In 1860, Eberhard Anheuser bought out the majority shares of Bavarian Brewery (started in 1852) and renamed it to E. Anheuser & Co. Adolphus Busch was a partner in a brewery supply company which is how he met Anheuser. Adolphus was introduced to Anheuser’s daughter Lily, and they later married. Shortly after that, he started working at E. Anheuser & Co. While working there, he bought 50% of the business and became a partner.
During this period, beer was sold primarily to locals in the area. This was largely due to beer not traveling well (it would spoil after long distances).
Adolphus wanted to branch out to other areas and along with a friend, Carl Conrad, created a lager and named it Budweiser, which was a name that many of the German immigrants could relate to.
Sales have decreased for the fiscal year ending 2015. The last time that happened was in 2010. Sales went from $14.4 Billion in 2014 to $13.7 Billion in 2015. The decline is attributable to changing consumer tastes for craft brews and other specialty beers. There are still loyal Bud drinkers, but others are willing to branch out.
Busch came up with the idea of pasteurization, which allowed beer to be transported for longer distances. His innovations also led to refrigerated railcars.
This allowed for national distribution of its now mainstream product, Budweiser. With both pasteurization and the ability to keep the product cool for long distances, Budweiser became a staple in the American economy that remains to this day.
How the Company Started
Eberhard Anheuser saw the popularity of local breweries and wanted in on the action. He didn’t have any brewing experience, but his soap company gave him enough profits to become a partner in the Bavarian Brewery and he later bought up a controlling number of shares.
As early as 1907 and continuing to this day, the trademark name of Budweiser has been disputed by a Czech Republic brewery called Budweiser Budvar Brewery.
According to claims, the name Budweis was created back in the 13th century by a king. In fact, the slogan for the beer was The Beer of Kings. Anheuser-Busch turned it around and called its beer The King of Beers, which it still uses in the United States today.
Due to this dispute, the company renamed the product to Bud in many European cities and other international cities that won’t allow it to use the name Budweiser.
The company had to create a nonalcoholic version of its beer during prohibition. It was finally allowed to resell its alcoholic beer after the lifting of restrictions in 1933.
Sales slipped during the Great Depression, but the company countered with a metal-based can that helped it increase sales. During World War II, the company ceased western US operations to contribute its railcars to the war effort.
The company was bought out by a Brussels/Brazilian company in 2008. Recently, the company introduced a label called “America” which has received some criticism since the company is no longer American-based.
One recent situation the company is dealing with is a backlash from the Brexit vote. It has to do with the purchase of some of the assets of SABMiller. There is a concern among SABMiller management that since the vote, the deal is now unfair to shareholders of SABMiller. They are losing value based on the decline of the Pound. The deal is currently being halted for more negotiations.
Why it Works
Anyone who has watched a Super Bowl within the last 20 years would see the dominance of advertising that Anheuser-Busch controls.
Between its Bud vs. Bud Light football matches along with the dog keeping the Clydesdale horses in line, the company has been quite successful in its promotions. You know you are onto something when highlights of Super Bowl ads are presented as a show in and of itself.
Budweiser also appeals to the average working class person. Although many feel it may not have the sophistication of imported beers, it is an inexpensive beer and has been passed down from several generations. Imported beers often have an air of snobbery associated with them, especially when you talk to Bud drinkers.
The label of being a domestic (US) beer has been clouded since 2008 as a Brussels/Brazilian company named InBev bought a controlling number of shares of the company.
Anheuser-Busch InBev has entered into partnerships with SABMiller for rights to sell certain products in strategic places. This reduces competitions and gives both companies pricing advantages that would not have been possible without such partnership.
It has been given the green light in many European countries as well as in Latin America countries. It has not yet been given the green light in the United States, but analysts believe it’s only a matter of time.
The company has loyal followers of beer drinkers. Succession from one generation to the next has kept the brand strong. If your parents were Bud drinkers, you would likely continue with that tradition. Bud is a reasonably-priced beer that has remained popular over the years.
Bud Light caters to beer drinkers who are conscientious about their weight. It has fewer calories than Bud while trying to maintain the same taste.
The challenge for the company is clearly shifting tastes and demographics. Traditions are not as strong in the United States as they used to be so passing down your love of a beer may not have the same effect on current generations as it once had.
The company has relied on this passing down for generations and will need to manage it going forward to stay competitive.
People either love Bud or they hate it. There doesn’t seem to be any in between. There is also the battle among brewers between domestic beer and imported. People who like domestic beer tend to stick with Bud, even though the lines are fuzzy as to whether it is a domestic beer anymore. There is also a third dynamic of the most recent growth of craft beers and microbreweries.
Although the InBev company has several brands in its pipeline, Budweiser is a major seller. One of the main ingredients in Budweiser is Rice, which some beer drinkers find off-putting. Again, it’s a love or hate relationship with the brew.
Lessons Learned by The Business
- Now that the company has expanded its reach worldwide, it needs to manage quality control of the entire operational procedures. This can be quite challenging when cultural differences arise.
- It’s crucial to keep in constant communication with your supply chain. A breakdown in even one of these can cripple your ability to continue operations. Have backups whenever possible.
- Management takes extra initiatives to make sure its employees are happy. Of course, this is somewhat of an easier task when you offer free beer to them!
- It’s clear that Budweiser has strong brand recognition. It maintains this through its advertising as well as strong relationships with its supply chain.
- No one can argue that the advertising team at Anheuser-Busch can push the emotional strings of its customers. Just look at the Super Bowl commercials featuring horses and puppies. There are few who can deny they know what these commercials are selling.
How Other Businesses Can Learn from This
When operating across several regions of the world, it’s important to set out global strategic initiatives but allow for flexibility at the local level. There is no sense in trying to make others fit with your procedures if they won’t be followed in the local interest.