Budweiser's Baseball Opening Day Holiday Plan Is Brilliant
PORTLAND, Ore. (TheStreet) -- So Anheuser-Busch and St. Louis Cardinals Hall of Famer Ozzie Smith got nearly 102,000 signatures on their White House petition to make baseball's Opening Day a national holiday. Just the merciful end of a sad marketing ploy by a flailing multinational brewer, right?
Nope, it's genius.
Anheuser-Bush InBev throws a whole lot of money at sporting events and spent more than $150 million on the Super Bowl alone since 2009, according to Nielsen. Of the more than $450 million that Nielsen says A-B spends on U.S. television ads, 65% of it goes toward spots that run during sporting events. But the $40 million per year that it reportedly pays Major League Baseball to serve as its official beer sponsor through 2018 -- plus the individual beer partnership deals it's inked with more than 20 MLB teams -- are about to pay off big.
The all-too-common refrain we've heard about Anheuser-Busch InBev in the years following the economic crisis was that the Brazil/Belgium-based beer behemoth was slipping. A-B's production was down an estimated 0.7% last year after falling for much of the past decade, but A-B still holds a roughly 46% share of the U.S. market by volume. While the Brewers Association craft beer industry group is right to point out that its brewers' beers are now 8% of the market by volume and 14% in dollars, the declining popularity of A-B's Budweiser, Bud Light and Busch brands has been as much about economy as it is about light lager's popularity.
Despite shifting tastes that have brought imports and homegrown styles such as the IPA to the fore and forced A-B to buy the Modelo, Goose Island and Blue Point breweries, 18% of all beer consumed in the U.S. is Bud Light. Bud Light's foes now just cost more. Lower-tier brands including Pabst Blue Ribbon, Busch and SABMiller's Miller High Life sell for an average of $15 a case, while flagships such as Bud Light and Coors Light bring in around $20 for those 24 bottles or cans. That same case of imported beer fetches closer to $30, while craft beer averages about $33.
The Beer Institute, a beer industry organization based in Washington, points out that import and craft gains came at the cost of overall industry losses. The Beer Institute compared unemployment rates with average monthly beer shipments during the same period and found that overall shipments began decreasing steadily in 2009 and continued through June 2012 in direct correspondence with job numbers.
While big brewers have been trying to plug the leaks by offering craft-style beers and even hard ciders, they're getting back to basics and going after their traditional premium and economy beer drinkers. With good reason. The $6 billion a year spent by lower-end beer drinkers is nearly a fifth of the $31 billion U.S. beer market, according to Nielsen. By volume, it's more like 25%.