ABSTRACT
Jack Purnell, chief executive for Anheuser-Busch International (A-B), had a goal to globalize A-B’s best-selling brand, Budweiser, and to make it as popular worldwide as Coca-Cola, Marlboro, and Levi’s. He told a reporter from USA Today:1
We’re not sure, but we’re going to give it a shot. Lately we’ve been hurt by overall U.S. revenue, which has been flatter than day-old draft since the late ’80s, so we’ve decided to tap into the fast-growing foreign markets. We’d like to build a global brand, but I’m not sure if it’ll happen. But right now, we don’t know how high we can go—we want to take it as far as we can.
Unlike distinctly American products such as soft drinks, cigarettes, and blue jeans, our beers hold little cachet in many traditional beer strongholds like Germany, Australia, and Brazil. That’s because our beers tend to be lighter, sweeter, and less robust than foreign brews. You know, we’ve been spoiled by the availability of fickle Americans who favor faddish brews like light and dry beers. So far, at least, drinkers in countries such as Germany are loyal to brands that are centuries old.
Right now, we’re doing our best to globalize our beer business. We’re almost forced to by the fact that the U.S. beer market is projected to grow at only 1% annually for the next ten years, while the international market will increase anywhere from six times to ten times faster. We also have to keep ahead of our two main rivals, Miller and Coors—they’ve both expanded to Mexico, Canada, East Asia, and Europe.
A-B is looking at a half-dozen development deals in Latin America, the Pacific Rim, and Western Europe in addition to the agreements we just signed in Japan, Mexico, and Italy. The big problem with expanding to Europe, the most stable and second-largest world beer market after the United States, is that we can’t seem to negotiate a deal with the Czech brewer Budvar, which holds the rights to distribute Budweiser (theirs, not ours) in most European countries.
242Our domestic business generates about $400-million in excess cash each year, so developing the international beer business is a good use of funds. Clearly, that’s where our focus is going to be. But then I have my market research people tell me that, while we have an 8% worldwide market share now, we may be able to capture only 5% more. They tell me that we’ll be limited by the local loyalty people have to their home brewers. People in the Netherlands will drink Heineken, in France, Kronenbourg, and in Germany, they’ll drink thousands of local brands from little fiefdoms.
But the way I see it, A-B’s beers, especially Budweiser, could ultimately become bigger abroad than at home. We’ve been right for 120 years—Bud has taken over North America. It may as well take over the world! We know how to market our products—I don’t see any reason why we won’t be just as successful in other countries.
