BUDWEISER: “THE KING OF BEERS” EYES BRAZIL

At the end of August 2011, AB InBev introduced Bud- weiser inBrazil, the world’s third-largest beer market. The brewer’sBrazilian roots stretch back to 1885. Its forerunner, AmBev wascreated in 1999 through the merger of two of Brazil’s leadingbrewers—Brahma and Antarctica. In 2004, AmBev merged with BelgianInterbrew to create InBev. This Belgo-Brazilian company acquiredthe iconic American Bud- weiser brand in 2008 when it acquiredAnheuser-Busch for $52 billion.

Budweiser held a 16-percent share of the U.S. beer market,making it the best-selling beer in that market and second in theworld, behind Snow Beer, a brand sold only in China. Apart fromBudweiser, other global brands in AB Inbev’s portfolio includeStella Artois, Beck’s, and Hoegaarden. Its local brands in Brazilinclude three of Brazil’s leading brands, namely, Skol (31.3%market share in 2010), Brahma (16.2%), and Antarc- tica (10.6%).Brazil’s per capita beer consumption was about 47.6 liters percapita in 2010, higher than China’s but lower than for mostdeveloped countries (see Table A). According to Euromonitor, ABInBev held a 63.6-percent market share in Brazil in 2011.

The plan was to sell “the American Dream in a bottle” said ChrisBurggraeve, AB InBev’s chief marketing officer. The Belgo-Brazilianbrewer decided to position Bud as a pre- mium brand with a pricethat matches Heineken and other high-end brews. The Brazilianlaunch included Bud-branded concerts featuring stars such asRihanna, Britney Spears, Red Hot Chili Peppers, and Pearl Jam. Toraise local awareness, the brewer hired influential Brazilians likeAnderson Silva, the UFC middleweight champion, to be brandambassadors. The latter appeared in a short documentary aired onBud- weiser’s Facebook page and YouTube channel. Budweiser wouldalso be an official sponsor at the 2014 World Cup Soccer inBrazil.

Budweiser accounted for 7–8 percent of AB InBev’s beerproduction; the U.S. market still represented three-quarters ofBud’s sales. AB InBev aspired to make Bud one of its key premiumbrands in its global brands portfolio. Bud debuted in Russia in2010, where it held a 1-percent market share. In China, Bud soldfor $1.75 per bottle (compared to $1 for most local brands). Thepremium market in China was just 3 percent of China’s total beersales, with Bud having a third of the segment.

In Brazil, AB-InBev planned to sell Budweiser at a 15-percentpremium over its local brands Skol and Brahma. The premium segmentin Brazil represented just 5 percent, compared with around 20percent in the United States and 40 percent in the United Kingdom.One other major player is Heineken, which formally established apresence in spring 2010 after it acquired FEMSA Cerveza. AB-InBevhad high hopes for Bud. AB InBev decided to spend $3.1 billion in2011 to build capacity to tap into demand in growth markets such asChina and Brazil. Bud’s marketing slogan for Brazil: “Great timesare waiting.”

TABLE A

PER CAPITA BEER CONSUMPTION BY COUNTRY (2010)

Country	Per Capita Beer Consumption (Liters)
Germany	110
The United Kingdom	99
The United States	81.6
Russia	58.9
Brazil	47.6
China	30

Source: http://en.wikipedia.org/wiki/List_of_countries_by_beerconsumption_per_capita#cite_note-Kirin-0, accessed November 10,2011.

Sources: “Budweiser ‘The King of Beers’ Comes toBrazil,” http:// www.riotimesonline.com, accessed January 10, 2013;“Can InBev Turn Budweiser Into a Global Brand?”http://www.nytimes.com, accessed January 10, 2013; “This Bud’s forYou, Emerging Markets,” http://www.businessweek.com, accessedJanuary 10, 2013.

DISCUSSION QUESTIONS

1. Beer brewers such as AB InBev and Heineken hope to turn theirsignature brands into powerhouse global brands. SABMiller, on theother hand, aims to build up a stable of strong local beer brands.Which strategy would be most effec- tive and why?

2. Whom should Budweiser target, and how would you position itin Brazil?

3. What strategic marketing recommendations would you make forBudweiser in order to build up the brand in Brazil?