How many bottles of beer on the wall? Anheuser-Busch looks to go more upscale

Anheuser-Busch (NYSE:BUD), noting the growing premium/boutique beer market share, is taking a new tack in its 2008 marketing. It will emphasize the quality of ingredients and brewing techniques in its core brands, Budweiser and Michelob. The strategy is an attempt to give them some of the cachet that has pushed sales of imports, such as those of its equity partners Grupo Modelo and Tsingtao.

According to the Wall Street Journal (subscription), the company will drop about $30 million on this campaign, while also increasing spending on more of the youth-oriented, humor-infused messages that promote Bud Light.

BUD is reacting to two challenges: declining/flat sales of its mainstream suds, and the competition posed by the recently announced partnership of SABMiller and Molson Coors (NYSE:TAP) to mutually market their products in the U.S. Anheuser-Busch successfully raised prices on its products in 2007, but I wouldn't expect such a move in 2008, in light of this competition.

In a campaign designed to elevate public perception of the quality of a brand, the danger lies in also elevating the public perception of the brand's cost. Too often, companies fail to find the right balance that persuades the public that they are getting a bargain, better quality for the same price. Or, in the words of a current Miller High Life campaign I feel is one of the best I've ever seen, "A tasty beer at a tasty price."

In a flat beer market, BUD's increased spending might just be enough to keep from sliding back, not a result likely to bump the stock price from its doldrums of the past 12 months.

[Photo drrt]