Budweiser: New Cans, Same Results

Budweiser released a new can. It has been using the old design for ten years. Beer cans don’t sell beer.

“Shipments of Budweiser to wholesalers, a measure of sales volume, fell 7.3% last year in the U.S. after a 9.5% decline a year earlier, according to newsletter Beer Marketer’s Insights” reported The Wall Street Journal.

Bud, the most widely sold beer in the U.S., is up against a swell of imported beers, local brewery products, and domestic beers that undercut it on price. Flying Dog Brewery of Frederick says it has a successful business in Maryland. Connecticut has at least 20 local beers listed in the Brewers Association data base. Many other states boast similar numbers.

International threats to US beer sales are no longer just from Europe. A number of Mexican beers do well here. Dutch brewer Heineken bought the beer-making operations of Mexico’s Femsa last year.  The company is the maker of Dos Equis, Tecate and Sol. Heineken essentially took over one of its primary rivals in the U.S. and got access to the large Mexican beer market as well.

Budweiser faces one of the most difficult hurdles in the business world. It has to defend a market share that has grown to tremendous size. It had, by some counts, 50% of the beer market in the U.S. just three years ago — same as GM (NYSE: GM) was a generation ago and Microsoft (NASDAQ: MSFT) today. Competitors only need to take a modest amount of market share from the leader to build profitable businesses of their own.

A change in the Bud can design won’t make the brewer’s multitude of problems go away.

Douglas A. McIntyre