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Despite award-winning advertising, Bud Lights sales volume and market share have been declining for over a decade.? What are three possible reasons why? Should InBev management conti

Please read the PDF File, and answer the following 2 Questions:

1. Despite award-winning advertising, Bud Light’s sales volume and market share have been declining for over a decade.  What are three possible reasons why?

2. Should InBev management continue to pursue its "line extension" strategy for Bud Light, or should they "double down" on the beer category and resist launching more Bud Light extension? Support your opinion.

Bud Light is ailing— can a new agency fix it? Springer, Jon . Advertising Age ; Chicago  Vol. 93, Iss. 11,  (Jul 11, 2022): 16.

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ABSTRACT (ENGLISH) Behind the prestige of an association with beer's biggest U.S. brandand creative control of one of the country's

most iconic and famous advertiserslies a formidable challenge for the advertising agencies vying to win the Bud

Light creative account. Volume of the core Bud Light beer (known inside the company as Bud Light Blue), has

decreased for 13 consecutive years, falling from an all-time peak of 42.4 million barrels in 2008 to 26 million last

year, according to beer trade publication Beer Marketer's Insights, which bases its analysis on shipments to

distributors. What this all means for Bud Light Bluestill America's best-selling single brand with 11.8% U.S. market

share, according to Beer Marketer's Insightsmay not be the message that its distributors necessarily want to hear.

Bud Light's 1.7% decline, Beer Marketer's Insights data shows (Lite was the only of the three to gain overall beer

market share). […]the agency that wins its business may be the one that tells that story best to the young audience

Bud Light the beer has seen steadily drain away, while latching onto the legacy strengths that once defined

ittransforming a youthful and fun-loving brand of low-calorie, sessionable beer that's dying into a youthful and fun-

loving family of low-calorie, sessionable things that can growbeers, cocktails, seltzers, health-focused beers and

perhaps other expressions still waiting to be invented, along with new ways to promote them. FULL TEXT Behind the prestige of an association with beer's biggest U.S. brandand creative control of one of the country's

most iconic and famous advertiserslies a formidable challenge for the advertising agencies vying to win the Bud

Light creative account. Can they help save a brand whose signature product is stuck in a long sales slump?

Anheuser-Busch InBev, parent of the Bud Light brand, initiated the review last month after eight years with

Wieden+Kennedy, which has chosen not to defend. Agencies pitching the business include Anomaly, Johannes

Leonardo, Gut, WPP's Cavalry and the Martin Agency, according to multiple people familiar with the matter. Other

shops may still join the chase.

The winnerexpected to be revealed this fallwill inherit a brand with massive sales and a long legacy of memorable

advertising, but also a world of troubling trends to overcome. Volume of the core Bud Light beer (known inside the

company as Bud Light Blue), has decreased for 13 consecutive years, falling from an all-time peak of 42.4 million

barrels in 2008 to 26 million last year, according to beer trade publication Beer Marketer's Insights, which bases its

analysis on shipments to distributors. And while a post-pandemic hospitality rebound helped to slow the rate of

decline in 2021, the pace of its downfall had essentially doubled in the five years before that, the publication's

figures show.

Worryingly, this came despite some wildly popular advertising, such as Wieden+Kennedy's viral "Dilly Dilly"

campaign, first introduced in 2017.

Experts in the beer and advertising industries say Bud Light is struggling to keep up amid a combination of

industry trends. They include an explosion of newer brands and styles developed for ever-narrowing tastes and

occasions, including seltzers and canned cocktails that more effectively draw in today's new drinkers than legacy

beer brands, including many under a growing Bud Light banner.

"Premiumization, fragmentation, innovation, varietythese were all things that were antithetical to everything Bud

Light is," said Benj Steinman, president of Beer Marketer's Insights.

Some say Bud Light's problems worsened while its parent AB InBev was busy assembling and integrating

acquisitions and "optimizing" its portfoliomoves they interpreted as the big company's indifference to the fate of

any one brand, particularly stalwarts such as Budweiser and Bud Light. These carry lower profit margins than

sibling brands like Michelob Ultra, or any number of seltzers, cocktails and imports also in the AB InBev stable that

can support higher prices, and potentially, at least, better reach the young audience that's long been Bud Light's

lifeblood. This dynamic might have been best expressed in a 2018 earnings conference call exchange between AB

InBev's then-CEO, Carlos Brito, and an analyst asking about the company's ailing U.S. brands. "What's working best

is that we're playing a portfolio game," Brito said, according to a Sentieo transcript. "Not a Bud and Bud Light

game."

In recent years, this approach has made winners of some AB InBev portfolio brands Michelob Ultra and Cutwater

canned cocktails for exampleand losers of stalwarts like Bud Light. AB InBev "fully understands" this dynamic, said

Robert Ottenstein, a financial analyst for Evercore who has followed AB InBev for years. But the brand's rate of

decline, he cautioned, "is a very significant challenge for the company."

"There's nothing wrong with trading upa Bud Light drinker in his 30s becoming an Ultra drinker in his 50sthat's a

natural and really healthy development for the company," Ottenstein added. "What you need to do is prevent the

leaky bucketyou don't want the Bud Light drinker moving over to [U.S. rivals] Corona or Modelo." [Constellation

Brands controls Modelo and Corona in the U.S., while AB InBev owns them globally.]

AB InBev declined to comment for this story, and has said it would not comment on the agency review beyond a

statement in early June, confirming it was taking place, which read in part: "As the brand marks its 40th

anniversary, Bud Light will be reviewing its creative business as it continues its mission to build authentic and

engaging connections with its consumers."

'Bad or nonexistent'

But there's some reason to believe the agency review could be a small part of a new dawn for Bud Light. It comes

in the wake of a new CEO at AB InBev, Michel Doukeris, who ascended from president of the company's North

America zone to succeed Brito on July 1, 2021. In a December investor seminar, Doukeris acknowledged many of

the trends that have contributed to Bud Light's ailing health, and had already begun showing up in the form of new

products with big ambitionslike the Super Bowl-advertised, high-profile Bud Light Next, an 80-calorie, zero-carb

beverage that can be seen as an interpretation of Michelob Ultra, only marketed for Bud Light's younger audience.

A new U.S. chief commercial officer, Kyle Norrington, previously led AB InBev's beer strategy in Canada as

president of Labatt Breweries. He intends to replicate in the U.S. what he has described as a transformative

prescription to reignite growth in the Great White North that aligns with Doukeris' vision for developed beer

marketsinnovation, premiumization and "beyond beer."

Andy Goeler, a longtime Anheuser- Busch employee who has recently steered Bud Light as the brand's marketing

VP, recently announced his retirement, and a fresh duo of executives are getting started at the brand: Alissa

Heinerscheid, who has the role of marketing VP, head of Bud Light Blue; and Steve Wolf, who is marketing VP

overseeing Bud Light brand extensions.

The company has also recently acknowledged a willingness to make big marketing breaks with its past, declaring

that it would surrender a longstanding practice of pursuing exclusivity among alcohol rivals in Super Bowl in-game

ads.

What this all means for Bud Light Bluestill America's best-selling single brand with 11.8% U.S. market share,

according to Beer Marketer's Insightsmay not be the message that its distributors necessarily want to hear.

Multiple people with deep knowledge of the brand who spoke to Ad Age say the best outcome they would hope for

from new brand creative is only to slow the rate of its decline and absorb more share currently finding its way to

rivals.

Bud Light's two biggest light lager category rivals, Molson Coors-owned Coors Light and Miller Lite, are victims of

the same long-term industry trends. But both of those brands outperformed Bud Light last year, increasing

shipment volumeCoors Light by 1.1% and Miller Lite by 3.8%vs. Bud Light's 1.7% decline, Beer Marketer's Insights

data shows (Lite was the only of the three to gain overall beer market share). AB InBev's distributors are keenly

aware of these figures.

"The [agency] change is welcome news because the effort behind Bud Light for the past year or more has been

either bad or nonexistent, and I'm sure would you get the same response from every distributor you hear from," one

longtime AB InBev distributor, who asked not to be identified, told Ad Age. "Having a new agency is a good first

step, but what we need to see is commitment and follow-through from the top."

Goeler's departure elicited a "gasp" among distributors who long viewed him as "their friend at the company," said

Kimberly Clements, co-founder of beer business consultancy Pints LLC, whose family ran the Tucson, Arizona,

Budweiser distributor Golden Eagle Distributors before selling it six years ago. In reflecting on the radical evolution

of the U.S. business since its merger with InBev, Clements relates a story that many with long memories of

Anheuser-Busch history reliably recall: That influential former CEO August Busch IIIthe grandson of A-B founder

Adolphus Buschwas particularly wary of the concept of line extensions on "workhorse" brands like Bud Light.

Distributors, Steinman adds, were "certainly underwhelmed" by the initial performance of Bud Light Next, a brand

the company said had been 10 years in the making and got a Super Bowl introduction, although he personally is

taking a "wait-and-see" attitude. "They're trying for something a little different here, and despite a slow start, I'm not

ready to write it off yet." As for Bud Light Blue, Steinman described distributor sentiment this way: "Even if you

can't get it to grow, if you just improve the trend, it would mean so much for the business."

Inside AB InBev, the action indeed appears to be around "a little different," and would seem to point toward

expanding Bud Light not as a beer, but as a kind of lifestyle platform. And the agency that wins its business may

be the one that tells that story best to the young audience Bud Light the beer has seen steadily drain away, while

latching onto the legacy strengths that once defined ittransforming a youthful and fun-loving brand of low-calorie,

sessionable beer that's dying into a youthful and fun-loving family of low-calorie, sessionable things that can

growbeers, cocktails, seltzers, health-focused beers and perhaps other expressions still waiting to be invented,

along with new ways to promote them.

Whether that can work is a matter of still further debate. What observers agree on, however, is whatever's been

done over the last 13 years for Bud Light has not.

Guy walks into a bar

Perhaps Bud Light's first significant creative victory was the 1985 "Gimme A Light" campaign that promoted the

brand's bar-friendly name change from its founding as Budweiser Light to Bud Lightestablishing for the first time a

personality separate from its parent and going directly after the then-category leader it would soon vanquish, Miller

Lite, with humor and understated cleverness.

The ads featured a series of "guy walks into a bar" jokes, with variations on the same punch line over and over

again: A customer in a bar orders a "light"only to be presented with a table lamp, a flare, a flaming branding iron

and so onforcing them to say, "I meant a Bud Light."

The same campaign, if run today, would make the brand itself the prop punch line. There are 26 different versions

of Bud Light currently listed on the brand's website, under any of six subcategories: There's Bud Light; four citrus-

flavored malt beverages (FMBs) now known as Peels; four versions of Chelada, a Clamato-infused Bud Light

popular with Hispanic consumers; a 6% alcohol version known as Bud Light Platinum; the new Bud Light Next; and

18 different seltzers: four fruit "classics"; four hard sodas; three "Retro Tie Dye" soda flavors; four "Cocktail Hour"

malt seltzers meant to mimic mixed drinks; and three flavors of Platinum seltzers. (Some of these are available

only as part of retail multipacks, so the number of varieties is something less than the number of flavors.)

Steinman estimates the line extensionseverything but Bud Light Blueaccounted for between 3 million and 3.5

million shipped barrels last year, or roughly eight times less than Bud Light Blue.

The degree to which this constitutes a thoughtful, consumer-centric and potentially lucrative approach to a core

brand in decline, an embarrassment of "brandspreading" inadvertently contributing to diluting equity, or a little of

both is a key question among observers. All generally agree it has added to the complexity of a brand that once

upon a time was so simple it could be explained in two short words.

'More Cheers'

To understand how it got this way is to understand the evolution of AB InBev's overarching strategies, and further

underscores the big transitional moment that the Bud Light agency review accompanies.

In a December seminar, Doukeris referenced the company's newly defined purpose"To a Future With More

Cheers"while discussing its broader strategic approach. In developed markets like the U.S., this strategy intends to

accelerate the company's growth and financial health by leaning into opportunities in premium products and

extending further into so-called "beyond beer" categoriesflavored alcohol beverages, seltzers and canned cocktails

designed to reach new consumers and occasions by addressing perceived barriers to beer adoption. Those

barriers, according to Rosie Coppiano, AB InBev's global VP, category strategy and insights, include "bitterness,

masculinity, and high carbs," according to a transcript of the event.

In Doukeris' vision, AB InBev is poised to take advantage of these trends through a massive array of global brands,

and the superior supply chain and distribution muscle, developed under the strategies of Brito, who led the wave of

industry consolidation. The "More Cheers" strategy also contemplates achieving industry leadership in e-

commerce, ambitious ESG goals and prescribes separate marching orders for global markets where beer is less

developed than in the U.S.

"As the industry consolidated and we became the largest global brewery, we took our eyes off consumer trends

and innovation," Doukeris said in the investor seminar.

The loudest flavors

While timeand presumably, the right creative touchwill tell if AB InBev's bold strategies ultimately succeed, it's safe

to say that when it comes to Bud Light, industry watchers are skeptical.

Some see such an array of brands assembled around a large but fast-falling anchor as a recipe for disaster and

interpret the whole thing as a kind of dressed-up apology for arriving late to innovations that other companies

pioneeredand still lead. Top-sellers in seltzerWhite Claw and Trulyaren't appendages of existing brands but new

entities founded by Mark Anthony Brands, the parent of Mike's Hard Lemonade; and Boston Beer Co., the maker of

Sam Adams, respectively. Bud Light's traditional rivals in light lagerCoors Light and Miller Liteare conspicuous for

pursuing far less than Bud Light in the way of line extensions, a phenomenon that some ascribe to their having

maintained a tighter focus on their core brand propositions.

Steinman notes that closely aligning seltzers and beer brands in the way AB InBev has, and Coors for a time did,

might have come at the expense of its potential to grow that segment more than it has. Bud Light Seltzer provided

"a real shot in the arm" for the overall brand in 2021, although Steinman projects the seltzer category is likely to

decline overall this year. "I think that a lot of people who gravitated toward seltzer were explicitly rejecting beer, so

for some, to go to a beer brand seltzer was a heavy lift. Some 70% of seltzer today is White Claw and Truly; beer-

branded seltzers are 20% of the marketmaybe," he said.

Bob Lachky, who spent nearly 20 years (1990-2009) in Anheuser-Busch advertising roles, joining the brewer

directly from the agency behind the "Gimme A Light" campaign, then known as Needham Harper &Steers,

maintains that Bud Light's line extensions have tended to be more focused on shelf visibility than actual consumer

trends. Bud Light's great size allows for its line extensions to bash into trends with considerable strength and

speed but, in Lachky's view, doing so ultimately serves to dilute its parent's equity.

"It's death by a thousand paper cuts," Lachky said. "When you have a new product launch, you jam it down that

distributor's throatyou make them take it … but [distributors and retailers] will just take another Bud Light facing

off the shelf," he said. "Here comes Bud Light Next. Here comes Bud Light Platinum. And that's one more facing

that Bud Light doesn't get. It's one more endcap that Bud Light doesn't get. And eventually, you've killed the brand

yourself. You've killed it by your own strategy of flanking the hell out of it."

The notion that too many line extensions have damaged Bud Light is a "risk," but also difficult to prove, said

Ottenstein. He noted some beverage alcohol brandslike Jack Danielshave done a lot of extensions without

seemingly hurting its core equity.

One clue that at least some of Bud Light's extensions aren't just clumsy bandages on a wounded brand can be

seen in how AB InBev is approaching another brand whose flagship is troubled very little by existential threats:

Michelob Ultra, the low calorie/low-carb brand that's been arguably the beer industry's biggest success story in 20

years. That brand too is now flanked with flavored versions and seltzers that viewed alongside their Bud Light

siblings spotlight AB InBev's "premiumization" strategy and the brands' respective focus on demographics.

Where Bud Light's Peels FMBs include a lime flavor, Michelob Ultra's FMB, called Infusions, highlights a more

exotic lime and prickly pear variety. And whereas Ultra's seltzers are certified as organic and boast that they

contain ingredients like coconut water and real fruit juice, this year's Super Bowl commercial starring Guy Fieri

promoting Bud Light's Hard Sodas seized on a simpler emotional idea: that they represented "the loudest flavors

ever."

'A solution to the wrong problem'

However they creatively approach the brand with their pitches, the agencies now busy preparing to win Bud Light's

business are going into it well aware of a single daunting fact: Years of memorable campaigns have failed to move

the needle on a light beer category in freefall, and Bud Light most dramatically.

Emblematic of Bud Light's dilemma was the 2017 campaign by Wieden+Kennedy known popularly as "Dilly Dilly."

Meant to cash in on a then-sizzling cultural property popular with Bud Light's desired audiencethe "Game of

Thrones" franchisethe ad was meant to show the beer was fun to share with friends, and playfully trip up the

notion that it had become uncool compared with craft beer.

"Our mission was to reinvigorate the Bud Light brand and make it a beer that people would be proud to hold again,"

according to a blog post examining the campaign, published on the Wieden+Kennedy website. "To do that, we first

had to put Bud Light back in the cultural conversation in a big, positive way."

Time would reveal the spot was wildly successful in W+K's latter goalbut nearly ineffectual in the first. "Dilly Dilly"

indeed took offfirst within the cultural properties where Bud Light's desired fans were: It got coverage on ESPN's

"SportsCenter" and an in-game audible from Steelers quarterback Ben Roethlisberger, then barreled into wider

culture: According to Wieden's post, "Dilly Dilly" for a time was the third-most-popular Google autofill following the

phrase "What does…" The phrase got 395,000 mentions on social media and more than 900 million earned media

impressions.

Energized by having a such big creative winner on its hands, the brand and Wieden plowed it into a full-blown

campaign that lasted for two years. The theme culminated in a 2019 Super Bowl campaign aiming not at vague

microbrews but big competitors such as Lite and Coors Light over a controversial allegation they used corn syrup

in brewing. Bud Light sales continued to slide.

Reflecting on the "Dilly Dilly" saga in retrospect, one agency executive with experience in beer marketing diagnoses

it failed due to a fundamental disconnect between the brand and its goals. "'Dilly Dilly' made a brand famous that

wasn't struggling for fame," said this person, who asked not to be identified. "Of course it didn't work. It was a

solution to the wrong problem."

Another veteran beer marketer, on the campaign's four-part corn syrup Super Bowl epic remarked, "Not a single

beer drinker in the country cared. But boy, did they spend a couple hundred million dollars."

"Dilly Dilly" demonstrated that Bud Light's marvelous ability to produce an unforgettable advertising moment was

still somewhere in its bag of tricks, even if making the brand cool again required a different kind of magic it may

still be seeking. In a 2021 Super Bowl spot, the characters from Bud Light's "Dilly Dilly" universe were joined by the

famous ad phrasemakers who proceeded them"Yes I Am, " "Wassup?" "I love you man" and morein a zany meta

plot where "Bud Light legends save the day," (naturally, the line was sung by the "Real Men of Genius" singer). The

great irony is that they didn't save the day, at least for the brand.

In Clements' view, the revamped Bud Light portfolio, whose future now seems staked to disparate items ranging

from the health-and-fitness ingredient-backed Next to the high-alcohol, sexy nightlife elicited by Bud Light's

Platinum entries, may no longer be appropriate for the megabrand's traditional reliance on humor. Moreover, she

said, "the kind of humor they traditionally relied ontongue-in-cheek and not so seriousI'm not sure that people see

that as so funny anymore," putting Bud Light at a positioning disadvantage vs. some growing brands such as

Corona and its consistent "find your beach" tagline, or the high- performing Modelo, which has found success

behind its "fighting spirit" message.

Clues as to what Bud Light ultimately wants can be seen among the perceived strengths of the agencies known to

be pitching. All five have declined to comment.

Four of them have recent experience with AB InBev brands. The Martin Agency, known for its Geico campaigns, is

a current AB InBev roster shop. Anomaly has been the brewer's partner in Canada, and would presumably have the

attention of Norrington, the client's new U.S. chief commercial officer. Gut's work with the brewer recently included

an eye-opening campaign for Michelob Ultra in Mexico. Cavalry has extensive beer experience, including a recent

gig helping AB InBev introduce a high-end line extension to its Budweiser family, Budweiser Supreme.

Johannes Leonardo would be the only newcomer to AB InBev, but has previous experience helping its rival

MolsonCoors launch its fighter in the seltzer wars, Vizzy.

The winning agency has a complex challenge in front of it, changing the trajectory of an entity that itself is rapidly

changing, to meet a consumer landscape rapidly changing, while rescuing its big but long-struggling star.

"In some ways, [Bud Light] is a victim of its success," Ottenstein, the Evercore analyst, said. "It was an

extraordinarily successful brand. At one time it had over 20% market share, which is extraordinary, but at a certain

point, the consumer changes."

Today, Ottenstein continued, "I'm not sure how clear it is to a lot of consumers what the brand stands for, and if

what the brand stands for is still as relevant to certain portions of the population." DETAILS

Subject: Marketing; Beer; Advertising; Trends; Audiences; Calories; Market shares; Breweries;

Advertising agencies

Business indexing term: Subject: Marketing Advertising Market shares Breweries Advertising agencies;

Corporation: Anheuser-Busch InBev; Industry: 31212 : Breweries 54181 : Advertising

Agencies

Location: United States–US

Company / organization: Name: Wieden + Kennedy; NAICS: 541810; Name: Anheuser-Busch InBev; NAICS:

312120

Classification: 31212: Breweries; 54181: Advertising Agencies

Publication title: Advertising Age; Chicago

Volume: 93

Issue: 11

First page: 16

Publication year: 2022

Publication date: Jul 11, 2022

Publisher: Crain Communications, Incorporated

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