Budweiser: Not The King of Generation Y

-David Mitchel, Norton Mitchel Marketing Budweiser, the self-proclaimed King of Beers, announced a marketing initiative this week to broaden its appeal to drinkers ages 21-30. Although Budweiser is an immensely popular global brand, it has had difficulty in the United States market in recent years. In the US, Budweiser sales volume was down 9% in 2009 and it appears the brand is on track to lose about 9% again in 2010. As a means of comparison, the whole US beer market fell 2% in 2009. In 1988, Budweiser had a 26% share of the beer market in the USA. Today, Budweiser only has a 9.3% share. In particular, Budweiser is most concerned about its lack of popularity amongst young drinkers. According to its own data, 4 out of 10 drinkers in their mid 20s have never tried the beer. These factors make now a quality time for the Budweiser brand to revitalize. However, based on the plans that Budweiser has divulged, I do not believe that they will be effective in changing the perception of the brand amongst young adults and generating greater market share. Budweiser's marketing initiative will begin in earnest with "Budweiser National Happy Hour" on Wednesday, September 29. Free samples of Budweiser will be available at various bars across the nation. The logistics of this plan already have been criticized in the mass media. While criticism of logistics is certainly valid from a brand management perspective, it does not take into consideration the larger strategic flaws in the plan. Free sampling can be a way to build brand awareness and develop positive brand beliefs. However, marketing is a mix of elements and all elements of the mix must work harmoniously together for success. In the case of Budweiser, this will not occur. Besides the National Happy Hour event, Budweiser plans to promote the brand through their Facebook presence and video advertising, much of it on television. They are taking a multi channel promotional approach, which is positive. Budweiser will use its Facebook page to give free beers to those celebrating a birthday (22nd birthday and up) and display photo albums of those celebrating with Budweiser on their birthday. A quick visit to Budweiser's Facebook page shows that Budweiser isn't likely to impress most of the young audience. Their primary profile picture displays 2 Budweiser bottles on ice and the slogan of this campaign "Grab Some Buds". The imagery is nothing new, which is disappointing because a key component to revitalizing a brand is repositioning. Using imagery that places Budweiser in a new context would be a welcome change. Also, the slogan for this campaign is "Grab Some Buds". There is nothing memorable about this slogan. It is about as boring as it gets. Meanwhile, the first video ad is available both on Budweiser's home page and the Facebook page. This video ad is likely to be perceived as rather stale by young adults because it uses undifferentiated imagery. It will not break through the clutter, which is the goal of all advertising. With an understanding of the effort, examining why it will fail with young adults and fail to revitalize the brand is vital. It appears that Budweiser is failing to understand the current young adult generation. This is nothing new for the brand. A 1997 article from Fortune documents Budweiser's troubles connecting with the young adults of the mid 1990s. The young adult generation of the present is part of Generation Y. Generation Y is generally considered birth years 1980-1994, although there are varying definitions of the cohort. The younger members of this generation have yet to reach legal drinking age, but the majority of this generation is now able to legally purchase alcohol. While all age cohorts have been affected, Generation Y has been disproportionally affected by the current economic downturn. BusinessWeek was a leader in the mainstream media in documenting this phenomenon but more and more media outlets are paying attention to this phenomenon. Generation Y is fundamentally different from their parents, most of whom are Baby Boomers. A new story this week detailed how many auto brands are failing to connect with Generation Y in the same way they connected with Generation X and Baby Boomers. Also, Generation Y has called by many sources as being difficult to market to. An early mention of this phenomenon comes from a USA Today article in 2002. Generation Y is also a very group/team oriented generation and reaching them en masse can be a matter of group consensus. How do the characteristics of Generation Y relate to the beer market in 2010? The most important aspect is Gen Y's plight in the economic downturn. As a result, pricing is likely to be the most significant factor in the marketing mix for many brands now. Consumers, particularly those in Gen Y, are looking for a tremendous price-value proposition. The most price conscious individuals are trading down to beers like Natural Light, Busch, Busch Light and Pabst Blue Ribbon (PBR). In 2009, Natural Light gained increased sales by 9.1%, Busch increased by 8.1% and Busch Light by 6.9%. PBR has successfully revitalized their brand over the past 5-10 years, and is considered a similar beer to the other brands. All of these beer brands have two things in common. They are inexpensive and hardly engage in mass media advertising. These brands have all used pricing to their advantage in the marketing mix. The lack of mass media advertising appeals to a Gen Y audience as they don't respond well to it. At the other end of the price-value proposition, more expensive beers craft beers/microbrews appeal to Gen Y. They provide a quality price-value proposition as they are perceived by many as higher quality for a reasonable price. One of the largest brands in this subcategory of beers is Samuel Adams. They tend to advertise more than other craft beers/microbrews, but their advertising has not appeared to deter sales amongst Gen Y members. Continued success has been predicted for Sam Adams and other microbrews (see here and here). In June, I wrote on DuetsBlog about what makes brand revitalizations successful. What Budweiser is attempting here is similar to what Procter & Gamble did with the Old Spice brand after 1990. Old Spice had a declining market share and appealed to an older market. They wanted to appeal to a younger market. To do this, Old Spice expanded their product line moving into new categories such as body washes and body sprays, changed their packaging, changed their communication messages and featured low prices. Budweiser would not be inclined to move into a new product category. They have not indicated a change in packaging is coming, nor would I think that would be wise at this time. Numerous brands have struggled with packaging changes, most notably Tropicana in 2009. Budweiser's communication efforts appear as if they will fail to resonate with young drinkers. The final element is pricing. Budweiser could likely raise sales with a price decrease. In many cases, the incremental sales volume that a brand achieves from a price decrease doesn't make up for the income lost. A price decrease should be considered an absolute last resort. And finally, with the Old Spice brand revitalization, it took Procter & Gamble many years to revitalize that brand. Budweiser has not indicated that this is an ongoing campaign. Rather, this appears to be an attempt at a quick fix. What can Budweiser do in the short term to revive their brand? They should shift their focus away from the young drinker. They don't have a competitive advantage in that space. They should try to reconnect with their core audience in the meantime, which would skew more to the Baby Boomers and Generation X in terms of age. In July, I thoroughly examined why the Boomers should not be ignored in brand marketing. Budweiser is far more positively perceived amongst Baby Boomers than Generation Y. This can work to Budweiser's advantage as the Boomers have more disposable income than Generation Y. Some Boomers could re-adopt the brand due to nostalgia or be trading down to it due to recession induced financial challenges (job loss, Gen Y children moving back home due to a lack of success in the job market, stock portfolio losses, etc). They need to find a message that will resonate with the Boomer audience and possibly the Gen X audience. I believe this message should incorporate nostalgia for the good times these cohorts had with the brand. In the longer term (5-10 years or more down the line), the brand may need to make some serious adjustments to find success with Generation Y or learn to connect with Generation Z (a generation which will be very different from Gen Y) when they reach legal drinking age. PBR is an example of a beer brand that didn't connect with a couple of generations but found a way to connect with a new generation. It is possible that Budweiser could find that to be the case with Generation Z. Only time will tell.

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