Budweiser still big on Super Bowl ads—at least for now

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Some wonder if Anheuser-Busch's new owner will reduce marketing

You can mark the years of Super Bowl play by the teams on the field, or the Anheuser-Busch commercials on the screen.

Super Bowl XXIX? That's when three frogs sequentially croaked "Bud," "Weis," "Er." Super Bowl XXXV? That's the year Cedric the Entertainer got a bit too excited and doused a hot date in beer. Last year? A Dalmatian guided a washed-up Clydesdale horse back to greatness, all set to the tune of "Rocky."

As usual, Anheuser-Busch will be a huge advertiser for the big game Sunday, trotting out commercials featuring the latest adventures of its venerable Clydesdales and a spot starring Conan O'Brien. The company's advertising agency, DDB Chicago, has been toiling over them since last summer, poring over hundreds of scripts.

The question is, will they have as big of a workload next year and thereafter? The sale of Anheuser-Busch to InBev last year for $52 billion has led some beverage and ad industry analysts to predict cuts in Bud's massive ad budget.

Belgium-based InBev is known for aggressive cost-cutting, not aggressive marketing. An Anheuser-Busch executive says neither Bud's ad spending nor ad strategy has changed. But the deal, reached in July, only closed in November.

"The InBev guys really haven't put their stamp on the company yet," said John Greening, who long worked at DDB Chicago on Anheuser-Busch accounts and now is a professor at Northwestern University's Kellogg School of Management. "It's a whole new game."

It's a whole new economy, too. Since the Anheuser-Busch deal was unveiled, recession has spread globally, ratcheting up pressure to cut costs of all kinds.

Anheuser-Busch has long had a commanding share of the U.S. beer market, and Bud Light is far and away the most popular beer brand. The company's marketing prowess has been a key factor in its success, and DDB Chicago has been part of that marketing effort since the 1970s.

Spuds McKenzie sprang from the minds of DDBers. Ditto for the "I love you, man" spots in the 1990s; the "Whassup" campaign a few years back; and, more recently, the "Dude" commercials for Bud Light. "They've had a very good run," Greening said.

Anheuser-Busch is one of DDB Chicago's biggest clients, and DDB is the lead agency for the Bud and Bud Light brands. The ad shop is the "mothership" for Anheuser-Busch's creative work, said Barry Burdiak, who heads DDB's Budweiser work. As for the big brewer, "they are a deep passionate lover that needs a lot of attention."

Indeed, Anheuser-Busch spends a lot of money on advertising, $381 million alone for the first nine months of 2008, according to TNS Media Intelligence. It's not clear how much of the brewer's ad budget goes into DDB's billings.

For the Super Bowl, Burdiak and Mark Gross, who heads up DDB's Bud Light efforts, usually start work in early fall at their offices in the Aon Center, though ideas may be hatched well before that, as they were this year. By mid-January, DDB has produced 12 to 18 rough-draft spots, which are shown to test audiences in three cities, usually Dallas, Los Angeles and Atlanta. Anheuser-Busch makes the selection in late January.

It's a costly ad play: 30-second Super Bowl slots go for about $3 million, though Anheuser-Busch pays somewhat less because it buys so much time. It's rare that any televised event could be big enough to justify rates of more than $1 million for 30 seconds, Greening said. In fact, a World Series spot of that duration cost just $392,000 last year, according to TNS Media Intelligence.

But Anheuser-Busch figures the Super Bowl is worth the investment: Spots premiered at the game will run for months, even years in the case of some ads featuring the Clydesdales. Plus, Super Bowl ads get all sorts of free media buzz, culminating in USA Today's post-game ad ranking. Anheuser-Busch won for the 10th consecutive year in 2008.

For the first time in a long time, PepsiCo, not Anheuser-Busch, this year will be the Super Bowl's biggest advertiser. Including spots for its Gatorade, SoBe Lifewater and Cheetos products, PepsiCo will have 5 to 6 minutes. But Bud is back with its usual truckload of advertising, filling 41/2 minutes with seven separate spots. All but one were created by DDB Chicago.

Anheuser-Busch "has a rich and deep brand marketing legacy and culture," Credit Suisse analyst Carlos Laboy wrote last summer when the brewer accepted InBev's takeover offer. InBev, on the other hand, has been known as a marketing laggard, its growth coming mostly from buying other beer companies and then slashing costs.

Still, InBev's Chief Executive Carlos Brito said last summer that the company wouldn't let up on Bud marketing. And Credit Suisse analysts say they believe InBev has gotten religion on marketing. "Our last two meetings with management have indicated to us that brand building has finally become a top priority at the highest levels of the organization," they said in a January report.

Bob Lachky, Anheuser-Busch's creative director, said "there's nothing changing" in the company's ad strategies under the new ownership.

Still, some analysts expect retrenchment, particularly given the grim turn in the economy since the deal was agreed upon. "They didn't figure Joe Sixpack would be unemployed," said Tom Pirko, president of beverage industry consultant Bevmark.

While the beer industry is relatively recession-resistant, troubling signs have been brewing in recent months across the globe.

In the United Kingdom, beer sales sank 8.3 percent during the fourth quarter compared with a year earlier, according to the British Beer and Pub Association. Diageo, maker of Guinness, recently said it is delaying an $842 million expansion at an Irish brewery because of the economic downturn. And in the United States, MillerCoors' sales declined 2.3 percent during the fourth quarter.

With the troubled economy and the massive debt InBev took on for the deal, the company will likely revert to its cost-slashing ways, some analysts say. "They have to dig into advertising at some point," Pirko said. Greening agreed, and said the relationship between Anheuser-Busch and DDB could change too.

The agency has long had a strong relationship with not only Lachky, but also the historic stewards of Anheuser-Busch, the Busch family, Greening said. Indeed, August Busch IV often personally reviewed DDB's ads.

"Now that the Busch family is not making the calls, I don't know how strong that relationship is," Greening said. But he added, "I don't why they'd walk away from [DDB] given what DDB Chicago has done."

mhughlett@tribune.com

InBev slow to pay all vendors

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A change in how Anheuser-Busch InBev pays its vendors is certain to aggravate local companies.

Lager Heads, a blog written by St. Louis Post-Dispatch writer Jeremiah McWilliams, reported that the company is changing its timeframe for paying suppliers to 120 days. “Anheuser-Busch typically pays its accounts in 30 days,” wrote McWilliams.

Rick Hines, vice president of sales at Patriot Buick-Pontiac-GMC, got one of the letters this week.

“They’ve been a customer for 30 years,” Hines said Friday. “We do repair work as well as vehicle inspections for Busch Entertainment and Busch Properties.”

Like others, the letter sent to Hines was blunt: “If you are not able to work with the change in payment terms, we may have to consider an alternative supplier,” one line reads.

Patriot’s response?

“We told them the terms were unacceptable,” he said. “We’re happy to continue doing business with them, but at the terms we’ve enjoyed for the last 30 years.”

An Anheuser-Busch spokesman told Lager Heads the new terms are driven by InBev, which bought Anheuser-Busch last year for $52 billion.

“Our decision,” he said, “ensures that Anheuser-Busch’s payment practices are consistent with those in place globally for A-B InBev.”

Some mom-and-pops delay payment for lack of cash. Big companies sometimes do it for “float,” to earn interest on the owed money. Yet interest rates are at all-time lows, so it’s a marginal advantage these days.

Locally, Ball Metal and Owens-Illinois are primary suppliers to Anheuser-Busch. Owens-Illinois provides bottles for beer while Ball makes the cans.

Dennis Lutz, administrative manager at Ball Metal in Grove, said his plant supplies the brewery with all of its 12-ounce cans, and sends 16-ounce cans to breweries in New York, New Jersey and Ohio. In all, 1.4 billion cans a year are produced here solely for Busch.

How the payment change will affect Ball is unclear. Lutz said that no payments are received by the local plant, but rather the Ball headquarters in Denver. “It’s a one-time issue,” he said. “After that, it gets into a regular cycle.”

The initial delay, however, will deeply hurt a supplier’s cash flow. The 120-day lag is ironic, given that Budweiser’s freshness guarantee is 110 days.

Lutz said the impact would likely be greater on small suppliers.

Scott McCarty, spokesman for Ball’s corporate office, said he could not discuss the terms of the company’s contracts with its customers. A call to the local Owens-Illinois plant was not returned.

Hines pointed out how smaller businesses often give more than they take in a relationship with large companies.

“Considering the discounts we had to give to earn their business, we had to decide if the little bit of profit we made was worth it. We’d like to keep them as a customer, but it’s their prerogative.”

The blogger McWilliams also reported that lengthening payment schedules appears to be old hat for InBev. “Back in June 2007, the Forum of Private Business, a U.K. trade group, blasted InBev and tried to shame the company for lengthening payment terms to 60 days. The group’s executive chairman called the move ‘an abuse of buying power.'"

Anheuser-Busch Inbev Pares Stake in China Brewer

By JOHN W. MILLER

Anheuser Busch-Inbev NV, the world's biggest beer maker, said Friday it is selling most of its stake in Tsingtao Brewery Co., China's number two brewer, to Japan's Asahi Breweries Ltd. for $667 million.

The deal follows last year's $52 billion acquisition of U.S. icon Anheuser-Busch by Belgium's Inbev. After completing the cash-based transaction, ABInbev had trouble completing its $45 billion loan package due to the global financial crisis. It now has $14 billion in debt to pay off.

Asahi will get a 20% stake in Tsingtao, with ABInbev retaining a 7% share. It is the first of five assets ABInbev Chief Executive Carlos Brito has said he might sell. The others are U.S. theme parks such as SeaWorld and Busch Gardens and Korean and German breweries, including the one that makes the popular brand Beck's. Mr. Brito has estimated their total worth at $7 billion.

ABInbev is still committed to China, the world's biggest beer market, Mr. Brito said. The company's strategy is to bring core Western brands like Budweiser and Stella Artois into emerging markets, analysts say.

ABInbev owns over 20 brewers in China, making it the country's third-largest beer maker, a spokeswoman said.

"With strong local brands such as Harbin and Sedrin and global brands such as Budweiser, we are well positioned to benefit from the significant potential in this important market," Mr. Brito said in a statement Friday.

The company, based in Belgium and New York, said the deal would "unlock shareholder value" as it works to repay debt from the Anheuser-Busch deal.

ABInbev has also been busy on the bond market. This month, it raised $5 billion in the U.S. and $2.5 billion in Europe.

The brewer's Brazilian leaders, including Mr. Brito, have a reputation for cost cutting. In December, the company said it would cut 1,400 U.S. jobs. This month, it promised to close a U.K. brewery, trimming 182 positions.

The sale of most of its stake in a Chinese brewer once considered a jewel by Inbev leaders is also a sign of the new relevance of Chinese competition authorities. In November, they approved Inbev's merger with Anheuser-Busch on condition the combined company not increase its Tsingtao stake.

Although Beijing didn't explicitly order ABInbev to sell the stake, it signaled the brewer wouldn't be given free rein. That probably contributed to the decision, analysts said.

"The path to clearance may now often feature Beijing as much as Brussels and Washington," said David Anderson, a partner in the Brussels office of London-based Berwin Leighton Paisner LLP.

The Chinese antitrust decision had no impact on ABInbev's move to trim its Tsingtao stake, the ABInbev spokeswoman said.

Write to John W. Miller at john.miller@dowjones.com

Super Bowl 2009 Budweiser Ads stick to Clydesdales

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European brewer InBev bought Anheuser-Bush in 2008. To keep Americans in the impression that nothing has changed and a Budweiser is still as American as a beer can be (By the way Monty Phyton described American Beer already back in 1982 as f%^&ing close to water).

Adage reports that Anheuser-Bush is at least placing three Clydesdales ads during Super Bowl 2009.

Last year the Clydesdales Super Bowl ad was the best Super Bowl Ads according to Ad Meter. More details on Adage.

Super Bowl 2009 will be happening on Sunday February 1st. This Super Bowl is a treat for geeks that is why we will cover it even more than in 2008. Despite the recession a 30 second Super Bowl Ad costs about $3m and there should be lots of must see Commercials again. There will be for instance the first 3D Super Bowl Ads and lots of Super Bowl Ads featuring new 2009 Sci-fi Movies including the new Star Trek and the next Transformers movie. So make sure you have your Super Bowl sized LCD HDTV and NFL Gear ready.

Anheuser-Busch InBev wants to open New York office

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Anheuser-Busch InBev (Euronext: ABI) on Thursday announced it plans to open an office in New York to support the needs of the newly combined organization.

The company provided no timetable for opening the new office. It would host members of management, along with members of the company's marketing, finance, human resources, supply, and legal teams.

InBev acquired Anheuser-Busch in November.

The U.S. has become the company's largest market, generating 40 percent of its earnings, according to Anheuser-Busch InBev, the brewer of Budweiser, Stella Artois, and Beck's brands.

The Leuven, Belgium-based beer maker has a plant that employs approximately 940 at 2885 Belgium Road in the town of Lysander.

Opening a New York office could lead to as many as 89 layoffs at the global headquarters in Belgium. Anheuser-Busch InBev hopes to find jobs for those employees at other locations in Belgium.

The company announced Dec. 8 it would cut 1,400 salaried jobs, or 6 percent of its total U.S. work force. It's not clear how the reduction affected the Lysander plant because the company wouldn't disclose job cuts for individual plants.

Contact Reinhardt at ereinhardt@cnybj.com

Buyers await Anheuser-Busch InBev asset sale

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The Financial Times newspaper has an interesting piece here discussing the possible sale of Anheuser-Busch’s theme parks. The story says that “Busch Entertainment, the group’s theme park business, which owns SeaWorld Orlando, is expected to be one of the first business units put up for sale with a possible price of up to $4 billion.” Possible buyers include Walt Disney and Universal Studios, according to the newspaper.

Anheuser-Busch InBev needs to sell “non-core” assets to pay back some of the debt it took on to form the combined company last year.

A-B InBev transfers Bevo Mill to St. Louis city

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Anheuser-Busch InBev has turned over the iconic Bevo Mill building and windmill in south St. Louis to the city.

David Gilbert and Patrick Viehmann operate the restaurant at Bevo Mill, at 4749 Gravois Ave., and had leased the property from the brewer. A-B InBev has transferred the land to the city for a dollar, Gilbert said, and lease payments will now go to the city of St. Louis.

“InBev is pretty much selling off all Busch properties, which is what we all kind of expected,” he said. “There are advantages to leasing from the city, which can help with improvements to maintain the historic character of the building.”

August Busch Sr. built the restaurant and five-story windmill in 1917 along Gravois, halfway between his home at Grant’s Farm and the brewery. Busch used the restaurant to entertain associates and as a private dining hall.

Since the restaurant was a retail beer outlet, the brewery had to stop operating it under new rules following Prohibition’s repeal.

The German-inspired restaurant, where female workers wear traditional dresses and male employees don lederhosen, was closed to all but private parties from 2001 through 2006, but then Gilbert and Viehmann reopened it as a restaurant.

Belgium-based InBev bought St. Louis-based Anheuser-Busch Cos. Inc. in a $52 billion deal that closed in November. Anheuser-Busch is now a wholly owned subsidiary of the newly named Anheuser-Busch InBev.

Recession hits beer sales

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Beer sales are known for being recession-resistant, but that isn't looking to be the case this time around. The London-based brewer behind the Miller brand recently reported that its shipments dropped unexpectedly in the third quarter. MillerCoors said its premium light brand volumes were down 2.4%. MillerLite sales were down 7.5%

Not surprisingly, the weakness in sales is being driven by smaller orders at restaurants and bars, which are anything but recession-proof. But it seems that some people are opting to skip out on beer entirely instead of heading to the liquor store to take home a case of Keystone Light.

Beer sales normally grow at about 1% per year -- in 2008, they only grew by half that amount. But it could get worse in 2009.

I can't help but wonder whether the combination of plunging 401(k)s and foreclosures has people thinking they need something a little more potent than beer. The Dayton Business Journal reports that in Ohio -- one of the harder hit sates -- sales of liquor containing more than 21% alcohol rose 5% in 2008. The top-seller was the bargain basement Kamchatka Vodka, which moved 380,465 gallons in that state.

St. Louis bids farewell to local A-B ownership

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ST. LOUIS: Few American cities are as closely linked to a company as St. Louis is to Anheuser-Busch, making for a difficult day for some here when Belgium-based InBev closed its $52 billion buyout of the brewer.

The Anheuser-Busch-InBev combination, which was completed on Tuesday, creates the largest beer company in the world, and one of the top five consumer product companies.

St. Louisans have had months to grow accustomed to the deal, but word that the brewer would no longer be locally owned still raises worries about what that will mean for the region's economy — and its psyche.

The brewer employs about 5,700 people in the St. Louis area and pays roughly $32 million in state and local taxes and fees. Anheuser-Busch donated about $13 million to philanthropic and charitable organizations last year.

The company said in a statement Tuesday that it has not made any additional changes to its work force, adding that "InBev has affirmed its commitment to the community." St. Louis will remain the North American headquarters for the company.

Brewery tours that draw hundreds of thousands of visitors annually to the red-brick Anheuser-Busch complex in the Soulard neighborhood are expected to continue, as are symbols long associated with the brewery, like its famed teams of Clydesdale horses.

Robert Archibald, president of the Missouri Historical Society, said he has heard people are worried about "the loss of one of the last St. Louis icons," but he thought the city's strengths will allow it to "do just fine."

Brewing has historically been an important industry in St. Louis, brought about by waves of German immigrants who came to the region before the Civil War. Beer, which would not have been pasteurized at the time, was often stored underground in area caves to keep it cold.

Anheuser-Busch had its roots in the Bavarian brewery, which Eberhard Anheuser acquired in 1860. His son-in-law, Adolphus Busch, in 1864 joined the company that would later become Anheuser-Busch.

There used to be dozens of breweries in St. Louis, but Archibald noted Anheuser-Busch developed its reputation through its marketing genius.

In St. Louis, the brewery's name is commonplace, glowing on signs at Busch Stadium where the major league baseball Cardinals play and marking the business' many corporate sponsorships of area programs and events.

In Archibald's view, there was a certain inevitability that the long-standing business, closely associated with a family, would change into a larger company and operate on a global scale.

But all the economic realities in the world can't sway St. Louis residents, for whom the loss of local A-B ownership feels personal.

"It's kind of a shame we're losing local control of it, but I expect I'll still like the beer," said Jerry Venverloh, 85. He and classmates from his 1937 graduating class from Our Lady of Sorrows elementary school gathered there for lunch.

Venverloh said he expects changes will come to the brewery in St. Louis, including a reduction in jobs, now that the deal is complete.

"In my working life, I've been in situations where new owners come in, and say they'll keep everything the same. Six months later, everything changes," he said.

St. Louis Mayor Francis Slay said the company's chief executive, Carlos Brito, phoned him Tuesday afternoon. Brito said he and a team of employees will spend several months making changes at Anheuser-Busch, but Slay sounded a positive note.

"Closing the Anheuser-Busch InBev deal, of course, means that thousands of St. Louisans will now be sharing one of the largest infusions of wealth into this region in our history," Slay said in a statement. "Given the state of the national economy, it probably could not come at a better time."

AB Inbev says it will cut 1,400 US jobs

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BRUSSELS (AFP) — Newly merged brewing giant Anheuser-Busch InBev said Monday it would cut 1,400 jobs in the United States as part of its recently closed takeover of Anheuser-Busch.

The Belgium-based brewing giant also said it would not fill 250 US positions and that 415 contractor jobs would be eliminated.

"To keep the business strong and competitive, this is a necessary but difficult move for the company," Anheuser-Busch President David Peacock said in a statement.

"We will assist in the transition for these employees as much as possible," he added.

The cuts, which will affect about six percent of the company's US workforce, would come at both Anheuser-Busch's St. Louis corporate headquarters, at breweries and its distribution network.

The group closed its takeover of Anheuser-Busch last month, ending Anheuser's roughly 150 years of independence as a premier American brewer while creating the world's largest beer company.

The new company is expected to have net sales of about 36 billion dollars a year, offering consumers some 300 brands, including Anheuser's Budweiser and Bud Light, and InBev's Stella Artois and Beck's.

The job reductions come on top of more than 1,000 cuts already carried out through a voluntary retirement scheme that closed in mid November.

The bid for Anheuser-Busch had stirred fierce opposition in the company's home state of Missouri where Governor Matt Blunt has called the prospect of a foreign takeover "deeply troubling."

Employees who lose their jobs are to receive severance pay and pension benefits based on age and years of service as well as other benefits such as help finding other work.

The company said that it expected the cuts, most of which are to take place this year, to cost it about 197 million dollars and that they are part of 1.5 billion dollars in synergies expected to be created by the merger.