USA: Beer distributors facing a dilemma of investing or not into Bud Light marketing

Beer distributors in the US are facing a dilemma right now when it comes to Bud Light: sink more money into marketing the brand in the hopes that the short-term loss will lead to long-term loyalty and growth, or cut the advertising and take the boost to the bottom line now, Food Dive reported on February 7.

Consumer tastes have been shifting away from traditional brews in recent years, in favor of craft beer, spirits and wine. This has been especially hard on Big Beer, namely Molson Coors and AB InBev, who together control about 90% of the beverage’s production in the U.S. today.

All four of America's best-selling beers posted declining domestic sales in 2017, according to market research firm IRI. The Washington Post reported that Miller Lite posted a volume decline of 1.6% compared to 5.9% for Budweiser in the U.S. Even smaller craft breweries are starting to feel the pinch, as double-digit growth slowed to 4% in 2016.

These falling sales impacted brewers and distributors. Wholesalers act as middlemen, selling beer regionally to retailers such as grocery stores and restaurants. Their support is crucial to companies like AB InBev. If they start cutting their local marketing budgets — where they often sponsor sporting events or music festivals — because sales continue to slide, the beer maker will feel it. Less public outreach could foster a further decline in sales, leading to an even bigger decline in marketing expenses, and so on.

AB InBev has taken active steps to boost brand awareness of Bud Light and improve relationships with distributors. Bud Light's current "Dilly, Dilly" ad campaign, which got air time during Sunday night's Super Bowl, has helped boost interest in the beer among younger drinkers and on social media. They also brought back Andy Goeler, who oversaw operations for Bud Light in the 1990’s when the beer was a far more popular product than it is today, with the goal of keeping wholesalers behind Bud Light.

For their part, distributors can help increase brand awareness through regional billboards and the displays consumers see in the beer aisle of grocery stores. According to the Wall Street Journal, distributors say Goeler has already made a difference in connecting national ad campaigns to local efforts.

Ultimately, it's up to AB InBev to right the ship so distributors will have an incentive to market the products. So far, they have been able to make Bud Light culturally relevant again with the "Dilly, Dilly" ads. It may just take time for that to translate into a modest bump in sales.

07 February, 2018