Busch IV says world beer industry faced with "serious challenges"

Modern Brewery Age,  Oct 31, 2005  

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August Busch IV, president of Anheuser-Busch, Inc., spoke to an audience of mainly European brewery executives at the World Beer and Drinks Forum in Munich in September. In coming issues, we will features speeches by other chief executives, including John Brock of InBev and Graham Mackay of SABMiller, together with text from their question and answer session. Mr. Busch's speech follows:

It is a great honor to be here today in the company of the world's finest brewers and beverage marketers. It is also a great pleasure for me to be here in Germany, a country famous for its love of beer and the land where my great-great grandfather, Adolphus Busch, was born. As you probably know, Adophus later moved to the United States, and began building a company that would eventually become Anheuser-Busch. But what you may not know is why. While Adolphus came from a successful family here in Germany, he was the second-youngest of 22 children. [audience laughter] And with ten older brothers, he realized there was little chance that he would be the one to take over the family business. So he had a decision to make, and he decided to try his luck in the new world. He had to know he was taking some pretty substantial risks, but he believed in himself, and obviously things worked out pretty well.

I tell you that story because the beer industry is now faced with some pretty serious challenges of its own. For example, in the U.S., the beer industry produces about 60% of all alcoholic servings. But after decades of decline, the hard liquor industry is beginning to experience growth. Through the introduction of a wide variety of flavored liquors, sophisticated packaging and increased marketing efforts aimed at beer drinkers and beer drinking occasions. Wine has seen similar growth trends over a longer period of time. The combined growth of hard liquor and wine has begun to impact beer industry trends.

Ultimately, the driving factor behind these trends is the consumer. Drinkers today are looking for more in their beverage choices. They want more variety. They want more sophistication. They want more excitement. Their preferences are changing, and, as a result, our industry is changing.

At Anheuser-Busch we believe our efforts as brewers and beer marketers must evolve as well. For too long, our industry has taken the beer drinker for granted. But there is no longer any guarantee that that customer will choose to drink beer. While we all compete aggressively in the marketplace, it is no longer good enough to simply compete against other brewers. We must do much more than simply promote and sell our own beer brands. We must promote beer itself. We must elevate the image of beer. Our brand messages must connect with our consumers in meaningful and relevant ways.

We must engage them, excite them, and enhance their experience with beer. We must romance beer, from the art of brewing and all natural ingredients to the very rituals of drinking beer--the glass, the pour, the aroma and the cool, refreshing taste. We also need to communicate the social virtues of beer.

Beer is a social drink. It helps bring people together: after work, at family gatherings, at sporting events, and at community festivals. Beer is real, authentic and true. It lacks the pretense associated with wine and hard liquor. Beer is also less concentrated, making it a better choice for many more occasions. And beer servings are more standardized, so you know how much alcohol you are consuming.

Beer also holds a very special place in the social fabric of the world and America. This sets beer apart from wine or hard liquor. And helps define its broad appeal versus other forms of alcohol.

In America, beer has been an intrinsic part of our nation's history. Beer was the favored beverage of our founding fathers. It has been a familiar and personal part of so many of our great social and cultural moments. Beer literally defines a rite of passage for many Americans as they enter adulthood on their 21st birthday. And when you get down to it, the fact is that no other alcoholic beverage refreshes like beer.

One important key to achieving this objective is getting our retail customers to fully appreciate the inherent benefits of beer. We need to show our retailers that it is in their best interest to improve and enhance their presentation of beer. As brewers, we work very hard to produce quality products, and create dynamic marketing support to build brand image.

Through our distribution channels, we ensure that our beer is delivered fresh to the marketplace. But we need our retailers to provide the final touch. We need them to showcase beer. To present and sell beer in ways that make it more sophisticated, more intriguing and more attractive to the contemporary drinker.

We must also help doctors and nutritionists to publicize the research regarding the health benefits from the moderate consumption, and to get better media coverage for their findings. For example, many doctors tell us that moderate drinking is better than abstinence for most adults. They tell us that beer can help prevent diabetes, can help improve bone density and cognitive skills. In fact, in a recent speech, Dr. Meir Stampfer, director of epidemiology and nutrition from the Harvard School of Public Health, stated that a person is 60% more likely to have cardiovascular disease if he or she does not drink, versus a person who drinks moderately. People who drink alcohol in moderation tend to weigh less than people who do not drink at all. Nutritionists and physicians tell us that beer provides the same health benefits of a glass of wine. They tell us beer contains vitamins and minerals not found in wine or hard liquor. And, as we all know, beer has virtually no sugar, no fat, no sodium and no chlolesterol. While these facts are not ones we can use in our advertising, this is important information that our consumers should know. And we need to do a better job of getting this type of research from doctors and nutritionists communicated to the media and the public at large.