Lime is the new black, apparently, at least according to Anheuser-Busch‘s recent marketing efforts. Last year, SABMiller had some success with their Miller Chill, flavored with lime and approximating a Mexican drink known as a Michelada in much the same way Taco Bell makes authentic Mexican food. Because that couldn’t be tolerated, A-B launched three of their own michelada-like beers, two under the name Chelada — Budweiser and Bud Light premixed with Clamato — and also Michelob Ultra Fruit Lime Cactus. As Lew Bryson points out in a comment to his own take on Michelada’s, The Big Chelada, there’s nothing new about pre-packaged cocktails, beer or otherwise. People will pay for convenience because we’re all busy multi-tasking. I tend to prefer to mix my own cocktails, but I understand why they’re popular.
Lime in beer is also nothing new, either, even north of the border. Some clever marketeer years ago put a wedge of lime in a Corona — more than likely to mask the fact that it’s almost always skunked — and so many consumers are already preconditioned to accept lime as a flavoring agent in beer. Even if Latin Americans hadn’t been using it in various forms of micheladas for decades, that fact alone probably makes it an easier sell.
|Now Anheuser-Busch is firing another shot over the bow at Miller Chill with the announcement of yet another line extension: Bud Light Lime. The new beer will be rolled out nationally in May, and will be supported by $35 million in advertising, according to Advertising Age. Brandweek also notes that a tagline hasn’t been decided upon nor has an ad agency been assigned the task of coming up with one yet. The Lime will be priced higher than regular Bud and Bud Light, around $1-1.50 more, and will be packaged in clear bottles with “BL Lime” on the label. Initial sizes will be six-packs and 12-packs. A-B is spinning the story that the beer has been in development for two years now, in an effort to deflect the appearance of copying.|
They may claim they started working on this long before Miller did, but there seems to be a pretty clear pattern of this sort of behavior stretching back some distance. Let’s not forget Bud Light itself was launched in response to the huge success of Miller Lite, which debuted in 1975. When Japan started making dry beer, A-B launched Bud Dry. When Molson brought Ice Beer to the U.S., A-B countered with Bud Ice. When tequila-flavored beers made a brief appearance, A-B put out Tequiza. When malternatives hit the scene, A-B came out with Doc Otis. When organic beer started gaining in popularity ever so slightly, A-B made up Wild Hop Lager and Stone Mill Pale Ale. When a few very small breweries began making gluten-free beers, A-B created Redbridge.
You could say that any business worth its salt (and lime) would do the same, that they were merely responding to the market. Maybe, but I think there’s something more at work in this strategy. I can’t really think of a niche that A-B hasn’t tried to dominate or crush. As Dave Peacock, vice president of marketing, said in the St. Louis Post-Dispatch a few days ago, “[t]his lets us address a gap.”
By “gap,” of course, Peacock means any space in the market where A-B isn’t the dominant player. A-B might quite possibly be the biggest high-alpha dog of all-time, and they seem to view the smallest crack as a monstrously wide gap that needs filling. I can’t think of another industry, especially in the food and beverage world, that has a nearly fifty-percent share and still feels so threatened by any would-be competitor, no matter how slight. I’m sure some will insist that’s the way you stay on top, by treating every threat seriously. I’m equally sure there are plenty of business tomes that will advise that very strategy, but that doesn’t mean I have to like it or find that it’s fair.
Craft brewers manage to carve out small niches within their already small niche and don’t usually try to crush one another in the process. Perhaps that’s because they’re all small and scraping and clawing their way up. Maybe, but there is another way. There are smaller sustainable businesses that realize staying a certain size and remaining at a static profit level is possible, and even desirable. Growth can rarely be sustained indefinitely, but equilibrium can. Anchor Brewery was profiled as one such company is a book called Small Giants, in which the author found hundreds of businesses that fit that model, and quite a few more that had problems maintaining their initial vision as they grew larger. “The bigger you get, the harder it is to preserve that passion,” [author Bo Burlingham] says. “In business, it’s easy to confuse size with greatness. Companies of all sizes can be great.”
Many of the regional craft brewers that started out small, like Sierra Nevada and New Belgium, have grown to their current size while remaining active participating members of the beer community, as supportive and helpful to the health of their smaller brethren as when they were small, too. A recent and wonderful example of this was the announcement yesterday that Jim Koch would be sharing ten tons of Boston Beer’s hops with smaller brewers who are strapped for the currently scarce ingredient. That gesture shows how even large companies can act responsibly and in a manner that’s good for everyone in an industry. And that’s why Boston Beer has grown as large as they have while remaining very much a part of the beer community. Size is not the issue, but how you wield that size is.
Anheuser-Busch, and to be fair all the other worldwide brewing giants, have become large multi-national corporations where share price, market dominance and everything they teach at business school are the most important concerns, especially to the people in the upper echelons of power. They are, in fact, legally obligated to act in the best interests of the corporation regardless of the consequences for us mere mortals. Our corporate system is, in simplest terms, broken. When much of society decides that business interests are superior to human ones, that’s a problem. But, as usual, I digress.
Last May, at August Busch IV’s first address to shareholders, A-B continued to spin up the business, despite the downward spiral of their core brands. Financial analysts, on the other hand, continue to believe that to be successful A-B must focus on the core brands. Ignoring that advice, A-B continues to believe the future lies in picking up import brands and new products, like BL Lime, to fuel its growth.
A friend and colleague of mine recently opined that the reason for this is that the slide of A-B’s core brands can’t be stopped. Presumably they’d know this and so buck conventional wisdom and concentrate their efforts instead on line extensions, new brands and signing up more imports. It’s a compelling idea, I think, and harder to dismiss than I thought at first blush. There’s currently so far ahead that it would obviously take quite some time for any truly substantial erosion of their market share to take place. But if the core brands can no longer be counted upon to steer the ship, it would only make sense that you’d look for another way to bail out the ship and set her right again. And I suppose with such thinking, any “gap” could be thought to weaken the ship, too. So it must be that corporate thinking truly believes every gap must be addressed. As a result, it looks we’ll continue to see more diversification, more new products and line extensions, and more mergers and acquisitions. And like the now trendy lime, I think the changes we’ll see will continue to be sour and a little tart and bitter.