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Anheuser-Busch: Strategy for Continued Success

Anheuser-Busch: Strategy for Continued Success. Prepared by: Jeremy Snow and Adam Zubke May 14, 2012. History. Originally founded as The Bavarian Brewery, 1852 in St. Louis Purchased by Eberhard Anheuser, 1860 Adolphus Busch (son-in-law) joined company, 1864

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Anheuser-Busch: Strategy for Continued Success

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  1. Anheuser-Busch: Strategy for Continued Success Prepared by: Jeremy Snow and Adam Zubke May 14, 2012

  2. History • Originally founded as The Bavarian Brewery, 1852 in St. Louis • Purchased by Eberhard Anheuser, 1860 • Adolphus Busch (son-in-law) joined company, 1864 • Original Budweiser created, 1876 – very popular, led to rapid growth • Company renamed Anheuser-Busch, 1919 • Sold yeast, refrigeration units, truck bodies, etc. during Prohibition, 1920’s & 30’s • After Prohibition a case of Budweiser was delivered to Franklin Roosevelt by Clydesdale horses, 1933

  3. History Cont. • Owned St. Louis Cardinals baseball team, 1953-1996 • Became #1 U.S. brewer, 1957 • Busch Entertainment Theme Park division, 1959-2009 • Participated in snack food business, 1980’s-1996 • Introduced Budweiser into England and Japan through licensing, 1984 • Increased holding in GRUPO MODELO (Corona, NegraModela) to 50%, 1998 – focus on specialty beer sector • Formed 50/50 joint venture in India, 2007

  4. Acquisition • Acquired by InBev (company formed by 2004 merger of Belgian and Brazilian brewing companies) for $52 billion, 2008 • Created world’s largest brewer, Anheuser-Busch InBev (AB InBev) • One of world’s top 5 consumer products companies • Paying down debt from acquisition • Sold part of metal container business • Sold Busch Entertainment division • Job cuts in U.S., mainly at Anheuser-Busch HQ in St. Louis

  5. Directional Strategies • Mission: Winning with Consumers through Our Strong Brand Portfolio • Create enduring bonds • Sales and merchandising capabilities, preferred supplier partnerships with customers, consistently building equity of brands • Vision: Winning at the Point of Connection • Volume growth in excess of market growth • Brand strength • Continued premiumization of brand portfolio • Sales and marketing investment

  6. Directional Strategies Cont. • Values: • Open innovation policy on all levels • Strong company culture, investing in people and maintaining a strong target-related compensation structure • Best-in-class financial discipline spread throughout the whole organization • Goal: Targeted External Growth • Selected acquisitions • Repeatedly demonstrate ability to successfully integrate acquisitions and drive revenue growth

  7. External Environment - General • Global Segment • Sociocultural Segment

  8. External Environment – Industry Specific • Political/Legal Segment • Competitive Segment

  9. Service Area • Primary service area: United States • 29% of global volume, 2011 • 42.6% of normalized EBITDA, North American region 2011 • AB InBev holds 47.7% market share in U.S., #1 • Primary target demographic • Between ages of 21-65 • 183,371,540 people in U.S. within target range, 2010 Census • Brand groups • Global brands: Budweiser, Stella Artois, Beck’s • Local champions: Bud Light, Michelob Ultra • Craft beers, specialty malt beverages, energy drinks, waters

  10. Competitor Analysis • Three major players • AB InBev • SAB Miller • Molson Coors • SAB Miller • 6 of top 50 beers in the world • Wide geographic reach • Relatively low U.S. market share • Limited liquidity position • Molson Coors • 5th largest brewer by volume • Most revenue comes from U.S. and Canada • Formed joint venture with SAB Miller in 2007 (MillerCoors / Miller Brewing Company) direct attempt to compete better against AB InBev

  11. Internal Environment • Strengths • Market leader in volume and revenue • Brand recognition • Commitment to community outreach and green practices • Proven history of successful growth • Weaknesses • Dependence on retailers and wholesalers • Large debt holdings due to various expansion activities • Opportunities • Emerging market opportunities • Threats • Price and availability of raw materials

  12. Adaptive Strategy • Market development – introduction of AB InBev products into Chinese market • Portfolio diversification – acquisition of Chinese brewing company • BCG Portfolio Analysis • Product Life Cycle

  13. Market Entry Strategy • Licensing/internal venture – offer global AB InBev brands in Chinese market • Acquisition – purchase of established Chinese brewer as addition to brand portfolio • Why?

  14. Strategic Posture • Traditional markets (U.S. and Europe) – defender strategy • Enhance brand value • Identify and successfully serve niche markets Acquired Fulton Street Brewery/Goose Island, Midwest craft brewer, 2011 Emerging markets – prospector strategy • Growth trend exclusively in emerging markets • Successful record of entering new markets

  15. Strategic Position • Differentiation • “Continued premiumization of brand portfolio” • Ad campaigns and sponsorships • History and tradition of ‘premium’ status • 14 brands have reached ‘billion dollar brand’ status • Focused position based on differentiation • craft beer and specialty segments increasing in popularity and variety • Focused on staying ahead of market trends

  16. Questions?

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