Anheuser-Busch’s Strategy Is One of Balance

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Anheuser-Busch’s Strategy Is One of Balance

By Melissa Kress, Convenience Store News - 11/21/2014

ST. LOUIS — The steps to success in the beer category are as easy as one, two, three … and four and five.

Since Anheuser-Busch rolled out its Your Balanced Portfolio Approach (YBPA) this year, the beer giant has not only helped retailers narrow down their individual plans of action for the beer category, but the company has also gained valuable insights that can apply to convenience store operators across the board.

Citing IRI research, CJ Watson, vice president of small-format sales at Anheuser-Busch, reported that beer is one of the fastest-growing product categories. To be a part of this growth, retailers need to leverage the entire beer portfolio to grow business — the concept behind YBPA.

Speaking at Anheuser-Busch's trade media open house Nov. 19-20 at its U.S. headquarters in St. Louis, Watson pointed out that two-thirds of all trips into a convenience store are for beverages. In addition, premium beer is the largest beverage segment for a c-store operator when it comes to revenue mix. However, some retailers are still struggling to win the beer category. 

YBPA data has found that all quartiles — from the best-in-class to the bottom — have roughly the same percentage of sales in each beer segment, proving retailers "can't just bet on one segment to grow," Watson said.

Anheuser-Busch also found that the top performers have five key points in common:

  • Single-serve beers — deliver higher margins, offer increased assortment and encourage incremental sales.
  • Two-for promotion strategies — encourage plus-one purchases, with an industry take rate of 70 percent on the buy-two option.
  • Three displays at all times — best-in-class retailers have, on average, three displays with 100 cases on display.
  • Four days of supply on hand — retailers sell 2.5 days of beer in 15 hours over the weekend (Thursday, Friday and Saturday from 4 p.m. to 9 p.m.)
  • Five doors allotted for beer — top-quartile retailers have 36 percent more beer space. Two out of those five door are dedicated to premium beer and in total, the five doors carry 110 SKUs.

What's notable about YBPA and its insights, according to Watson, is that the data does not pinpoint Anheuser-Busch products specifically, but beer overall.

"YBPA helps retailers sell more beer, not more Budweiser," he explained. "If the retailers sell more beer, it's good for Budweiser."

That doesn't mean Anheuser-Busch isn't taking steps to grow its brands. The key is renovation of core brands and innovation, said Pat McGauley, vice president of innovation at Anheuser-Busch.

2012 marked "the best innovative year we have seen in a long time," added David Almeida, vice president of sales and wholesaler development at Anheuser-Busch. Specifically, 2012 saw the introduction of Bud Light Platinum and Bud Light Lime-A-Rita, which has now grown into an entire Rita brand line.

Anheuser-Busch's success in innovation continued in 2013 with the introduction of Bud Light Straw-Ber-Rita and Budweiser Black Crown.

"The Rita family is the most relevant innovation in the past few years," Almeida said. In fact, it is on track to be a $1-billion brand in year three (2015).

This year, the beer giant took a different approach to innovation, with a focus less on new products and more on new packaging for its core brands. "The best thing we could do for our core brands is elevate their image," he explained.

Notably this year, the company rolled out the 25-ounce can (an extra ounce as a reward to consumers), and the aluminum bottle with twist-off cap that can be used to reclose the beer.