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Anheuser-busch badly needs product innovation

April 11, 2005

Anheuser-Busch and Coca-Cola, have many similarities, one key attribute they both share is the presence of giant core brands, with Budweiser and Coca-Cola respectively. While these brands contribute massively to the bottom line, any slight slow down in sales has a dramatic impact on the company.

Today, Anheuser-Busch is facing a shrinking beer market. It recently reported to analysts that earnings will be lower than expected. The company now faces a significant challenge just to stay relevant to an increasingly fickle and disloyal audience.

However, the problem looks increasingly like a cultural one, the recent innovations seem to have been either slow to the market (low-carb), re-hashes of old concepts (B-E- energy beer),
extensions of failed products (Bacardi Silver) and premium launches that try too hard to protect the parent brand (Budweiser Select)

To succeed, Anheuser-Busch needs to inject some radical thinking into their process. It needs to look at target audiences in more depth to identify relevant opportunities and understand how it could create a structure to serve niche markets. The company’s origins lie in mass distribution of a mass brand, but if the Long Tail theory holds true, giant portfolio companies, Anheuser-Busch included, need to use spead their portfolios into the niches.

Anheuser-Busch has been a radical innovator in the areas of advertising, media and distribution; successfully tying its core brand to communities, events and giving it personal relevance.

However, perhaps the ubiquity of Bud is now the big problem. Trying to make everything Bud could be a mistake, as in an increasingly personalized world, people are looking for their own statements of authenticity, that requires more niche brands. Anheuser has then in its portfolio, it’s just not exploiting them.

Influx expects a radical shake up at Anhueser-Bush within the next 12 months, with accelerated new product development and increased investment in new, innovative marketing approaches.

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