be the case study of how to turn around a dying brand," Modern Brewery Age editor Peter Reid told the Portland Oregonian. DDB Needham did not disguise its pleasure with the results. "Advertising has established the brand as hip, and that translates into sales," Bob Scarpelli, chief creative officer and vice chairman of the ad agency, told the Dallas Morning News.

The campaign's success was not just limited to the beer market. The "I Love You, Man" ads became a full-scale cultural phenomenon. As the Oregonian reported, "The line is the new mantra of the TV-watching crowd, like 'Where's the beef' before it. Signs proclaiming 'I love you, man' are all over the stands at sporting events." "I love 'I love you, man,'" concurred one 26-year-old interviewed by the Wall Street Journal. "It's a total manly moment." That response was exactly what Anheuser-Busch had hoped for when it launched the campaign.

LOUIE THE LIZARD CAMPAIGN

OVERVIEW

In June 1997 Anheuser-Busch Companies introduced a multimedia national advertising campaign to bolster its Budweiser brand beer. Although Anheuser-Busch dominated the American beer market with a 45.3 percent market share and a diverse product line that included the beers Budweiser, Bud Light, Busch, Michelob, and numerous other brands, Budweiser's sales had begun to slip in the late 1980s. The company turned to its advertising agencies to seek a solution to Budweiser's problems through a revamped marketing image. After launching, in 1995, the highly successful "Frogs" campaign, which attempted to capture the 21- to 29-year-old segment of the American population, Anheuser-Busch continued to pour advertising dollars into Budweiser. A substantial portion of the estimated $150 million spent annually on Budweiser between 1997 and 2001 went to a campaign called "Louie the Lizard," developed by the ad agency Goodby, Silverstein & Partners to target younger beer drinkers.

The campaign, which had TV, radio, print, outdoor, online, and promotional components, focused on an embittered animatronic lizard named Louie who railed against the Budweiser frogs in a Brooklyn accent. Louie was galled that Budweiser had chosen the frogs as brand representatives instead of him; the frogs were each capable of uttering only a single syllable, whereas Louie was articulate and intelligent, if somewhat unstable. Over the course of the campaign Louie became increasingly jealous of the frogs, hiring a ferret to kill them during one memorable series of commercials. In 2000 he focused his resentment on a wildly popular contemporaneous Bud advertising campaign. Soon thereafter, the swamp-creatures storyline faded from prominence, to be only briefly resurrected in 2001, 2004, and 2005.

The campaign was one of the most popular in recent advertising history, and it was credited with sustaining the freshness of Budweiser's image among its target audience of young beer drinkers. It won numerous ad-industry awards, including a 1998 Silver Lion at the Cannes International Advertising Festival and an assortment of Clio Awards in 2000. Nevertheless, Budweiser sales continued to decline during the life of the campaign. Although some observers pointed to this fact as evidence of the fruitlessness of Bud advertising, the reality of changing American beer preferences was inarguably the leading cause of Budweiser's steady sales erosion.

HISTORICAL CONTEXT

In the fiercely competitive American beer market, Anheuser-Busch had often used high-profile advertising campaigns to promote its flagship beer brand, Budweiser. Even with a history of brewing in the United States that dated back to 1852 and a solid reputation as the world's largest beer maker, Anheuser-Busch still felt the squeeze of flattening beer sales that plagued the entire beer sector in the 1990s. In 1995 American beer sales continued a decade-long trend of descent and dropped an additional 1.5 percent. Anheuser-Busch soon realized that, although Budweiser remained the beer of choice for older Americans, the brand's popularity with the highly desirable segment of younger beer drinkers, aged 21 to 29, had waned.

By 1994 Anheuser-Busch determined that Budweiser's image—carefully cultivated through visible ad campaigns—sorely needed to be energized and updated. That year Anheuser-Busch severed its long-term relationship with D'Arcy Masius Benton & Bowles, the agency that had created the iconic 1979 "This Bud's for You" campaign that featured hardworking, Budweiser-drinking blue-collar laborers. Prior to this dismissal, however, D'Arcy had produced a single TV spot that would lay the groundwork for one of Budweiser's most popular advertising platforms of all time.

That initial commercial, featuring three swamp-dwelling frogs who stared at a neon Budweiser sign and who each croaked a syllable of the brand name in turn, immediately resonated with consumers. DDB Needham Chicago (the agency later dropped "Needham" from its name), one of the group of ad agencies Anheuser-Busch chose to work with after severing its relationship with D'Arcy Masius, followed this introductory commercial with more than a dozen spots featuring the amphibians croaking out the syllables of the Budweiser brand in humorous scenarios. Over the course of the next two years the campaign almost single-handedly vaulted the Budweiser brand out of its slump. Sales of the brew among younger beer drinkers boomed; industry publications, including Advertising Age, lauded the campaign's creativity and wit; and polls measuring consumer response revealed that the "Frogs" campaign was one of the most popular ever.

Anheuser-Busch was under constant pressure to end the beloved "Frogs" campaign, though. Children's advocacy groups claimed that the commercials were designed to "hook" kids on the Budweiser brand by using "critters." In 1996 a survey of San Francisco-area children revealed that 9- to 11-year-olds were more likely to recall the Budweiser frogs than they were Smokey Bear or Kellogg's Frosted Flakes' Tony the Tiger. The company was also aware of the risk of taking the "Frogs" concept beyond the point of freshness and innovation.

TARGET MARKET

The lizards' saga of jealousy and murderous rage, as presented in the "Louie the Lizard" spots, was designed to capture the same audience pursued by the "Frogs" campaign. Attracting men aged 21 to 29 had long been the aim for beer advertisers. Not only did these younger drinkers consume far more beer than their over-30 counterparts, but also, they cemented their beer brand loyalty during these years of their lives. In the 1990s, however, Anheuser-Busch was plagued both by younger consumers turning to trendier microbrews and by a falling number of 20-somethings in the population at large. The smaller pool of younger drinkers was more likely to consider Budweiser as their "father's brand" and less as the choice for a younger generation.

The "Frogs" campaign did much to reinvigorate the brand's image among more youthful drinkers. Advertising Age correlated a near tripling of this age group's awareness of Budweiser with the release of the "Frogs" commercials. The so-called Generation X, however, was more media-savvy than its predecessors and thus more likely to lose interest in a campaign. "They look to advertising and marketing as almost a spectator sport," a specialist in targeting Generation X consumers told the Sacramento Bee.

The lizards, especially Louie, with his solipsistic plot to overthrow the frogs and become a commercial star, provided Anheuser-Busch with the perfect opportunity to deliver a style of tongue-in-cheek humor that often performed well with the target audience. By purposefully poking fun at the "Frogs" campaign—which was beginning to wear thin with some viewers—the "Lizards" commercials delivered a sophisticated spoof on advertising itself. Beverage World agreed that it was the type of consciously cultivated "self-deprecating" humor that sold well with consumers in their 20s.

COMPETITION

Anheuser-Busch's largest rivals launched their own advertising campaigns to capture the same demographic group targeted by the "Lizards" commercials. Miller Brewing Co., always a strong competitor, teamed up with Portland-based ad agency Wieden+Kennedy to create the "It's Time to Drink Beer" campaign for Miller Genuine Draft (MGD) in 1997. With Miller facing the same stagnating sales figures as Budweiser, its campaign was intended to reposition MGD as the hip brand of the 1990s. Following the popular resurgence of 1970s fashion, the black-and-white commercials featured frolicking youths wearing bell-bottom jeans and swigging MGD to funk music. But the Miller campaign employed the same irreverent humor that marked Louie's rants. "It's time for good old macrobrew" made in "vats the size of Rhode Island," one commercial proclaimed in block type. Miller's vice president of marketing explained to Beverage World that the target market of the MGD campaign did not "like typical advertising."

Like Budweiser's "Lizards," MGD's campaign also sought not to exclude women and minorities—two groups noticeably absent from earlier beer commercials. Instead of avoiding the issue with "critter" ads, MGD's "It's Time to Drink Beer" sought to build a more modern image through an inclusive cast of characters. Women appeared in the commercials but danced and drank with "the boys." Their function was not that of sex symbols. African-Americans with outrageously tall afro hairstyles (again reminiscent of the 1970s) were prominently featured in the campaign as well.

Adolph Coors Brewing Co., the third-largest American brewery, relaunched its Original Coors beer in 1996 with a $10 million advertising campaign. For years Coors had dedicated most of its efforts to marketing Coors Light. The Original Coors commercials were themed "the last real beer" and centered on the notion that Original Coors was an "honest," anti-elitist brew.

MARKETING STRATEGY

Although Anheuser-Busch would not reveal the exact dollar amount it committed to the saga of Louie and Frank, the company typically spent between $300 and $350 million a year on advertising during the years that "Louie the Lizard" ran. The bulk of that figure was dedicated to Budweiser and Bud Light, and multiple campaigns for each brand tended to run simultaneously. This giant budget ensured that Anheuser-Busch was able to support Budweiser with a "total advertising effort," according to the company. In addition to a vast array of "Lizard" television commercials, the reptiles also appeared in national radio spots, on promotional clothing, in outdoor and print ads, and as the sponsors of athletes and sporting events.

Indeed, if there was one word to encapsulate Anheuser-Busch's strategy in reaching its target audience, it would be sports. The television commercials were usually aired during big-ticket athletic events watched by millions of American viewers. The campaign debuted during a National Basketball Association (NBA) game carried by NBC, made numerous Super Bowl appearances, and often ran during Major League Baseball games and the Monday Night Football series.

Radio spots were similarly broadcast during sporting events. Not only did Anheuser-Busch dole out considerable funds to ensure that Budweiser was named the "Official Beer of Major League Baseball" in 1998 but it also crafted specialized radio commercials for baseball fans. Budweiser also sought and achieved the distinction of being recognized as the "Official Beer of NASCAR," the stock-car racing circuit. In conjunction with this development, Louie the Lizard was painted on the Budweiser team's car in 1998. Michael LaBroad, director of Budweiser marketing, explained in a press release that the company was "always looking for ways to extend our advertising icons beyond television."

INVENTING REPTILIAN PERSONALITIES

In addition to constructing an elaborate plotline in the "Lizards" campaign, Goodby and Anheuser-Busch made up profiles for their new stars, Louie and Frank. On Budweiser's Web page Goodby created "Bios and Headshots" for the reptiles. Using the same cute humor that defined the commercials, these profiles listed such fictional details as Louie's "Last Book Read" (The Work Habits of Seven Highly Effective Lizards) and "Hobbies" ("swatting flies, tracking grasshoppers, and bowling"). Moreover, in press releases Budweiser executives spoke of the lizards as though they were real. A marketing representative was quoted as saying, "We're delighted that Louie and Frank have decided to spend their summer with us in Texas."

The "Louie the Lizard" spots starred Louie and Frank, two disaffected animatronic lizards who felt spurned because Anheuser-Busch had made stars of the earlier Bud campaign's croaking frogs instead of them. "I can't believe they went with the frogs," Louie complained to Frank in a distinct Brooklyn accent in the campaign's first commercial. "Our audition was flaw-less." Perhaps the best known of the commercials were those released during the 1998 Super Bowl in a sequence of four spots that related Louie's attempt to assassinate the frogs (and thus be able to take their place) by hiring a ferret hit man. The campaign continued with Louie trying out a Texas accent after he learned that one of the Bud frogs he had tried to eliminate was a Texan. "Frank, these Texans, they hold grudges," said Louie. "You know the phrase, 'Remember the Alamo?' Well now it's going to be 'Remember the frog.'" In July 1998 a commercial showed Louie being given a chance to join the croaking-frogs chorus. But he became flustered and botched the shoot, crying, "I can't work in this environment. Cut! Cut!"

As the campaign matured, the jealousy plotline escalated. Although the ferret successfully managed to electrocute the frogs with the neon sign on which they so obsessively focused, the frogs lived. The incomprehensibly gibbering ferret was well received by consumers and Anheuser-Busch executives and became a regular character in the campaign. In 2000 Louie's jealousy found a new target: the cast of another set of DDB-created Budweiser spots, the enormously popular "Whassup?!" campaign. That effort, centering on the comically ebullient "Whassup?!" greeting exchanged, with elaborate tongue-wagging, among friends, had for the moment eclipsed even the universally famous frogs and lizards. ("Whassup?!" parodies flooded the Internet, and the campaign won the Grand Prix at the 2000 International Advertising Festival in Cannes.) Louie claimed, with characteristic resentment, that the "Whassup?!" crew had stolen the protruding-tongue idea from him.

Always wary of overexposing even its most successful advertising concepts, Anheuser-Busch sent the swamp creatures into semiretirement midway through 2000, and the hiatus lasted roughly a year. In 2001 Louie and company reappeared in commercials that, surprisingly, were aimed at an over-40 audience. These spots included work that mimicked Budweiser product-quality advertising of the past as well as further ferret-related drama. The swamp-creatures storyline again faded from the airwaves, only to reappear briefly in 2004. Amid an increasingly acrimonious advertising spat between Anheuser-Busch and SABMiller (the parent company of Miller Brewing), which had been initially triggered by Miller's claims that its Miller Lite had fewer carbohydrates than Bud Light, Louie was tapped to foment the anti-Miller sentiment. Anheuser-Busch again allowed the lizards to be resurrected in 2005 at the request of JibJab, the animation team that had created a wildly popular online cartoon parodying the 2004 presidential-campaign efforts of George W. Bush and John Kerry. JibJab, given creative license to spread the Budweiser message online, showcased the lizards and frogs in a barbershop sing-along deriding drinkers of pretentious cocktails and wine.

OUTCOME

The exploits of the disgruntled reptiles quickly won popular approval. USA Today's Ad Track survey of adult consumers revealed that the campaign was among the most popular in modern advertising history. Anecdotal evidence and analysts' observations indicated that the "Louie the Lizard" campaign connected with the desired audience. Janine Misdom, a Manhattan marketing- firm partner, explained to the Sacramento Bee why consumers under 30 responded to the Louie and Frank saga: "It's funny, it's a little bit nostalgic, and there's a little bit of the bad-boy thing." On June 22, 1998, USA Today reported that its most recent Ad Track indicated that the "Louie the Lizard" campaign appealed to consumers across lines of class and age. Marketing insiders heaped praise on Goodby's lizards. Advertising Age commended the campaign as the "Best of Show" from a pool of nationally aired commercials. The TV campaign won a Silver Lion at the Cannes International Advertising Festival in 1998. In 2000 the radio portion of the campaign was awarded a gold, two silvers, and two bronzes at the Clio Awards (one of the world's largest advertising-awards programs), while the TV campaign took home a bronze Clio Award.

Neither "Louie the Lizard" nor "Whassup?!" could arrest Budweiser's seemingly permanent sales slide, however. This led many advertising-industry observers to question the value of Budweiser's marquee image-building campaigns, but Anheuser-Busch felt that the declines were the inevitable result of changing American tastes in beer. Besides, Budweiser advertising was meant to have the ancillary effect of driving sales of other Anheuser-Busch brands, especially Bud Light, which in 2001 surpassed Budweiser to become the best-selling beer in the United States.

OH, AND BEWARE OF THE PENGUINS CAMPAIGN

OVERVIEW

Anheuser-Busch introduced two new beers to its Budweiser family in 1995. Bud Ice and Bud Ice Light were both "ice brewed" by pumping the beer through ice chambers during the brewing process. Both varieties of Bud Ice were packaged in distinctive long-necked bottles shaped to look and feel like a handful of ice cubes. To inaugurate its newest product, as well as to bolster Bud Ice in the competitive ice beer market, Anheuser-Busch selected the San Francisco-based ad agency Goodby, Silverstein, & Partners to develop an advertising campaign that would reflect the values of the fledgling brand and that would appeal to viewers through creative, memorable, and entertaining commercials. The resulting "Oh, and Beware of the Penguins" campaign, which featured slightly sinister penguins, was launched during the Super Bowl on January 28, 1996. Since that first spot garnered almost immediate positive responses from both consumers and critics, Anheuser-Busch continued with the campaign. Over the next two years, the "Penguins" campaign was expanded to include other television commercials, as well as ads on billboards and trucks. Additionally, marketing teams dressed as penguins turned up in bars handing out samples of the beverage.

The television "Penguins" spots all featured tuxedo-clad penguins that went to edgy extremes to steal people's Bud Ice. The spots, which parodied movie genres, included such commercials as "Penguin Express," in which a film-noir-type detective was frightened in his train car by a Bud Ice-seeking penguin who sang the refrain from the classic Frank Sinatra song "Strangers in the Night" in a nasal-toned "Dooby Dooby Doo." In another commercial, this time spoofing horror movies, a suburban couple was terrified by a penguin's crank calls from their upstairs bedroom. The bird, of course, wanted their ice beer. In 1997 Anheuser-Busch released an ad that portrayed the thieving penguin making off with the National Hockey League's Stanley Cup trophy. "Jungle" told the tale of jungle explorers who made the mistake of resting and drinking a Bud Ice. Spear-pointing natives captured the party, lashed them to stakes, and used the Bud Ice to summon their penguin god, which they did by chanting "Dooby Dooby Doo" and placing the beer on a shrine before a roaring fire. At the close of each ad, viewers were advised to "Drink Bud Ice … But Beware of the Penguins."

Anheuser-Busch chose the quirky and slightly-threatening penguin as its mascot for Bud Ice to target the company's professed target market—the "contemporary adult" aged 21 to 34 years old. Moreover, using a bird instead of a person to promote its beer allowed Budweiser to reach across race and gender lines to appeal to a wide audience of potential Bud Ice drinkers. The campaign and its high-visibility tie-ins, such as Bud Ice's partnership as the "official beer" of the National Hockey League, helped propel Bud Ice and Bud Ice Light to become the highest-selling ice brand in the United States.

HISTORICAL CONTEXT

Anheuser-Busch, the world's largest brewery with a history dating back to the 1860s, originally launched an ice draft brand in 1994. The beer, which was added to Anheuser-Busch's vast repertoire of beers—including Budweiser, Bud Light, Michelob, and the nonalcoholic O'Doul's—was first marketed under the more cumbersome name Ice Draft from Budweiser. This brand met with stiff competition from other brewers and did not fare as well as expected, partially because Budweiser's contribution to the ice genre contained 5 percent alcohol instead of the 5.5 percent alcohol of other ice draft brands. In addition, shortly after Ice Draft from Budweiser was released, Anheuser-Busch's competitors hurried their own versions to the shelves. Miller Brewing Company, Budweiser's chief competitor, introduced six ice beers. Although Ice Draft from Budweiser was the best-selling ice beer in 1994, its market share was eclipsed by Miller's total line of ice drafts. Anheuser-Busch expected to sell 3.5 million barrels but actually realized sales of only 2.5 million barrels in the highly competitive market.

Rather than abandon the concept, however, Anheuser-Busch chose to repackage and relaunch the brew as Bud Ice in 1995. Bud Ice Light was released the same year. The new formulation had the higher alcohol content of its rivals and was bottled to look as if the glass container were sculpted out of ice. But even more important to the brand's success was the estimated $35 million Anheuser-Busch dedicated to promoting Bud Ice.

TARGET MARKET

Bud Ice and Bud Ice Light were targeted at what Anheuser-Busch termed the "contemporary adult," who ranged in age from 21 to 34 years old. More specifically, though, the brand sought to appeal to a group "a little younger than the mainstream—to people from 21 to 27," according to Advertising Age. These young adults represented the pinnacle of the market for breweries. Not only were 20-somethings bigger beer consumers, they were also more liable to form their life-long brand preferences during this decade of their lives. A spokesman for one of Budweiser's competitors, Miller Brewing Company, told Beverage World that "the most evolving dynamic is the 21- to 30-year group … it would take a lot of pounding away to try to accomplish a [brand] switch [after that age]."

Budweiser knew from its experience with the wildly successful Budweiser frogs and wise-cracking lizards that humor worked well to attract this younger target audience. Bob Lachky, vice president of Budweiser brands, explained to Advertising Age that "the only way to appeal to [this demographic group] was with something off-beat and a little edgy." The cute but malicious singing penguins fit this bill neatly and indeed were like nothing else on television.

Budweiser was also aware that by focusing the campaign on penguin mascots it could obtain a competitive boost without offending or excluding any group, which was a risk run by ads featuring real people. Although young men by far consumed more beer than any other group, Anheuser-Busch had only recently abandoned its more sexist ads that featured scantily-clad women as barroom objects of desire for beer-guzzling men. After an outcry from women (who were drinking more beer with each passing year of the 1980s and 1990s), as well as from trade publications such as Advertising Age (which in 1993 condemned most beer ads for using women to "represent sexual imagery and nothing else"), Anheuser-Busch changed its strategies. "Treating women as objects is not in tune with today's markets," Lachky told the Milwaukee Journal Sentinel. Beer campaigns that relied on animal mascots rather than party scenes did not run the risk of excluding women from their appeal.

The penguins did provide Bud Ice and Bud Ice Light with an abundance of personality. Bud Ice brand manager, Michael La Broad, emphasized to USA Today that the "beauty of the [Penguins] campaign is that it's memorable." Analysts concurred that the "critter ads" had sufficient wit and entertainment value to reach both 20-something Generation Xers and aging baby boomers, an impressive sweep for a beer campaign. Moreover, by cleverly parodying standard film tropes, each commercial allowed the brand to capitalize on the popularity, image, and hip campiness of the various genres the campaign spoofed.

COMPETITION

Bud Ice and Bud Ice Light faced stiff competition from every major brewer (as well as many minor brewers) in the United States. When Anheuser-Busch launched its Ice Draft from Budweiser, it quickly encountered nearly 40 competitors. Foremost among these was Miller Brewing Company, which released six ice beers in 1994 and 1995. Ice Draft from Budweiser was originally released to compete with cold-filtered Miller Genuine Draft. As Bud Ice, it clashed with Miller's Icehouse, which was advertised in corporate identity spots produced by BBDO Worldwide, Toronto. Miller also sought to win over the coveted 20-something target market. One of the early Icehouse spots showed two bodysurfers in a mosh pit trying unsuccessfully to swim over the crowd to get to the bar. In response, a waitress—with a tray of perfectly balanced Ice House beer—was passed over the audience to reach them. The Milwaukee-based company spent more than $26 million promoting its Lite Ice beer in 1994 alone.

A LAWSUIT FOR THE BIRDS

In 1997 Bud Ice's use of the penguin resulted in a lawsuit filed by a Miami clothing maker, Supreme International, which alleged that Anheuser-Busch stole that company's signature bird trademark. "Now I know what it's like to be kicked in the stomach by a Clydesdale," said Supreme's chairman, George Feldenkreis, referring to the mammoth horses that had served for decades as Budweiser's signature image.

Beyond its specific ice draft competitors, Bud Ice initially had to struggle to keep the entire ice draft category afloat. This new beer category saw its sales fluctuate widely, and sometimes its very existence seemed tenuous. But by 1996 the market had begun to steady, and ice beers came to account for 5 percent of the 190 million barrel U.S. beer market. But the market faced encroachment from a new source. Trendy microbreweries and smaller national breweries like Samuel Adams vied for Bud Ice's young and brand-conscious target market. Moreover, other major breweries—Miller and Coors Brewing Company, among others—always remained poised to capture any unguarded share of Budweiser's leading position in the market.

MARKETING STRATEGY

Anheuser-Busch first confined its television advertising efforts for Bud Ice to sports-oriented programming. A USA Today poll revealed that as of July 15, 1996, Bud Ice's "Penguin" ads were resoundingly popular, yet had been seen by only 30 percent of the viewers quizzed for the survey. The reason for this discrepancy was that Anheuser-Busch ran the commercials only during televised sporting events that "reached a young, affluent audience." "Penguins" spots did appear regularly on local and cable sports programming, including ESPN, the preeminent sports broadcasting station in the country. As the campaign caught on, however, Budweiser attempted to reach a wider audience. "Penguins" commercials ran on programs such as Saturday Night Live, the Late Show with David Letterman, and Mad TV, as well as on the VH-1 music video network.

As the television campaign gained momentum, Anheuser-Busch devoted more time and money to so-called on-premise activity, referring to promotions carried out at locations (most notably bars) at which alcohol is sold and consumed "on the premise." In late 1996 marketing teams dressed in tuxedos turned up in bars giving out Bud Ice-icles, which were plastic icicles that customers could use to add a bright color and a fruity taste to their bottled Bud Ice. Flavors included "Brain Freeze," "Ice-otope," and "Kiss My Face."

Anheuser-Busch also sought to draw in more of its key market with promotional tie-ins with the National Hockey League (NHL) and other regional hockey associations, such as the East Coast Hockey League and the American Hockey League. Jim Schumacker, marketing chief for Bud Light and Bud Ice, revealed to Brandweek that Bud Ice's marketing strategy was two-pronged. "We've got two thrusts," he said. "Equity in the penguin has been very strong in the contemporary-adult market, as has equity in the National Hockey League." Since the NHL itself targeted the same contemporary young adult male demographic, the link was natural. In one television commercial that illustrated the dual strategies of the "Penguins" campaign, a Bud Ice penguin stole the Stanley Cup, the National Hockey League's championship trophy. In addition to these national efforts, Anheuser-Busch also strove to bring the "Penguins" campaign into key regional markets. For instance, Florida—home of two NHL teams—proved to be essential to Bud Ice because of the success Miller's Icehouse had achieved in that market. The ubiquitous penguin made personal appearances throughout the state (dressed for the sunny climate in sandals and sunglasses) and was christened "Florida's Snowbird," a pun on the state's nickname for transplants from northern states. According to Brandweek, Bud Ice "created the most tightly-woven plan for the brand, interlacing local market activity with a raft of hockey association, and, of course, that larcenous penguin." This combination of targeted television advertising and concentrated local and regional efforts proved quite successful as Bud Ice strengthened its grip on the top slot in the ice beer market.

The company also devoted a website to the birds, providing information about how the commercials were made, tie-ins to other Budweiser websites, and biographical data on the penguins. The graphics and prose style of the site were clearly targeted to the young adult audience.

OUTCOME

Although industry analyst Jerry Steinman acknowledged to USA Today that "it's hard to link increased sales of Bud Ice to one specific factor," the "Penguins" campaign was remarkably well received by television viewers. This enthusiasm was borne out by USA Today's Ad Track survey, which monitored the popularity and effectiveness of national advertising campaigns. The penguin spots proved to be among the 10 most popular ads measured, winning the approval of nearly a third of the polled consumers. In 1996 Bud Ice's sales rose 21 percent, compared to the 1.8 percent increase of ice draft sales in general.

The campaign did receive stiff criticism from a variety of groups who accused Anheuser-Busch of using a cute mascot to lure children to its brand (and thereby create a lifelong market for it). A former ad executive told the Milwaukee Journal Sentinel, "When I worked on the McDonald's account [at another ad agency], the theory was to target kids 4- to 7-years-old. We thought if we could capture them at that age, we could keep them for life." Critics believed Anheuser-Busch's "Penguins" campaign was employing a similar strategy. Company officials, however, disputed the claim that the ads targeted kids, and Anheuser-Busch refused to pull the "Penguins" campaign. A spokeswoman for the company cited Anheuser-Busch's $160 million educational campaign against underage drinking as evidence of the brewer's opposition to youth drinking and its firm commitment to deterring it.

REAL AMERICAN HEROES/REAL MEN OF GENIUS CAMPAIGN

OVERVIEW

Anheuser-Busch Companies, Inc., had the two best-selling beers in the United States in 2000 as well as more than double the market share of any competitor. The company's flagship brew, Budweiser, remained the country's most popular alcoholic beverage despite a decade-long decline in sales. Bud Light had meanwhile been making double-digit percentage gains in sales and was poised to overtake the "King of Beers," thanks to the growing consumer preference for reduced-calorie beer. Anheuser-Busch maintained its market dominance in part by consistently setting the standard for beer advertising.

After assuming responsibility for advertising for the Bud family of brands in 1994, August A. Busch IV (son of August A. Busch III, the company's CEO) made it a priority to update Bud's image for a new generation of beer drinkers. Anheuser-Busch advertising, under Busch and marketing executive Bob Lachky, increasingly relied on irreverent, ironic humor to appeal to younger segments of its legal-drinking-age audience. Although radio had become an afterthought for many advertisers by the late 1990s, Anheuser-Busch continued to explore the medium's possibilities. In keeping with the tone of a mid-1990s radio campaign and Bud Light's consistently popular television campaigns, Anheuser-Busch unveiled a tongue-in-cheek series of radio spots called "Real American Heroes," which parodied beer advertisements of previous decades. Anheuser-Busch spent a reported $4 million on the radio campaign in 2002.

The "Real American Heroes" campaign made a bigger splash than many believed possible for a radio effort. Renamed "Real Men of Genius" after September 11, 2001, the campaign ran successfully for years, earning dozens of awards from the advertising industry while building a dedicated base of fans. "Real Men of Genius" made the rare leap from radio to television in 2003. Though the television commercials were likewise well regarded, the campaign returned exclusively to radio the following year.

HISTORICAL CONTEXT

In the 1970s and 1980s top American brewers marketed their beers by appealing to consumers' affection for the blue-collar American workingman. Classic slogans such as "Miller Time" and "This Bud's for You" suggested that hardworking men deserved a quality beer at the end of the day and that, moreover, the "regular guy" was a hero deserving of recognition. Anthemic music and patriotic undercurrents were used to enhance the sincere, heroic tone of these commercials, and the formula proved successful until the early 1990s.

During the late 1980s and early 1990s, however, Anheuser-Busch had an aging base of consumers, and younger drinkers were perceived as unresponsive to commercials that saluted such straightforward values as patriotism and hard work. Anheuser-Busch sought to update its products for a new generation. The sincere statement "This Bud's for You" gave way, in the mid-1990s, to less traditional ideas, such as the Budweiser frogs and lizards, as well as Bud Light creative, including "Ladies Night," "Yes I Am!" and "I Love You, Man." These campaigns helped "make the 25-year-old believe that Budweiser spoke their language," according to Anheuser-Busch's Lachky.

Also in the mid-1990s Anheuser-Busch supported the Bud Light brand with a popular series of over-the-top radio commercials narrated by Charlton Heston. The Heston spots, according to Lachky, "carved out an area attached to the brand that was very fun, very young, very cut through." As the Heston campaign wound down, Anheuser-Busch commissioned Bud Light lead agency DDB Worldwide Chicago to come up with a replacement radio campaign.

TARGET MARKET

The focus of Anheuser-Busch's marketing efforts during this time was 21- to 27-year-old drinkers, a segment of the population that consumed more beer per capita than other age groups and had not yet formed strict brand allegiances. Like preceding Anheuser-Busch campaigns of the 1990s, "Real American Heroes" used ironic humor to reach its core audience. Beyond simply appealing to this audience's tastes, however, the radio spots capitalized on the younger market's wariness of traditional advertising techniques by mocking the sincere "work-reward" campaigns of the 1970s and 1980s. Using dramatic rock music and authoritative voice-overs that explicitly recalled those earlier campaigns, "Real American Heroes" sarcastically extolled the virtues of "heroes" like Mr. Bowling Shoe Giver Outer, Mr. Garden Gnome Maker, and Mr. Jelly Donut Filler.

The campaign eventually made its way onto television (after having been renamed "Real Men of Genius"), but many of the spots were particularly suited to a radio audience because they created, as Lachky told the St. Louis Post-Dispatch, a "theater of the mind" that activated the consumer's imagination. Though the spots mocked supposed everyday heroes, they were similar to the classic work-reward campaigns in that they were meant to reflect listeners' ordinary observations and personal experience. "Everybody has got their quirks," Lachky said, "and everybody has probably been a 'Real Man of Genius.'"

Supplementing Bud Light's brand strategy via radio campaigns became increasingly sensible, in Anheuser-Busch's view, because of the rise of cable television and the resulting fragmentation of the network viewing audience. Additionally Anheuser-Busch was able to place many of its radio spots locally as well as nationally. This benefited wholesalers, who needed to be able to respond to varying local conditions. Further, television viewing traditionally dropped off significantly during the summer months, the time of year when consumers drank the most beer. Radio allowed Anheuser-Busch to reach otherwise unreachable segments of its audience, including those who were traveling or engaging in leisure activities away from their televisions.

COMPETITION

Though Miller Brewing Company remained Anheuser-Busch's nearest rival, its market share had been decreasing for years, and its leading product, Miller Lite, was likewise losing market share when Bud Light's "Real American Heroes" campaign broke. Miller's advertising campaigns had been partially blamed for these declines. Miller Lite's "Dick" campaign, which ran on television in 1997 and 1998 and consisted of a series of absurdist vignettes supposedly dreamed up by a fictional advertising copywriter named Dick, attracted attention for its unpredictability and humor but did little to promote the beer itself. After abandoning "Dick," Miller Lite struggled to find new, compelling themes in its advertisements. In 2002, after being purchased by South Africa Breweries, Miller began using taste-test commercials claiming that Miller Lite outperformed Bud Light, and in 2004 Miller Lite began to make up ground against Bud Light and Coors Light by positioning itself, amid the low-carbohydrate diet craze, as a lower-carb alter-native to its rivals.

The Adolph Coors Company, a distant third in the American beer wars, increased its market share in the late 1990s, and its leading product, Coors Light, had by 2001 surpassed Miller Lite to become the country's third most popular beer (and second most popular light beer). Coors Light's multiyear "Beer Man" television campaign, focusing on ballpark vendors, was seen by many wholesalers as a refreshing real-life contrast to campaigns like the Budweiser lizards and Miller Lite's "Dick."

MARKETING STRATEGY

Extending the tone of the Heston radio campaign and directly parodying Anheuser-Busch's own "This Bud's for You" concept, DDB's creative team singled out "regular guys" in overlooked jobs or with comical foibles, "people who just need to be called out to take a bow for whatever reason," as agency creative director John Immesoete said, and began scripting music-based mock tributes to them. For the commercials' sound track, DDB commissioned Chicago-based Scandal Music to compose a comically overblown 1980s song similar to the Survivor hit "Eye of the Tiger," and David Bickler, who had himself been Survivor's lead singer, was hired to do a bombastic parody of his own vocal work. After a lengthy search DDB hired announcer Pete Stacker, whose experience included traditional beer advertising, to do voice-over for the spots. The lyrics, sung in dramatic fashion by Bickler, worked in counterpoint to Stacker's deadpan baritone voice-over, and a portrait of each "hero" emerged against the background of soaring music. Anheuser-Busch was uncertain, in the beginning, about the extreme sarcasm of the commercials. "But we ran them past the consumer," Lachky told Adweek, "and they were a home run."

MIDLER WAS NO SURVIVOR

DDB Worldwide Chicago originally envisioned using a Bette Midler song like "The Wind Beneath My Wings" for the sound track to the "Real American Heroes" commercials. But the rights to Midler's songs proved prohibitively expensive, and the Midler music did not work well in test runs. DDB's creative team began, instead, to lean toward a 1980s anthem-rock sound along the lines of Survivor's "Eye of the Tiger." The agency hired Chicago's Scandal Music to do an original parody of that sound, and it happened that Scandal's owner, Sandy Torano, was a friend of Survivor's lead singer, David Bickler. Far from being offended at the suggestion that he mock someone like himself, Bickler embraced the role. Indeed Bickler had long enjoyed a career not just as a rock star but as an ad pitchman, with singing credits that included a Kentucky Fried Chicken "Finger Lickin' Good" spot, a Frosted Flakes commercial, and work for Sprite's "Uncola" campaign. In TV versions of the "Real Men of Genius" spots, Bickler was shown wearing an unflattering wig and pumping his fists triumphantly while singing. "That's part of my role, to provide that exclamation point," he told USA Today. "I get into the spirit. I want it to be as good as it could be."

The initial series of 12 "Real American Heroes" spots attracted fans almost immediately. Radio personality Howard Stern lauded them on the air, and websites devoted to the jingles' lyrics began appearing. Tape recordings of the spots showed up for sale at the online auction site eBay, and "Real American Heroes," along with Budweiser's famous "Whassup?!" television commercials (also created by DDB Worldwide Chicago), began to dominate the awards circuit. The radio commercials were likewise popular with Anheuser-Busch executives and distributors, and DDB was told to "keep 'em coming," according to Immesoete. Another 17 spots followed the original 12. With the terrorist attacks of September 11, 2001, however, the premise of mocking American heroes suddenly seemed questionable, and the spots were pulled from circulation. The campaign reemerged in early 2002 as "Real Men of Genius."

The continuing success of "Real Men of Genius" led Anheuser-Busch to commission the campaign's adaptation for a 2003–04 television run. The move was seen as risky, even though similar Anheuser-Busch spots had already aired on British TV. The spots' success in the United States had depended, until then, on allowing the consumer to visualize the characters being parodied via song and voice-over. As DDB's Bob Winter told Adweek, "It was hard to think of how to do it visually on TV." The initial spots adapted included "Mr. Way Too Much Cologne Wearer," "Mr. Foot Long Hot Dog Inventor," and "Mr. Really Bad Toupee Wearer" and appeared on programs such as Saturday Night Live and Monday Night Football. A "Real Men of Genius" commercial likewise made it onto Anheuser-Busch's famously competitive Super Bowl roster, and the television campaign was, like its radio counterpart, a favorite on the awards circuit. Anheuser-Busch decided early on, however, to limit the number of TV adaptations. "Sometimes the best ideas are [best] left alone in the medium where they flourish," Lachky told the St. Louis Post-Dispatch.

The spots continued on radio. In 2004 the number of spots produced since the campaign's inception surpassed 100, and in Anheuser-Busch's view the potential to extend the idea was still endless.

OUTCOME

In addition to exceeding 100 spots, the "Real American Heroes/Real Men of Genius" campaign earned more than 100 advertising awards. The radio campaign won the top Radio-Mercury Award two years in a row, the 2003 Grand Clio, and numerous other Clio, ADDY, Kinsale, One Show, and ANDY awards. The television campaign won a Gold Lion at the International Advertising Festival in Cannes, France. Numerous websites devoted to lyrics and MP3 recordings of the commercials could be found on the Internet throughout the campaign's run. In 2003 and 2004 Anheuser-Busch released two volumes of official compact disc recordings of selected spots along with bonus tracks of unreleased spots. The campaign was credited with raising the profile of radio advertising as a whole.

In 2001 Bud Light, overtaking Budweiser in sales for the first time, became the number one beer in America. Continuing to dominate the domestic beer market, Anheuser-Busch had approached a market share of 50 percent by 2001 and held steady at that unprecedented level in following years. "We knew we had a winner with the 'Real Men of Genius' campaign early on," Lachky told PR Newswire, "but the popularity and longevity of the series has exceeded our expectations and provided a fantastic promotional opportunity for Bud Light."

WHASSUP?! CAMPAIGN

OVERVIEW

In December 1999 Anheuser-Busch Companies, Inc., had the two best-selling beers in the United States and more than double the market share of any competitor. Despite a decade-long decline in sales, Budweiser, the company's flagship brew, remained the country's most popular alcoholic beverage, although, thanks largely to the growing consumer preference for reduced-calorie beer, Bud Light was poised to overtake the "King of Beers." Anheuser-Busch already had the industry's biggest and most successful advertising presence, but the Budweiser television campaign called "Whassup?!" resonated with a new, more youthful audience and became not just an industry award winner but also a pop-culture phenomenon.

The idea behind the "Whassup?!" commercials, developed for Anheuser-Busch by DDB Worldwide Chicago, was simple. In the initial spot, called "Whassup True," four male friends, speaking over the phone, greeted one another with the slang phrase "Whassup?!" The answer—"Watching the game. Having a Bud"—elicited the response "True, true," before the conversation escalated into a chorus of "Whassups?!" delivered with mouths open, tongues protruding, and an air of intense glee. "It didn't feel like advertising," said DDB's Don Pogany. "It seemed different than anything else. And it seemed to be totally what Bud is about: camaraderie and friendship and what guys do." A second spot aired during the 2000 Super Bowl, and several more featuring the "Whassup?!" guys aired later in the winter. Each of the spots ended with the Budweiser logo against a black background and the tagline "True."

Within a few months of the campaign's introduction, unauthorized Internet parodies began to appear that featured people in the news, cartoon superheroes, and many others greeting one another with innumerable variations on "Whassup?!" Disc jockeys and late-night talk-show hosts began saying "Whassup?!" and soon it became a common greeting and a pop-culture phrase around the world, even in countries where Budweiser was not sold. The initial campaign won nearly every major industry award, and later installments continued to win awards. "Whassup?!" ran through 2001 and was then developed into a more expansive campaign called "True," in which the tagline from the original commercials was interpreted in new ways meant to show beer drinkers that Budweiser understood them and their lives.

HISTORICAL CONTEXT

In 1992 August A. Busch IV, whose father, August A. Busch III, was the CEO of Anheuser-Busch, took charge of marketing for the Budweiser family of brands. At the time imports and microbrews posed threats to the Anheuser-Busch juggernaut, and as Michael McCarthy of USA Today put it, "Bud was becoming your dad's beer." Though Anheuser-Busch and Budweiser had a long history of marketing prowess, as evidenced by the iconic status of their trademark Clydesdale horses and by enduring slogans like the "King of Beers" and "This Bud's for You," Busch set out to update the Bud image for a new generation of beer drinkers.

Busch and Anheuser-Busch executive Bob Lachky oversaw a period of breakthroughs in creative work on behalf of the Budweiser brands. Between 1993 and 1995 campaigns such as "Ladies Night," "Yes I Am!" and "I Love You Man," all on behalf of Bud Light, helped, in Lachky's words, "make the 25-year-old believe that Budweiser spoke their language." Anheuser-Busch began using a combination of different advertising agencies while relying primarily on DDB and on Goodby, Silverstein & Partners, the San Francisco agency responsible for the successful "Louie the Lizard" campaign. According to Lachky, the use of multiple agencies encouraged "a healthy competition and better creative work."

By 1999 Anheuser-Busch had an estimated market share of 47.5 percent, up from 43 percent at the beginning of the decade. Budweiser, however, continued to lose ground yearly. Although this was seen as a reflection of consumer preference rather than a deficiency in the product or in marketing, Anheuser-Busch continued to allocate large amounts of advertising money and energy to Budweiser. This was intended to arrest the slide in Budweiser's market share, but also, as Hillary Chura noted in Advertising Age, "Advertising dedicated to Budweiser often boosts sales of other brands like Bud Light, Bud Ice, and the rest of the brand family."

TARGET MARKET

Anheuser-Busch expected the "Whassup?!" ads to resonate across demographic lines within the 21- to 27-year-old segment of the population, an essential part of Budweiser's larger target market of all legal-age drinkers. Not only did this segment of young adults account for a disproportionate percentage of beer sales relative to other adults, its brand loyalties had presumably not yet been formed. The spots featured a mostly African-American cast, and the campaign's central verbal exchange was based on slang terms used in minority communities, although the universal principles of friendship that were displayed had the power, Anheuser-Busch believed, to attract young viewers across racial, ethnic, and gender divides. Barbara Lippert argued in Adweek that the ads were about "feeling so connected to your best buds you can watch TV together through the phone. And that while you are supposedly 'chillin,' you are all maniacally dialing each other."

Anheuser-Busch, however, wanted to avoid alienating older customers who did not understand the significance of the characters' boisterous attitudes and protruding tongues. When a group of wholesalers expressed their disapproval of the emerging campaign, Lachky and Busch decided not to continue to air the original version but to showcase "Whassup?!" spots that relied on individual narratives and thereby helped viewers make sense of the characters. They also decided to trim the 60-second spots to 30 seconds in order to reduce the amount of time occupied by the "Whassup?!" ritual itself. Soon Internet parodies began, and the campaign attracted mainstream media attention. Once "Whassup?!" became part of the pop-culture vocabulary, the campaign had an air of widespread public validation that overcame all demographic divisions. As Advertising Age put it, "Any advertising that bridges generation gaps so that even our mothers are leaving 'Whassup?!' messages on our answering machines must be a good one."

THE QUESTION OF ORIGIN

After "Whassup?!" had won both the Grand Clio and the Cannes Grand Prix in 2000, there were complaints within the advertising industry. Some felt that it was inappropriate to give the industry's highest honors to a campaign that had not originally come from an advertising agency at all. The idea, of course, was Charles Stone III's, and the initial spot was similar to his independent film True. But Stone was not himself the sole author of the idea. "Whassup?!" was a greeting that he and his friends had been using with one another since 1984.

COMPETITION

Although Miller Brewing Company remained Anheuser-Busch's nearest rival, Miller's market share, which had been decreasing for years, dropped from 21.7 to 19.6 percent between 1999 and 2001. Advertising campaigns for the company's two top brews, Miller Lite and Miller Genuine Draft, had been blamed for failing to move the products. Miller Lite's "Dick" campaign, which ran in 1997 and 1998 and consisted of a series of absurdist vignettes dreamed up by a fictional advertising copywriter named Dick, attracted attention for its unpredictability and humor, but it did little to promote the beer itself. Miller Genuine Draft's "Never Miss a Genuine Opportunity" campaign, which relied on openly sexual themes and narratives, was derided by many for being too graphic and, like the "Dick" campaign, for failing to establish any connection between the story line and the product. After abandoning these campaigns, Miller struggled to find new, compelling themes in its advertising.

The Adolph Coors Company, a distant third in the American beer wars, had increased its market share to 11.1 percent by 2001, and its leading product, Coors Light, had surpassed Miller Lite to become the country's third most popular beer. "Beer Man," a Coors Light advertising campaign that focused on ballpark vendors, was seen by many wholesalers as a refreshing, real-life contrast to campaigns like the Budweiser lizards and Miller Lite's "Dick." An effort to turn back slumping sales of the company's Original Coors beer by touting its alcohol content and rich taste met with mixed results in the declining market for full-calorie domestic beers.

MARKETING STRATEGY

"Whassup?!" had its genesis outside the advertising world in a short film called True, created by music-video director Charles Stone III as a means of trying to break into feature films. A DDB creative director discovered True and immediately recommended it to his supervisor as suitable for a Budweiser advertisement. The film, which became "Whassup True" after minor adjustments in content, featured Stone and three of his friends. Stone himself was tapped to direct and to act in the series of commercials DDB began scripting, and though roughly 80 other actors were auditioned for the parts of Stone's friends, with one exception DDB hired the real-life friends to play themselves. Stone worried that the slang response "True" might need to be scrapped in favor of a more mainstream line like "Right on," but Anheuser-Busch's Lachky recognized the trend setting potential of the original.

"Whassup True" originally aired with little fanfare on sports programming in December 1999. The 60-second commercial was a hit with the 21- to 27-year-old demographic, but for the 2000 Super Bowl Anheuser-Busch chose the shorter and less risky "Girlfriend," in which one of the "Whassup?!" friends answered the phone in characteristic fashion while trying not to let on that the "game" he was watching with his girlfriend was actually a figure-skating competition. Other spots in the original campaign included one in which a pizza deliverer was mistaken for a friend and subjected, over an apartment-building intercom, to the "Whassup?!" routine. The spots eventually ran during sports programming, as well as prime-time and late-night shows.

After Internet parodies and media attention became widespread, "Whassup?!" was at risk of becoming overexposed, and Anheuser-Busch and DDB worked to keep the campaign fresh by running their own spoofs. In "Come Home" an alien, returning to his home planet after infiltrating Earth in the guise of a dog, was asked by his ruler what he had learned from his time among humans. After a short pause the alien declared, mouth wide and tongue lolling, "Whassup?!" In addition, DDB created a unique hybrid commercial called "Language Tape," in which a professor-like character directed viewers to Budweiser.com, where they could learn how to say "Whassup?!" in 36 different languages. Website traffic increased to 1.265 million visitors per month, compared to the previous year's average of 400,000.

Anheuser-Busch and DDB went on to run commercials featuring New Jersey men bearing a strong resemblance to characters on the hit television show The Sopranos, who said, "Howyoudoin," instead of "Whassup?!" After this final twist on the original idea, Budweiser's advertising agencies, along with its in-house marketing team, began producing various television spots that more broadly interpreted the tagline "True." These spots included story lines offering honest and affectionate reflections on gender differences and male behavior, commercials with a focus on product quality, and several series of vignettes, such as the well-known "Leon" commercials, which revolved around the comical exploits of an extremely self-centered professional football player.

TALK VALUE

DDB Worldwide Chicago claimed to have pioneered the concept of "talk value," that elusive quality that makes advertising campaigns and phrases cultural touchstones, but the "Whassup?!" campaign far exceeded the agency's and Anheuser-Busch's expectations. The phrase appeared as a headline on the cover of Forbes, and the commercials were parodied on Saturday Night Live in addition to being mentioned countless times in the media while being spread around the world via more than 80 homemade Internet parodies. At the 2000 Grammy Awards performers Christina Aguilera and LeVar Burton imitated the "Whassup?!" commercials on the red carpet, and during that year's NBA season the Sacramento Kings gave a collective cry of "Whassup?!" after each team huddle.

OUTCOME

"Whassup?!" was one of the most acclaimed and popular campaigns in advertising history. It won nearly every major award in the industry, including the prestigious Grand Clio and the Grand Prix at the International Advertising Festival in Cannes, France. During the second year of the "Whassup?!" campaign, Busch was named Advertiser of the Year at the Cannes festival. The campaign's signature phrase earned comparisons to classic advertising phrases like Wendy's "Where's the Beef?" and Nike's "Just Do It." Busch said of the "Whassup?!" campaign, "In our lifetimes, we'll never see so much value created from a single idea. It makes Budweiser a brand for every culture, every demographic and every community. It makes Budweiser a younger, hipper, more contemporary brand."

The decline in Budweiser sales could not be stopped, however. Meanwhile, sales of Bud Light continued to grow at double-digit rates, and in 2001 it surpassed Budweiser to become the best-selling beer in the United States. Anheuser-Busch continued to dominate the domestic beer market. In 2000 the company increased shipments and sales by 2.8 percent, and in 2001 it likewise outperformed the industry, approaching a market share of nearly 50 percent. Budweiser's umbrella "True" campaign, so memorably launched by the "Whassup?!" commercials, continued.

Anheuser-Busch Companies, Inc.

views updated Jun 11 2018

Anheuser-Busch Companies, Inc.

One Busch Plaza
St. Louis, Missouri 63118
U.S.A.
(314) 577-2000
Fax: (314) 577-4013

Public Company
Incorporated: 1979
Employees: 43,345
Sales: $13.19 billion
Stock Exchanges: New York London Frankfurt Tokyo Paris Zurich Geneva Basle Boston Midwest Cincinnati Pacific Philadelphia
SICs: 2082 Malt Beverages; 3411 Metal Cans; 2079 Edible Fats and Oils, Nee.; 2068 Salted and Roasted Nuts and Seeds; 7996 Amusement Parks; 6719 Holding Companies, Nee.

The Anheuser-Busch Companies, Inc. is a diversified corporation with subsidiaries that oversee operations of the world’s largest brewer and U.S. industry leader since 1957; America’s second-largest producer of fresh-baked goods; and one of the largest theme park operations in the country. The company’s 19 brands of malted beverages—including flagships Budweiser, Michelob, and Busch—dominated the U.S. market, with 1993 sales volume comprising over 44 percent of the total brewing industry, including imports. The company operated breweries in five foreign countries and exported Budweiser to over 60 others. Efforts to integrate vertically over the decades have brought Anheuser-Busch into several related industries, including refrigerated transportation, metal container production and recycling, labeling, farming of raw materials, and marketing communications. The company’s other businesses include production of snack foods and baked goods, operation of a chain often theme parks, real estate holdings, and ownership of the St. Louis National Baseball Club, Inc.

Anheuser-Busch has been overseen by a member of its founding family since 1852, when Eberhard Anheuser, a prosperous soap manufacturer in St. Louis, bought a failing brewery from Bavarian immigrant George Schneider. The brewery’s cool underground caverns near the Mississippi River were conducive to good brewing, and Anheuser was determined to turn the business around, but he lacked experience in the industry. He therefore hired his son-in-law, Adolphus Busch, a recent German immigrant schooled in the art of brewing, as his general manager. Together, Anheuser and Busch approached the enterprise with an aggressive business strategy and knowledge in quality brewing, two factors that have informed Anheuser-Busch’s history ever since.

According to a popular company legend, Adolphus Busch obtained the recipe for his beer during a visit to a German monastery. There, monks provided him with a recipe and some of their brewer’s yeast, the secret of their excellent beer. That recipe became the basis of Anheuser-Busch beers, and the original strain of yeast, allegedly preserved for years in Adolphus’ ice-cream freezer, remained in use in the 1990s. Although fictitious, the story highlighted two important philosophies at Anheuser-Busch: only the finest “European” ingredients were to be used and the basic recipe would remain essentially unchanged.

In 1853, Anheuser and Busch increased the rejuvenated brewery’s capacity from 3,000 to 8,000 barrels per year and began to expand their sales effort into Texas and Louisiana, as well as their home state of Missouri. The beverage became increasingly popular, as cowboys reportedly deserted their beloved red-eye whiskey for the light Bohemian beer, which became known as Budweiser in 1891, when the company purchased the rights to the name from the Bohemian brewer of “Budweis.”

Budweiser’s formula was enhanced by innovations in the brewing industry, particularly as pasteurization allowed for longer preservation periods. Moreover, newly invented refrigerated railroad cars permitted the transport of beer across state borders, and the bottling of beer allowed for easier distribution throughout the country. Regional brewers lost their advantage to large breweries such as Anheuser-Busch, which had found the means to supply beer to every state in the union. Despite the growth of its market, however, Anheuser-Busch still referred to itself as a “regional brewery”—an institution that understood the distinct needs and tastes of local people.

Anheuser gave over the day-to-day operations to Busch in the 1870s. The company continued to prosper, and its work force increased. During his tenure, Busch initiated the concept of considering employees members of a family: cared for and nurtured by the company and expected to remain loyal to the company for a lifetime. Anheuser-Busch considered this unique relation between employer and employee, intimate and cooperative, vital in producing an outstanding product.

In the 1890s, Pabst, a competitor, was the best-selling beer in the United States. However, Busch and his “family” thwarted the competition with the introduction of Michelob in 1896. Forceful and frequent advertising promoted Budweiser and Michelob as the most popular beers in the country, and this goal was realized in 1901, when Anheuser-Busch was the leading brewery in the country.

Busch died in 1913, and his son, August A. Busch, Sr., took over; the younger Busch soon focused on diversifying the company’s interests. Toward this end, Busch patented the first diesel engine, which was installed in the brewery to increase production. With the onset of World War I, Busch founded a subsidiary to produce the engines for Navy submarines. In addition, the Anheuser-Busch family purchased sufficient war bonds to finance two bombers—each named “Miss Budweiser.”

After the war, in November 1918, President Wilson signed the bill that instituted Prohibition. During this hiatus, Anheuser-Busch diversified into related fields. Malt syrup was canned and sold to people who required malt for their homemade brews. A refrigeration car company was established to transport perishables. Bevo, a soft drink made from ingredients similar to those in beer, was a great success for three years; it later failed when Prohibition laws concerning the use of yeast forced the company to change ingredients. Nevertheless, Anheuser-Busch began a trend toward diversification that would thereafter characterize the history of the company.

When Prohibition ended, the company experienced an unforeseen problem: people had become used to the sweet taste of the soft drinks and homemade brews that were available during Prohibition and were not willing to return to the more bitter commercial beer. In response, many brewers changed their formulas to achieve a sweeter taste. However, Anheuser-Busch refused to alter the formula for best-selling Budweiser, a decision endorsed by Dr. Robert Gall, the company’s post-Prohibition brewmaster. Instead, the company initiated a major advertising campaign, challenging consumers to a “five day test.” Busch predicted that after five days of drinking Budweiser the consumer would not drink a sweet beer again. The advertising campaign was successful and established a trend for future consumer appeals.

During World War II, the company, led by Adolphus Busch III, again made substantial contributions to the war effort. Anheuser-Busch supplied the military with ammunition hoists, which were in production at a new company subsidiary. Moreover, the distribution of Budweiser beer was withdrawn from the Pacific Coast in order to supply the government with additional freight cars for war essentials, and spent grain was sold to financially troubled war-time farmers for poultry and livestock food. These patriotic actions elevated sales and advanced Anheuser-Busch’s image as a patriotic company.

Between 1935 and 1950, the demand for Anheuser-Busch beer consistently exceeded the supply. In 1941, three million barrels of beer were produced, a figure that doubled by 1950. After the death of Adolphus Busch III in 1946, the company temporarily relinquished its lead in the industry. But with the succession of his brother, August “Gussie” Busch, Jr., the company became the nation’s top brewer once again.

August Busch, Jr. continued the practice of aggressive advertising established by his brother and father, which had involved the distribution of pocket knives and gold pieces; advertisements featuring reproductions of patriotic art such as “Custer’s Last Stand” and the 1933 introduction of the famous Clydesdale horses, which remained popular in the 1990s. Under August Busch, Anheuser-Busch became the first brewery to sponsor a radio network. Positive consumer response prompted William Bien, the vice-president of marketing, to design a legendary advertising campaign: “pick-a-pair-of-six-packs.” The campaign cost $2.5 million for two months, but was the most successful promotion in the history of the beer industry.

Despite its successful promotions, Anheuser-Busch entered a close competition at the beginning of the 1950s with Carling beer. During this time, a holiday was declared in Newark, New Jersey, in honor of the opening of a new Anheuser-Busch factory in that city. However, the new facility and new equipment necessitated a price hike, and Carling profited when its economical beer attracted customers put off by Anheuser-Busch’s higher prices. In response, Busch introduced a new, low-priced lager beer and also pursued aggressive advertising promotions. In 1953, Anheuser-Busch bought the St. Louis Cardinals baseball team, targeting sports fans as a new category of consumers. Ultimately, the company was successful in rebuffing Carling’s challenge.

Another brewery soon attempted to displace Anheuser-Busch from its number one market ranking. Decreasing the price of its beer in the 1960s, the Schlitz brewery hoped to force Anheuser-Busch into a price war. August Busch, Jr. remained confident that consumers would recognize Anheuser-Busch beer as superior in quality. However, public opinion was never tested, as Schlitz committed several marketing and advertising mistakes, and Anheuser-Busch retained its ranking.

During this time, August Busch HI began his career at his father’s company. After attending college for two years in Arizona and undergoing instruction in the art of brewing at a school in Chicago, Busch III started in an entry level position at the company. In 1979, he took over as CEO, vowing to uphold Adolphus Busch’s philosophy that natural ingredients be used to distinguish the company’s fine brewing from the lower quality brewing of other beers.

The Miller Brewing Company challenged this philosophy during the 1970s and 1980s. Miller introduced a light, low calorie beer in 1974, which became the best selling beer for a few months. Although Anheuser-Busch soon edged back into the top ranking, it remained closely followed by the Miller brewery. In response to Miller’s challenge, Anheuser-Busch introduced two light beers in 1977, Natural Light and Michelob Light, and the popular Budweiser Light was introduced soon thereafter.

Under Busch III, the company developed a unique strategy for dealing with competition that included introducing new brands, increasing the advertising budget, and expanding its breweries. Moreover, Busch III refocused the company’s marketing practices to target more specific groups of consumers. He hired a team of 100 college graduates to promote the sale of Anheuser-Busch beers on college campuses. He also oversaw the development of new advertisements designed to appeal to the working class. In the process, the company’s marketing budget quadrupled, and sales increased.

Busch III also adopted a “management control system” that increased the efficiency of the company, redefining it as a modern corporation rather than a small family business. The new management system emphasized planning, teamwork, and communications, controls that, ironically, were intended to promote Anheuser-Busch’s image as a regional brewery producing different beers to satisfy individual tastes. Anheuser-Busch continued to rank first in the brewing industry into the 1980s. By 1980, sales had reached 50 million barrels, increasing to 86.8 million barrels by 1992. While competition with Miller remained intense, the Budweiser brand outsold its next four competitors combined.

Anheuser-Busch initially espoused an acquisition policy of purchasing companies that would enhance its brewing operations, including malt plants in Wisconsin and Minnesota, beer can factories in Florida and Ohio, and yeast plants in Missouri, New Jersey, California, and Florida. The St. Louis Refrigerator Car Company inspected and maintained the 880 refrigerated railroad cars used to transport the company’s beer across the country. Manufacturers Railway shipped Anheuser-Busch beer after it has been manufactured at the brewery with help from the malt and yeast subsidiaries.

Other subsidiaries, however, were soon established that were not directly related to the beer industry. Campbell-Taggart, Inc., the second largest bakery in the United States, was acquired in 1982, associating Anheuser-Busch’s name with the food industry. In the 1980s, 6.7 percent of Anheuser-Busch’s operating income was spent on food products. Another acquisition, Eagle Snacks, Inc., nationally distributed food products to bars, taverns, and convenience stores. Despite intense competition from Frito-Lay and Planters Peanuts, Eagle Snacks enhanced Anheuser-Busch’s beer business by targeting consumers likely to purchase beer to complement their food products.

Anheuser-Busch also developed and acquired theme parks, forming the Busch Entertainment Corporation in 1979. The first “Busch Gardens” had opened 20 years earlier in Tampa, Florida, featured a 300-acre park boasting one of the world’s largest collections of wildlife under private ownership. Another tourist attraction, “The Old Country,” in Williamsburg, Virginia, was modeled after villages in seventeenth-century Europe. Anheuser-Busch also acquired the eight-park Sea World chain of mostly aquatic theme parks in 1989 for $1.3 billion. Although these entertainment parks were not particularly profitable, they helped expose Anheuser-Busch’s name to a new target group—a younger generation and their parents—and enhanced the company’s reputation for contributing to the public welfare. Anheuser-Busch’s ownership of the St. Louis Cardinals served a similar function.

Anheuser-Busch also devoted considerable energy to nurturing its foreign market. The corporation formed Anheuser-Busch International, Inc. in 1981 to expand its presence in the global beer market through joint ventures, licensing agreements, and equity investments in foreign brewers. The corporation’s timing in this venture proved fortuitous: the fall of trade barriers and conversion of formerly communist and socialist governments to free enterprise systems opened a wealth of opportunity for Anheuser-Busch. By 1993, the company’s beers were offered in 21 European countries and ranked as the second most popular lager beer in the Republic of Ireland and the United Kingdom. Budweiser was introduced to Japan in 1981 and stood as that country’s leading import by the early 1990s due to successful promotion to the young adult market. With a nine percent market share worldwide, Anheuser-Busch had the largest export volume of any American brewer in 1993, accounting for over 45 percent of U.S. beer exports.

During the early 1990s, Anheuser-Busch was compelled to face the declining—and more discerning—use of alcoholic beverages among Americans. The company had introduced LA, the first low alcohol beer, in 1984, but this product didn’t prove widely successful. However, LA was replaced by O’Doul’s in 1990, which soon became the nation’s most popular non-alcohol brew. Moreover, as Americans’ tastes grew more refined and microbreweries made unprecedented inroads into the modern beer industry, Anheuser-Busch sought to enhance the appeal of its brew. The company introduced eight new beers between 1984 and 1991, and, by 1993, Anheuser-Busch offered nineteen beer brands, three of which were imports. Anheuser-Busch’s Bud Dry and Ice Draft from Budweiser appealed to such premium-beer drinkers. New brand introductions did not seem to detract from Budweiser’s brand power; the new variations captured 17 percent of the market, while Bud only lost half a share point.

The challenges facing Anheuser-Busch in the early 1990s included an aging population, increasing state and federal excise taxes, a static beer market in the United States, and increased price competition. Acknowledging heightened competition and adverse economic conditions, the company adopted a Profitability Enhancement Program in September 1993, taking a onetime, pre-tax restructuring charge of $565 million, reducing the salaried work force by ten percent, and implementing productivity measures to ensure future success.

Principal Subsidiaries:

Anheuser-Busch, Inc.; Busch Entertainment Corporation; Manufacturers Railway Company; St. Louis Refrigerator Car Company; St. Louis National Baseball Club, Inc.; Busch Properties, Inc.; Metal Container Corporation; Anheuser-Busch Recycling Corporation; International Label Company; Anheuser-Busch International, Inc.; Busch Media Group; Busch Creative Services Corporation; Busch Agricultural Resources, Inc.; Civic Center Corporation; Eagle Snacks, Inc.; Campbell Taggart, Inc.

Anheuser-Busch Companies, Inc.

views updated May 23 2018

Anheuser-Busch Companies, Inc.

One Busch Plaza
St. Louis, Missouri 63118
U.S.A.
Telephone: (314) 577-2000
Toll Free: (800) 342-5283
Fax: (314) 577-2900
Web site: http://www.anheuser-busch.com

Public Company
Incorporated: 1979
Employees: 23,645
Sales: $11.70 billion (1999)
Stock Exchanges: New York London Frankfurt Tokyo Paris Zurich Geneva Basel Boston Midwest Cincinnati Pacific Philadelphia
Ticker Symbol: BUD
NAIC: 31212 Breweries; 332431 Metal Can Manufacturing; 71311 Amusement and Theme Parks; 23311 Land Subdivision and Land Development

Anheuser-Busch Companies, Inc. is the largest brewer in the world, producing more than 100 million barrels of beer each year. The company’s primary brands, Budweiser, Bud Light, Michelob, and Busch, are market leaders, enabling the massive St. Louis enterprise to claim nearly 50 percent of the U.S. beer market. Anheuser-Busch also operates nine theme parks, including Busch Gardens and Sea World properties at several locations.

19th-century Origins

Anheuser-Busch has been overseen by a member of its founding family since 1852, when Eberhard Anheuser, a prosperous soap manufacturer in St. Louis, bought a failing brewery from Bavarian immigrant George Schneider. The brewery’s cool underground caverns near the Mississippi River were conducive to good brewing, and Anheuser was determined to turn the business around, but he lacked experience in the industry. Therefore, he hired his son-in-law, Adolphus Busch, a recent German immigrant schooled in the art of brewing, as his general manager. Together, Anheuser and Busch approached the enterprise with an aggressive business strategy and knowledge in quality brewing, two factors that have informed Anheuser-Busch’s history ever since.

According to a popular company legend, Adolphus Busch obtained the recipe for his beer during a visit to a German monastery. There, monks provided him with a recipe and some of their brewer’s yeast, the secret of their excellent beer. That recipe became the basis of Anheuser-Busch beers, and the original strain of yeast, allegedly preserved for years in Adolphus’s ice cream freezer, remained in use in the 1990s. Although fictitious, the story highlighted two important philosophies at Anheuser-Busch: only the finest “European” ingredients were to be used and the basic recipe would remain essentially unchanged.

Anheuser gave over the day-to-day operations to Busch in the 1870s. The company continued to prosper, and its workforce increased. During his tenure, Busch initiated the concept of considering employees members of a family: cared for and nurtured by the company and expected to remain loyal to the company for a lifetime. Anheuser-Busch considered this unique relationship between employer and employee, intimate and cooperative, vital in producing an outstanding product.

In the 1890s, Pabst, a competitor, was the best-selling beer in the United States. Busch and his “family” thwarted the competition, however, with the introduction of Michelob in 1896. Forceful and frequent advertising promoted Budweiser and Michelob as the most popular beers in the country, and this goal was realized in 1901, when Anheuser-Busch became the leading national brewery.

After the war, in November 1918, President Woodrow Wilson signed the bill that instituted Prohibition. During this hiatus, Anheuser-Busch diversified into related fields. Malt syrup was canned and sold to people who required malt for their homemade brews. A refrigeration car company was established to transport perishables. Bevo, a soft drink made from ingredients similar to those in beer, was a great success for three years; it later failed when Prohibition laws concerning the use of yeast forced the company to change ingredients. Nevertheless, Anheuser-Busch began a trend toward diversification that would thereafter characterize the history of the company.

When Prohibition ended, the company experienced an unforeseen problem: people had become used to the sweet taste of the soft drinks and homemade brews that were available during Prohibition and were not willing to return to the more bitter commercial beer. In response, many brewers changed their formulas to achieve a sweeter taste. However, Anheuser-Busch refused to alter the formula for best-selling Budweiser, a decision endorsed by Dr. Robert Gall, the company’s post-Prohibition brewmaster. Instead, the company initiated a major advertising campaign, challenging consumers to a “five-day test.” Busch predicted that after five days of drinking Budweiser the consumer would not drink a sweet beer again. The advertising campaign was successful and established a trend for future consumer appeals.

During World War II, the company, led by Adolphus Busch III, again made substantial contributions to the war effort. Anheuser-Busch supplied the military with ammunition hoists, which were in production at a new company subsidiary. Moreover, the distribution of Budweiser beer was withdrawn from the Pacific Coast in order to supply the government with additional freight cars for war essentials, and spent grain was sold to financially troubled wartime farmers for poultry and livestock food. These patriotic actions elevated sales and advanced Anheuser-Busch’s image as a patriotic company.

Post-World War II Expansion and Diversification

August Busch, Jr., continued the practice of aggressive advertising established by his brother and father, which had involved the distribution of pocket knives and gold pieces; advertisements featuring reproductions of patriotic art such as “Custer’s Last Stand” ; and the 1933 introduction of the famous Clydesdale horses, which remained popular in the 1990s. Under August Busch, Anheuser-Busch became the first brewery to sponsor a radio network. Positive consumer response prompted William Bien, the vice-president of marketing, to design a legendary advertising campaign: “pick-a-pair-of-six-packs.” The campaign cost $2.5 million for two months, but was the most successful promotion in the history of the beer industry.

Despite its successful promotions, Anheuser-Busch entered a close competition at the beginning of the 1950s with Carling beer. During this time, a holiday was declared in Newark, New Jersey, in honor of the opening of a new Anheuser-Busch factory in that city. The new facility and new equipment necessitated a price hike, however, and Carling profited when its economical beer attracted customers put off by Anheuser-Busch’s higher prices. In response, Busch introduced a new, low-priced lager beer and also pursued aggressive advertising promotions. In 1953, Anheuser-Busch bought the St. Louis Cardinals baseball team, targeting sports fans as a new category of consumers. Ultimately, the company was successful in rebuffing Carling’s challenge.

Another brewery soon attempted to displace Anheuser-Busch from its number one market ranking. Decreasing the price of its beer in the 1960s, the Schlitz brewery hoped to force Anheuser-Busch into a price war. August Busch, Jr., remained confident that consumers would recognize Anheuser-Busch beer as superior in quality. Public opinion, however, was never tested, as Schlitz committed several marketing and advertising mistakes, and Anheuser-Busch retained its ranking.

Company Perspectives:

Innovation, a long-standing strategy at Anheuser-Busch, represents the path to greatness. Adolphus Busch employed this strategy 120 years ago to make Budweiser the first national beer —using new ideas like pasteurizing beer, refrigerating railcars to transport it across the country and mobilizing grassroots salespeople to market the product. Today, Anheuser-Busch has some of the most innovative brewing, packaging and adventure-park facilities in the world. Leaders keep their eye on the future and continually find new ways to think about their business. Anheuser-Busch is no exception.

During this time, August Busch III began his career at his father’s company. After attending college for two years in Arizona and undergoing instruction in the art of brewing at a school in Chicago, Busch III started in an entry-level position at the company. In 1979, he took over as CEO, vowing to uphold Adolphus Busch’s philosophy that natural ingredients be used to distinguish the company’s fine brewing from the lower quality brewing of other beers.

The Miller Brewing Company challenged this philosophy during the 1970s and 1980s. Miller introduced a light, low-calorie beer in 1974, which became the best-selling beer for a few months. Although Anheuser-Busch soon edged back into the top ranking, it remained closely followed by the Miller brewery. In response to Miller’s challenge, Anheuser-Busch introduced two light beers in 1977, Natural Light and Michelob Light, and the popular Budweiser Light was introduced soon thereafter.

Busch III also adopted a “management control system” that increased the efficiency of the company, redefining it as a modern corporation rather than a small family business. The new management system emphasized planning, teamwork, and communications, controls that, ironically, were intended to promote Anheuser-Busch’s image as a regional brewery producing different beers to satisfy individual tastes. Anheuser-Busch continued to rank first in the brewing industry into the 1980s. By 1980, sales had reached 50 million barrels, increasing to 86.8 million barrels by 1992. Although competition with Miller remained intense, the Budweiser brand outsold its next four competitors combined.

Anheuser-Busch initially espoused an acquisition policy of purchasing companies that would enhance its brewing operations, including malt plants in Wisconsin and Minnesota, beer can factories in Florida and Ohio, and yeast plants in Missouri, New Jersey, California, and Florida. The St. Louis Refrigerator Car Company inspected and maintained the 880 refrigerated railroad cars used to transport the company’s beer across the country. Manufacturers Railway shipped Anheuser-Busch beer after it was manufactured at the brewery with help from the malt and yeast subsidiaries.

Anheuser-Busch also developed and acquired theme parks, forming the Busch Entertainment Corporation in 1979. The first “Busch Gardens” opened 20 years earlier in Tampa, Florida, and featured a 300-acre park boasting one of the world’s largest collections of wildlife under private ownership. Another tourist attraction, “The Old Country,” in Williamsburg, Virginia, was modeled after villages in 17th-century Europe. Anheuser-Busch also acquired the eight-park Sea World chain of mostly aquatic theme parks in 1989 for $1.3 billion. Although these entertainment parks were not particularly profitable, they helped expose Anheuser-Busch’s name to a new target group—a younger generation and their parents—and enhanced the company’s reputation for contributing to the public welfare. Anheuser-Busch’s ownership of the St. Louis Cardinals served a similar function.

Anheuser-Busch also devoted considerable energy to nurturing its foreign market. The corporation formed Anheuser-Busch International, Inc. in 1981 to expand its presence in the global beer market through joint ventures, licensing agreements, and equity investments in foreign brewers. The corporation’s timing in this venture proved fortuitous: the fall of trade barriers and conversion of formerly communist and socialist governments to free enterprise systems opened a wealth of opportunity for Anheuser-Busch. By 1993, the company’s beers were offered in 21 European countries and ranked as the second most popular lager beer in the Republic of Ireland and the United Kingdom. Budweiser was introduced to Japan in 1981 and stood as that country’s leading import by the early 1990s because of successful promotion to the young adult market. With a nine percent market share worldwide, Anheuser-Busch had the largest export volume of any American brewer in 1993, accounting for more than 45 percent of U.S. beer exports.

Key Dates:

1852:: St. Louis soap merchant Eberhard Anheuser acquires the Bavarian Brewery.
1853:: Anheuser, together with son-in-law Adolphus Busch, expand sales into Texas and Louisiana.
1876:: Budweiser is introduced.
1896:: Michelob is introduced.
1936:: Budweiser is packaged in cans for the first time.
1955:: The Busch brand is launched.
1959:: Company’s first amusement park, Busch Gardens, opens in Tampa, Florida.
1964:: Annual production reaches ten million barrels.
1982:: Bud Light is introduced.
1984:: Through licensed brewers, Budweiser is introduced in England and Japan.
1989:: Anheuser-Busch Companies purchases Sea World.
1997:: Worldwide annual production eclipses 100 million barrels.

Adjusting to a New Marketplace: 1990s

During the early 1990s, Anheuser-Busch was compelled to face the declining—and more discerning—use of alcoholic beverages among Americans. The company had introduced LA, the first low alcohol beer, in 1984, but this product did not prove widely successful. LA was replaced by O’Doul’s in 1990, however, which soon became the nation’s most popular nonalcohol brew. Moreover, as Americans’ tastes grew more refined and microbreweries made unprecedented inroads into the modern beer industry, Anheuser-Busch sought to enhance the appeal of its brew. The company introduced eight new beers between 1984 and 1991, and, by 1993, Anheuser-Busch offered 19 beer brands, three of which were imports. Anheuser-Busch’s Bud Dry and Ice Draft from Budweiser appealed to such premium beer drinkers. New brand introductions did not seem to detract from Budweiser’s brand power; the new variations captured 17 percent of the market, while Bud only lost half a share point.

As the decade progressed, so too did the growth of the craft-brewing industry, forcing the nation’s three largest brewers to take heed of the beer industry’s upstarts. Anheuser-Busch’s closest rivals, Adolph Coors Company and Miller Brewing Company, introduced a host of new brands during the mid-1990s as a riposte. Anheuser-Busch followed suit, but to a much lesser extent, pursuing a more conservative strategy that proved to be a prudent approach later in the decade when many of the specialty brands introduced by the big breweries were confirmed failures. Bill Weintraub, the senior vice-president of Adolph Coors, noted as much. “I think they’ve (Anheuser-Busch) understood that supporting their core brands is a smarter way to build brands over the long term,” he conceded in the May 5, 1997 issue of Brandweek.Although Anheuser-Busch invested substantially in the craft-brewing phenomenon—including signing a distribution and equity partnership agreement in 1994 with Red Hook Brewery, a leading craft brewer—the company’s primary focus was on its core brands.

Amid a flurry of new beer brands introduced during the mid-1990s, Anheuser-Busch scaled back its operations, divesting properties while other large brewers expanded their portfolios. In 1995, the company announced it was severing its ties with Eagle Snacks after 17 years of losses. Concurrently, Anheuser-Busch announced it was divesting itself of the St. Louis Cardinals and Busch Memorial Stadium properties. In 1994, the baseball franchise posted a loss of $12 million, and Eagle Snacks racked up $25 million in losses. The divestitures were made so that the company could direct more of its attention and resources to beer and theme parks, the two principal areas of Anheuser-Busch’s focus for the future.

Of particular importance was injecting new life in the company’s all-important Budweiser brand, which was suffering from stagnant sales growth as the company entered the mid-1990s. Internationally, the company was realizing encouraging growth, thanks in large part to investments such as the 50 percent of Grupo Modelo (brewer of Corona beer) acquired in 1993 and the majority stake purchased in the Chinese brewer Budweiser Wuhan International Brewing Company, in 1995, but domestically the brand’s sales had flattened. The task of spurring Budweiser sales fell to August Busch IV, whom many regarded as the next in line to lead the family business. (In 1997, August Busch III announced his intention to retire in 2003.) Under the 30-year-old’s direction, a revamped marketing plan was developed that aimed at winning over younger consumers, who had gravitated to imports and mi-crobrews. “There was a culture weaved into the Budweiser brand,” the younger Busch explained to Fortune on January 13, 1997. “No one wanted to change it.” August Busch IV spearheaded the widely popular “talking frogs” advertising campaign for Budweiser and the successful “I Love You Man” advertising campaign for Bud Lite, both of which were credited with lifting sales. In 1997, two years after the irreverent, youth-oriented advertising campaigns were launched, annual worldwide beer volume (including the interests Anheuser-Busch held in other breweries) eclipsed 100 million barrels for the first time, as Budweiser sales moved measurably upward.

At the end of the 1990s, Anheuser-Busch’s dominance of the U.S. beer industry testified to the prolific growth of the company during the 20th century. By 1999, the company’s share of the U.S. beer market had risen to 47.5 percent, fueling confidence that August Busch Ill’s goal of capturing 60 percent of the market by 2005 could be achieved.

Principal Subsidiaries

Anheuser-Busch, Inc.; Busch Entertainment Corporation; Manufacturers Railway Company; St. Louis Refrigerator Car Company; Busch Properties, Inc.; Metal Container Corporation; Anheuser-Busch Recycling Corporation; Anheuser-Busch International, Inc.; Busch Media Group, Inc.; Busch Creative Services Corporation; Busch Agricultural Resources, Inc.; Precision Printing & Packaging, Inc.

Principal Competitors

Miller Brewing Company; Adolph Coors Company; Heineken N.V.

Anheuser-Busch Companies, Inc.

views updated May 18 2018

Anheuser-Busch Companies, Inc.

founded: 1852

Contact Information:

headquarters: 1 busch pl.
st. louis, mo 63118 phone: (314)577-2000 fax: (314)577-7622 toll free: (800)dial-bud url: http://www.anheuser-busch.com http://www.budweiser.com

OVERVIEW

Anheuser-Busch Companies, Inc. is a St. Louis-based corporation with subsidiaries that include the world's largest brewing organization, the second-largest U.S. manufacturer of aluminum beverage containers, and one of the largest theme-park operators in the United States. Anheuser-Busch is also involved in producing malt, milling rice, developing real estate, and other business activities. In 1997 Anheuser-Busch Companies had worldwide sales of $12.8 billion.

Anheuser-Busch, Inc. (ABI), a subsidiary of Anheuser-Busch Companies, is the largest brewer in the world. In 1998, ABI accounted for 46.9 percent of all the beer sold in the United States, compared to 22.7 percent for the second largest U.S. brewer, Miller Brewing Company. ABI sold a total of 96.6 million barrels of beer in 1997. The company's Budweiser beer, with it famous "King of Beers" slogan, is by far the best selling brand of beer, with 21 percent of the U.S. market.

COMPANY FINANCES

In 1997, Anheuser-Busch reported gross sales of $12.8 billion, up 1.7 percent from 1996 sales of $12.6 billion. Net sales for 1997 were $11 billion, compared to $10.8 billion in 1996. All divisions performed well and realized increased revenues, including the Busch Entertainment Corp. (theme parks), which exceeded $100 million in operating profits for the first time. Gross sales for the first quarter of 1998 were reported as $2.9 billion, $87 million more than first quarter 1997 sales, an increase of 3.1 percent. The company's theme park operations noticed a loss in earnings over the period from first quarter 1997 to first quarter 1998, however, as did its international beer operations. The decline in international operations was attributed by Anheuser-Busch to 1997's unusually strong first quarter, during which new operations were opened in China, Argentina, and the Philippines. Worldwide beer volume rose 4.4 percent in 1998's first quarter, while domestic beer volume increased by 5.3 percent.

In 1997, Anheuser-Busch paid $1 per share dividends to shareholders, an 8.7-percent increase over dividends paid in 1996 of $.92 per share. Anheuser-Busch stock showed a 52-week high of $49.31 per share, and its 52-week low was $38 1/2. Anheuser-Busch earnings per share were $.54 in the first quarter of 1998, 5.9 percent more than the same period in 1997.

ANALYSTS' OPINIONS

Opinions of stock market analysts on Anheuser-Busch (A-B) Companies have appeared to be somewhat mixed. For example, in a November 1997 report, JP Morgan Securities Inc. recommended Anheuser-Busch stock only as a "long-term buy," citing reasons such as price constraints in the U.S. market (meaning Anheuser-Busch could not raise its prices) and because analysts expected lower earnings per share from 1997-99. JP Morgan did cite some factors that could offset the impact of this on A-B stock, such as better cost containment by the company and more revenue contributions from Grupo Modelo in Mexico.

However, in 1998 Brown Brothers Harriman rated Anheuser-Busch as "outperform/buy," citing expected increases in the company's earnings per share, an expected increase in domestic consumption, and growth in Bud Light sales. The company's growth in international business and increases in overall demand for A-B products prompted other analysts, such as those at CIBC Oppenheimer, to rate the company a "strong buy," while others remained neutral on A-B stock. Analysts at Zacks Investment Research and Morgan Stanley recommended a "hold" rating on Anheuser-Busch stock through 1998, citing a sluggish domestic market for beer and an expected modest 3-percent growth rate for the company.

HISTORY

Anheuser-Busch was founded in 1852 as the Bavarian Brewery in St. Louis by George Schneider, who sold the brewery eight years later to Eberhard Anheuser. Anheuser's son-in-law, Adolphus Busch, joined the company in 1865, eventually becoming a partner and president of the company. In 1876, Busch helped restaurateur Carl Conrad create Budweiser beer—rights to the name Budweiser had been purchased from another brewery. In 1896, they created the Michelob brand.

When Adolphus died in 1913, his son August took over the company, which was re-named Anheuser-Busch, Inc. in 1919. Anheuser-Busch has grown from its roots as a regional beer company into the largest international brewer/marketer and a leading operator of theme parks. During prohibition, when it could not sell beer, the company nearly went under, but survived by selling other products such as ice cream, ginger ale, malt syrup, and nonalcoholic Budweiser. Once Prohibition was repealed, in the 1930s the firm began a steady ascent toward the top of the beer business. By 1957, Anheuser-Busch surpassed Schlitz in sales to become the largest U.S. brewer, a title it has held ever since. Busch Entertainment Corp., a theme park operator, was created in 1959 with the opening of Busch Gardens in Tampa, Florida. In 1982, Anheuser-Busch bought Campbell Taggart, a baked goods maker, and also created its Eagle snack foods unit. Both were sold off in 1996, taking the company out of the food business. That same year the company also sold the St. Louis Cardinals, an earlier acquisition. In 1989, Anheuser-Busch acquired Sea World from Harcourt Brace Jovanovich, adding Anheuser-Busch to the ranks of the country's largest theme park operators.

STRATEGY

In the mid-1990s Anheuser-Busch Companies summed up its corporate strategy with four key phrases, which still applied in 1998: focusing on the core businesses of beer, entertainment, and packaging; leveraging resources; thinking differently; and "making friends." The company's focus on core businesses was illustrated by its exit from unrelated businesses (see History above). The company planned to leverage its resources by investing $2 billion in its brewery systems from 1996 to 2001, increasing its quality standards, expanding internationally, and creating new "specialty" beers. They also used aggressive marketing to capitalize on core brands. One of the most successful campaigns was Budweiser Concentration Week, the largest selling promotion in Anheuser-Busch's history, in which employees and wholesalers "hit the streets" selling Budweiser.

"Thinking differently" applied to improving relationships with wholesalers and re-engineering internal management systems. And "making friends" referred to the promotion of the safe use of alcoholic beverages, increasing the company's charitable activities, and promoting environmental conservation. Another corporate strategy, articulated in 1998, focused on reducing costs, improving productivity, and changing the company's pricing strategies in order to increase the profit margin, rather than increasing price.

Global marketing was clearly on the mind of Anheuser-Busch in the late-1990s, since the global beer market was four times larger than the U.S. market. As of 1997 Anheuser-Busch's beer brands were sold in more than 80 countries, either as an imported beer or produced locally under license. While brewing traditionally has been a local industry, Anheuser-Busch was expanding into China, Japan, Mexico, Brazil, and other countries in the mid-1990s. In the early 1990s, Anheuser-Busch bought a 5-percent stake in Tsingtao, China's largest brewery, for $16.4 million and later purchased 80 percent of a large brewery in Wuhan in central China. The company also spent $600 million buying shares of leading breweries in Mexico and Brazil.

FAST FACTS: About Anheuser-Busch Companies, Inc.

Ownership: Anheuser-Busch Companies, Inc. is a publicly owned company listed on the New York Stock Exchange and other stock exchanges around the world.

Ticker symbol: BUD

Officers: August A. Busch, III, 59, Chmn. & Pres.; W. Randolph Baker, 50, VP & CFO; Patrick T. Stokes, 54, VP & Group Exec.; John H. Purnell, 55, VP & Group Exec.

Employees: 24,326

Principal Subsidiary Companies: Anheuser-Busch Companies, Inc., is the parent company for Anheuser-Busch, Inc. (U.S. brewing); Anheuser-Busch International, Inc. (overseas brewing and marketing); Busch Agricultural Resources, Inc. (raw materials for brewing); Busch Media Group, Inc. (advertising placement); Busch Creative Service Corporation (marketing and business communication); St. Louis Refrigerator Car Company (railroad car maintenance and repair); Manufacturers Railway Company (terminal rail-switching services); Metal Container Corporation (aluminum can manufacturing); Anheuser-Busch Recycling Corporation (collection of recyclable materials); Precision Printing and Packaging, Inc. (labels and cartons); Busch Entertainment Corporation (theme parks); and Busch Properties, Inc. (real estate development).

Chief Competitors: Anheuser-Busch is primarily a maker and distributor of beer. As such, its primary competitors are: Adolph Coors Co.; Bass; Boston Beer Co.; Carlsberg; Guinness; Heineken; Inter-brew; Molson; Miller Brewing Co.; Stroh Brewery Co.; and San Miguel. As an owner and operator of theme parks, Anheuser-Busch also includes among its competitors Six Flags; Viacom, Inc.; and Walt Disney Co.

The company established an international division in 1981, but major growth in international sales did not begin until the mid-1990s. One observer noted that Anheuser-Busch's international efforts "were going nowhere" until the company gave up efforts to set up its own overseas operations and began establishing partnerships with foreign brewers in the early 1990s. After that, results were more promising. For example, Anheuser-Busch's international volume grew 13.4 percent in 1997, to 7 million barrels. However, this was still a small total compared with its U.S. sales of 89.6 million barrels. In 1997, Anheuser-Busch had an 8-percent share of the worldwide beer market.

Anheuser-Busch planned to grow internationally through a complex web of joint marketing agreements, local brewing, import distribution agreements, joint ventures, contract brewing, and equity investments. In 1997 sales outside the U.S. market increased by 13 percent. The company also planned to build Budweiser as a global brand, focusing on marketing the beer in countries with rising growth rates and standards of living. Sales of Budweiser overseas increased by 18 percent in 1997, mostly in China, the United Kingdom, Ireland, and South America.

INFLUENCES

Today, the company is known as much for its intensive and creative marketing as for its beer. Despite fierce competition, A-B's creative television and print advertising has kept its flagship "Bud" brand on top of the beer market. In the mid-1990s, nearly all A-B beer brands were growing despite slow growth in the overall beer market. Bud Light was particularly successful, growing fast enough to overtake Miller Lite as the nation's number-one light beer.

In 1996 Anheuser-Busch made a major marketing change by using "freshness dating" on its Budweiser beer. The company called the freshness dating a "born on" date to show that its beer is brewed, transported, and sold quickly. The company aggressively focused on this new concept in a major television advertising campaign and continued to use this as a strategy illustrating the beer's high quality in the late 1990s.

CURRENT TRENDS

Even though specialty beers accounted for a small part of the U.S. beer market in the mid-1990s—about 2 percent—large breweries such as Anheuser-Busch began making specialty beers under different labels to appeal to people who like exotic beer. One of the specialty beers introduced by Anheuser-Busch's Specialty Brewing Group was Pacific Ridge Pale Ale, which was launched in California in November 1996. Other brands included Red Wolf, Elk Mountain Amber Ale, ZiegenBock, and Christmas Brew.

At the same time, the company aggressively challenged much smaller specialty brewers. In 1996, the company went so far as to petition the U.S. Bureau of Alcohol, Tobacco & Firearms to require small "contract brewers," which market specialty beers that are actually made at larger breweries, to state the name of the company that brews the beer on labels and advertisements. The petition was supported by some microbrewers who brew beer in their own establishments.

Another major trend Anheuser-Busch faced in the mid-1990s was social and regulatory pressure over its marketing tactics, particularly television advertising. Most of the controversy was concerned with the effect of advertising for beer and other alcoholic beverages on teenagers. While Anheuser-Busch said that its marketing and advertising was geared at an adult audience, many consumer activists claimed that the "spillover" effect of such marketing encouraged underage drinking.

CHRONOLOGY: Key Dates for Anheuser-Busch Companies, Inc.

1852:: Founded as Bavarian Brewery
1860:: Is sold to Eberhard Anheuser
1865:: Adolphus Busch joins the company
1876:: Purchases the Budweiser beer brand
1896:: Creates the Michelob brand
1913:: Adolphus Busch dies
1919:: Company renamed Anheuser-Busch, Inc.
1920:: Prohibition closes the brewery for thirteen years
1934:: August Busch dies
1953:: Acquires St. Louis Cardinals
1957:: Becomes largest U.S. brewer
1959:: Opened Busch Gardens in Tampa, Florida
1981:: Establishes an international division
1982:: Buys Campbell Taggart and creates Eagle snack foods unit
1989:: Acquires Sea World
1996:: Sells Eagle Snack Foods, Campbell Taggart, and the St. Louis Cardinals; introduces freshness dating and Bud Ice

As a result, Anheuser-Busch and other brewers tried to create a more favorable image by funding programs that encourage abstinence for people under 21 and responsible drinking for adults. The company also modified some of its marketing tactics. For example, in response to regulatory pressures, Anheuser-Busch removed its beer commercials from the cable channel MTV in 1996 since many MTV viewers were below the legal drinking age. However, MTV Networks planned to transfer most of the ads to its affiliate, VH-1, which is oriented toward adults.

PRODUCTS

Anheuser-Busch extended its product line in 1997, adding new specialty extensions to its Michelob line. These included Honey Lager and Pale Ale, released in the United States. HefeWeizen, another brand, was expanded from select markets to national availability. And Black and Tan was planned for national release in 1998. Seasonal beers were also planned under the Michelob name, including Maple Brown Ale and Winterbrew Spiced Ale.

In Japan, Anheuser-Busch also extended its product line. Through its existing alliance with the Kirin Brewery Company, the company began brewing Kirin Lager, Kirin Ichiban, and Kirin Light at the A-B Los Angeles brewery. The joint venture, the first time Anheuser-Busch has brewed foreign brands for U.S. sale, is 90-percent owned by Kirin.

CORPORATE CITIZENSHIP

Anheuser-Busch and its charitable foundations donated funds to hundreds of charitable organizations in the mid-1990s, helping to provide relief after disasters like the Oklahoma City bombing, flooding, and hurricanes. The company also funded educational opportunities through the United Negro College Fund, National Hispanic Scholarship Funds, and National Korean American Scholarship Foundation. Anheuser-Busch donates to health care institutions, the arts, civic and cultural groups, and social service agencies. The company also participates in alcohol awareness and education, sponsoring programs that send a message of personal responsibility in schools, in the home, and anywhere that sells alcohol. The company's goal is to work with teachers, law enforcement, and community organizations to fight drunk driving and underage drinking. They teamed up with 7-Eleven and created a program promoting "Family Talk About Drinking." 7-Eleven stores post prominent notices to make the public aware of the program, information about which patrons can receive by calling 800-359-TALK.

Anheuser-Busch is also the world's largest recycler of aluminum beverage containers. The company's recycling efforts are coordinated by the Anheuser-Busch Recycling Corporation, which recycled 125 percent of the amount of cans actually sold by Anheuser-Busch in 1997.

GENTLE GIANTS—THE BUDWEISER CLYDESDALES

Working together in eight-horse teams called hitches, the Budweiser Clydesdales are arguably one of the greatest American icons. First introduced in 1933 to celebrate the end of Prohibition, the Clydesdales have risen to immense popularity. However, these horses have to pass strict standards to earn a place on the team. An acceptable horse must be 72 inches tall at the shoulder, be reddish-brown (bay) with a black mane and tail, have white stockings on all four legs, and a white blaze on its face; it must also have passed its third birthday.

Descended from ancient European war horses, the Clydesdales have been bred in North America to be powerful enough to pull a wagon or a plow. Anheuser-Busch is dedicated to preserving the Clydesdales and maintains breeding and training facilities at Grant's Farm in St. Louis, Missouri, and in Romoland, California. From there horses that meet the standards are trained and sent to one of three touring hitches in St. Louis, Romoland, or Merrimack, New Hampshire; or they are sent to one of Anheuser-Busch's theme parks so visitors can see them.

The touring hitches travel all over the world to perform at special events such as the Rose Bowl and other parades. Before a hitch can make an appearance they must be groomed and decorated with red, white, and blue ribbons woven through their manes and tails. The handlers hitch them up to an antique four-ton brewery wagon using a custom made black leather harness. The finishing touch on every hitch is a dalmatian. The Clydesdales are beautiful to watch as they perform "high, graceful strides" while pulling the wagon, and people come from miles around to see them. Thanks to Anheuser-Busch, the next generation will enjoy them, too.

GLOBAL PRESENCE

Anheuser-Busch's two main strategies for global operations were to build Budweiser into an "international premium brand" and to build partnerships with foreign brewers. The company's largest and most profitable foreign market was the United Kingdom, in which the Budweiser brand showed double-digit growth rates—Budweiser had 2.9-percent market share of the U.K. market at the end of 1997. Bud Ice, introduced in 1996, holds 25 percent of the United Kingdom's ice beer market. Through a partnership with Guinness Ireland, Budweiser has been introduced into Northern Ireland and captured 25.4-percent share in the lager market there. Budweiser has also been successfully introduced into Paraguay, Brazil, Colombia, Honduras, China, and the Philippines. Latin America and Asia were still considered "key strategic markets" by the company in 1998.

In 1996 Anheuser-Busch began making beer for Japan's Kirin Brewery, the company's first attempt to make a foreign brand of beer. At the same time it ended talks to obtain the rights to the Budweiser name throughout Europe, which it sold previously. Anheuser-Busch continued the same arrangement it had for decades: it kept the Budweiser name in 11 European countries while Czech brewer Budvar Budejovicky owned it in nine others (in those countries, Anheuser-Busch uses the alternative, "Bud").

SOURCES OF INFORMATION

Bibliography

Anheuser-Busch Companies Annual Report 1997. St. Louis: Anheuser-Busch Companies, Inc.

Anheuser-Busch Companies 1996/1997 Fact Book. St. Louis: Anheuser-Busch Companies, Inc.

"The Beer Barons Raise Their Glasses to the World." The Economist, 13 May 1995, 61.

"It's a Small World for U.S. Brewers; International Beer Sales Are Flourishing, Providing a Pleasant Change From a Flat Domestic Market." Beverage Industry, May 1996, 10.

Palmer, Jay. "Brewing Storm: New Beer Makers Gain Popularity, But Trouble May Bubble Up." Barron's, 28 October 1996, 37.

For an annual report:

The company's annual report is available on the Internet at: http://www.anheuser-busch.com/finhome.htm or call (314)577-3889 or write: Vice President and Secretary's Office, Anheuser-Busch Companies, 1 Busch Pl., St. Louis, MO 63118.