Anheuser-Busch will be bringing six TV ads to the Super Bowl this year: Two 30 second Bud Light Platinum ads which will air first, two 60 second Bud Light ads, and two 60 second Budweiser ads. BBD got a sneak peek at the ads yesterday: One Budweiser ad centers on the Clydesdales bringing the first cases of beer to a tavern after Repeal of Prohibition, and the other is a music fueled ad showing people partying with Budweiser through the ages. Both ads have very high production values and are highly choreographed. One Bud Light ad features a rescue dog named Weego that fetches beers for everybody at the party in a humorous way (to get a beer, you say, "Here Weego", which is also BL's tagline). The other Bud Light ad is a secret. The Bud Light Platinum ads feature the blue bottle heavily and are designed to build awareness.
BBD spoke briefly with A-B's vp marketing Paul Chibe about the ads:
BBD: The Prohibition/Repeal Budweiser ad is very rich and unique. How did the agency come up with the idea of featuring Repeal?
PAUL CHIBE: You think about how does the agency hook into moments of pop culture. You've got Ken Burns broadcasting a huge documentary on Prohibition, you've got Boardwalk Empire on HBO, you've got various movies. So there's been a lot of conversation in pop culture about those times. And it was an incredible moment in the history of Anheuser-Busch as well. Anheuser-Busch was very scrappy in those days during Prohibition just trying to get by, making ice cream, etc. When that ended, it was a moment that heralded great times in our country, and heralded a great time for Budweiser, coming out of the Depression and becoming an icon in America."
BBD: The Bud ads in particular have very high production values. Were they expensive to make?
PAUL: Yes. But when it comes to the investment in making the ads for the Super Bowl, you don't skimp. The expectations are high, so the production values are high.
BBD: The Platinum ads feature young upscale people, and seem to be geared toward awareness.
PAUL: You've got to look at the two spots working together. In the first ad you get introduced to the bottle, you get a sense of the proposition -- of it being an upscale premium proposition. Then [in the second ad] you see who it's for. It's a f0r an upscale, diverse consumer. It might not be the typical Super Bowl ad, where you bang a bell and there's animals jumping around. The purpose of those two ads is to work hard creating awareness. When we tested those ads, they are doing exactly what we need them to do. We're very pleased with how consumers have responded to these ads, and they're working hard for us coming out of the Super Bowl for Bud Light Platinum awareness.
BBD: Who thought of the idea of coming out with Bud Light Platinum? Was it a group of folks brainstorming around a circle or was it the result of market research?
PAUL: It's a lot of both...
BBD: Just tell me, was it your idea?
PAUL: No, this was well before my time. When you have major innovation like this, it can takes years. Pat McGauley has been working on this for quite awhile, and from a strategic standpoint when I came on board, it was the right thing to do and the right time to do it, and I put my full support behind it.
BBD: The Bud Light spot seems to adhere closely to the brand's humorous roots..
PAUL: The thing that's important, is that it stays true to the "Here We Go" campaign, but there are some subtle differences. Think about it, there is not any point in that ad where the consumer is the butt of the joke. The people in that ad are diverse and attractive, but they're also smart. I think the beer industry has done a disservice by portraying our consumers in ads as people that nobody wants to aspire to. That's not how it should work. If you think about young people today, they're smarter, more educated, have more access to information, and their level of wit and humor is at a higher level than ever before. The stuff that lasts has intelligence, and that's what Bud Light brings.
NCSLA STRIKES BACK AT ALCOHOL JUSTICE OVER ATTACK ARTICLE
In a rare situation, the National Conference of State Liquor Administrators (NCSLA), the association representing state beverage alcohol regulators, has shot back at Alcohol Justice, the anti-alcohol folks formerly known as the Marin Institute, with strong language in a press release. Here's what happened.
Earlier this week Alcohol Justice issued a press release highlighting an article that their Sarah Mart wrote for Addiction magazine claiming that the NCSLA's annual conference in 2010 was "dominated by the global companies that produce, import, distribute and sell alcohol. Not surprisingly, the Association's liquor control agenda lacks public health considerations." Noting that 72% of the attendees were from the alcohol industry, Mart writes that "Big Alcohol panelists actually sent regulators a warning message: Be industry-friendly. Don't rock the boat of commerce with public health concerns, or your job may be on the line."
That must have really set off NCSLA president William Kelley, who fired off a press release taking Alcohol Justice down a notch and repeatedly pointing out that Alcohol Justice has been so ineffectual that they had to change their name from Marin Institute. He also suggests that Alcohol Justice's motive in putting out this article now about a conference two years ago is related to NCSLA requiring them to pay their own way to the conferences like other public health activists, when previously, apparently, NCSLA was allowing them to attend free. Writes Bill:
"The NCSLA is dismayed at the conduct of any organization which has chosen to re-brand itself and seeks to create relevance for its new brand by pandering for headlines, while taking no real, affirmative action to support and defend the federal and state beverage alcohol regulators in the executive, judicial and legislative branches of state and federal government." Bam!
"The agenda of self-promotion by 'Alcohol Justice' is obvious and unavailing. The telling fact is that the now re-branded entity formerly known as Marin Institute has repeatedly chosen not to become a member of the NCSLA despite the numerous invitations that have been extended to them and the years of courtesies from the NCSLA they have enjoyed in the form of expense-paid attendance at NCSLA conferences and participation on NCSLA panels. It is equally telling that this statement comes when further special treatment has been denied this re-branded entity while at the same time it was directly invited and encouraged to join the NCSLA, take a seat at the proverbial table, but on the same terms as those long met by other public health and public advocacy groups." Double bam!
"It is disheartening when any entity with substantial financial resources, yet without the economic hardships endured for years by state beverage alcohol regulators, appears content to do nothing." Triple bam!
"The silence of this re-branded entity is deafening in the national dialogue that continues as Congress, The President of the United States, the people of the state of Washington and the representatives of the people in all the 50 states grapple with the modern issues of beverage alcohol control. This struggle is the American legacy of that failed experiment named 'Prohibition.'" I'm out of bams.
It appears the NCSLA isn't going to take it sitting down. Well done.
NORTH AMERICAN BREWERIES IN YEAR THREE
NAB's yearly Orlando-based sales meetings are always entertaining. This year we even got VP sales James Pendegraft on stage in a Woody from Toy Story costume, though one forgets the obvious lost wager when faced with a grown man so clothed.
Of course, there were also numbers, plenty of them. And plenty of prospective look-backs, as well as future laid plans. We've got it all for you.
2011 BRAND FAMILY PERFORMANCE. You'll be interested in this 30,000-foot view: The NAB brand family performed pretty well in 2011. Shipments and depletions were both up around 9%. Depletion growth by off-premise channel included a 9% jump in grocery, 15% at c-stores, 23% at liquor stores and 7% at the drug channel. NAB launched over 50 new SKUs, LTOs and seasonals in 2011, and they've got plenty more for next year.
CEO Rich Lozyniak opened to his 800+ distributor audience (200 more than 2011) with the past year's benchmark, including some particularly interesting pieces on KPS' investment and involvement, as well as improvements in inventories and wholesaler consolidations.
Grab a sandwich or something before you continue.
KPS, ACQUISITIONS, AND INVESTMENTS. The elephant in the room, to use another animal cliche, was the issue of acquisitions. Many had thought NAB would acquire last year, and indeed Rich said KPS partner Raquel Palmer "was prepared to write a check" from her fat checkbook. And he admitted that they did "look at a lot of opportunities and make bids, but nothing closed."
Rich addressed the "concern" with private equity, what with the general unfamiliarity unearthed most recently by Romney's campaign. Indeed, the first question at the end of the entire session was about KPS' involvement and happiness with the brewing group. Rich had a solid answer. "We're doing well, making more money. But we're not by cutting back on advertising or training or on our breweries. ... What you saw today was continued investment. So I think they're happy, [too]."
There was a surprising reveal about capex: NAB asked for $9 more million at the end of September 2011. The board approved. It wasn't even for an ROI item: By Q2 the money will be invested for brewing infrastructure improvements to advance the quality of Genesee and Seagram's (yeast systems, clear malt base systems, etc.)
"That said - there will be an exit one day for KPS," Rich said. Our people are starting to ask [about this]. My message: If we focus on the good things we'll have a great outcome. If we do a great job something strategic may come along, or we might do an IPO." If strategic, Rich says, The Big Two big guys can't buy, from an antitrust perspective. "It'll be someone that wants our brands, distribution."
CONTINUOUS IMPROVEMENT: INVENTORY, WHOLESALER CONSOLIDATION. "Velocity drives profitability; that's important ...but [improved turnover is] also a change in business philosophy, " says Rich. There's a renewed interest in fresh beer. In the old days, they'd make a big batch of Gene Cream ale once a month and work inventory down, which meant some could end up with 30-day-old beer. "Now we batch it every single week, call it 'the wheel.'"
"So look at inventory now ... we're hanging out about 15, 16 turns. There's still room for improvement." They compared themselves to a few other producers, including Sam Adams at 7.8 turns, according to 2010 audited financials.
As for wholesaler consolidations, another pressing improvement item: In March of '09, NAB had 704 distributors. As of this month, they're down to 627. Rich emphasized the need to get the number down. "We have more wholesalers than A-B...and they're slightly bigger than us."
2012 PRIORITIES? "Same as last year," says Rich. Increased investment, innovation, and continuous improvement. And they hope to "write a lot more checks."
SALES HIGHLIGHTS: SEAGRAM'S UNDER REPPED BY DISTRIBUTORS. Sales VP James Pendegraft then took the stage to chastise distributors for not carrying Seagram's top packages, despite their strong incremental push and breakaway sales. New flavors Mango and Sangria are two of the top 10 FMBS. Seagram's is one of the fastest-growing "brands, period," says James. Put on display, this brand goes gangbusters. "We have Bartles & Jaymes on the ropes," says James.
But. In terms of facings, it's B&J 3.5 vs. Seagram's 2.25. What James calls the must-have, core SKUs -Seagram's Escapes flavors Wild Berries, Jamaican Me Happy, Strawberry Daiquiri, and the variety pack - are still not represented by that many Seagram's wholesalers. What about the hottest brand, Jamaican? Number in 1 volume, number 1 growth? Probably not even half of the distributors. The variety pack representation is even smaller. There's "lots of opportunity here."
AND MARKETING? Marketing vp Peter Bodenham took the stage to talk about Angry Birds, his point being how the viral game utilizes different birds to attack different targets. "Who is NAB at year three?" he asked. "A mid-sized U.S. owned brewer with passionate and educated people who produce and sell a comprehensive and dynamic portfolio of brands." Their brands compete in craft, PAB, import, and value, or "every occasion, every channel, every conversation."
"Having a portfolio of Angry Birds allows you to go to new levels," he concluded.
Later, consumer and category insights guru Mary Jo Hardy would build on his platform with a big takeaway: Consumers are unhappy. Satisfaction and optimism measures are at 30-year lows. Purchase decisions are skewed against the mainstream and toward individualism and happiness, leading to an experimental culture and the idea that "small is the new big." So 2012 NAB brand programs are designed to educate, reward and engage consumers. More on that next week.
FOCUS ON LABATT BLUE. Despite their portfolio of Angry Birds, Labatt is, of course, probably their main player. And there's re-emphasized focus here with a "12 in 2012" campaign, which is just as it sounds: a 12-point plan to achieve this year's brand imperatives: Continue to grow Labatt Blue Light. Stem the decline of Labatt Blue. And get more growth out of Blue Light Lime.
How they gonna do it? Innovation, sports sponsorships, LTOs, Lime Summer, Blue Rewards, real hockey, on-premise, social media, traditional media, "Better beer. Better times." year two, the Auction of Awesomeness, and you (the distributor).
More on NAB's craft beer business (Magic Hat and Pyramid) in Craft Business Daily later today.
DOMESTIC SHIPMENTS FAIL TO RECOVER IN 2011
December's domestic beer shipments are in, and it isn't pretty. The month was down 3.7% or 5ook barrels, estimates Lester Jones at the Beer Institute. Domestic shipments wer down 1.9% for the entire year, or 3.4 million barrels. That's a huge drop. We won't know final imported beer shipments for a few weeks, but they will have to be up if we are to get to the -1.5% that we predicted for the year.
The fact is, we just never recovered from a disastrous July, where we lost over 1.5 million barrels, down 9%. Sure, there was one less selling day, weird July 4 timing, and June inventories were on the high side. So you would've thought that August would compensate. It didn't. September was a good shipping month, but it only served to compensate for August's slide, not helping the terrible July at all. And then we had three bad months in row: October -1.2%, November -0.8%, and December -3.7%. It was just a horrible year for domestic volumes.
MILLERCOORS EXTENDS ITS SPONSORSHIP with Nascar and Penske Racing. Coors Light will continue as the official beer of Nascar's three racing series the Sprint Cup, Nationwide and Camping World Trucks. Miller Lite will also continue its sponsorship of Penske's No. 2 Dodge with driver Brad Keselowski.
SAVE THE DATE: BEER SUMMIT 2013. We haven't even had Beer Summit 2012, but we're already planning ahead to 2013. Every year we have to jockey the dates of the Summit to stay clear of HUSA's, Crown's, and CAGNY's meetings. So to get out of everybody's hair, I'd like to schedule the 2013 Beer Summit earlier in the year, Monday January 28 and Tuesday January 29, 2013. Save the date.
Until tomorrow, Harry
"Difficulties are meant to rouse, not discourage. The human spirit is to grow strong by conflict." - William Ellery Channing
THE 10TH ANNUAL BEER INDUSTRY SUMMIT will be held February 20-21, 2012 at the historic Hotel del Coronado near San Diego. Tickets going fast. Check the schedule of great speakers here.
Registration link here: https://www.beernet.com/register.php?id=7
Make yourself heard, your opinions count. Anonymous feedback and tipster form: http://www.beernet.com/hotline.php
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