Free beer, get your free beer here! Conditions have gotten so bad at the Budweiser brand that parent Anheuser-Busch InBev (NYSE: BUD ) is resorting to free beer. From Monday until Wednesday of next week at bars around the country, the iconic brand will try to become relevant with the under-30 crowd again by offering a free taste of an old classic.
Budweiser unit sales were down 9% last year and are off as much this year, but the biggest concern for Anheuser-Busch is the loss of the next generation of drinkers. Young drinkers have passed over the classic Budweiser brand for craft brews and new concoctions, helping drive Budweiser's rank in national product brands down from 16th to 220th in the last seven years.
For Anheuser-Busch and Molson Coors Brewing (NYSE: TAP ) , a trend of some concern is the move toward craft beer like Boston Beer's (NYSE: SAM ) Sam Adams. The year 2009 saw a shift toward craft brew, and in the first half of 2010 overall U.S. beer sales were down an estimated 2.7% by volume, but craft brews were up 9%. Even better for investors in craft brews: the retail dollar share of craft brewers was up 12%. Craft brewers are selling more volume and getting a higher price for their product.
This doesn't spell the end for the diversified Anheuser-Busch. Consumers have been "trading up" to its other products, such as Stella Artois, nearly tripling Stella's U.S. share in the import category since 2005. Similar to Molson Coors, Anheuser-Busch has a brand in nearly every category to satisfy the whims of consumers, so the relative underperformance of Budweiser may be an opportunity to coax consumers to trade up to one of its more premium offerings.
Overall, I don't see how this is a good sign at all for the King of Beers, Budweiser. As a beer connoisseur in the target market for this promotion, I think other bar aficionados will take the bait and try a Bud or two. I'll give the server a "hmmm ... that was interesting" and then order a round of my favorite local craft brew. A free beer just isn't enough to make Budweiser relevant to me again.
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