The Strategy for Success in the Beer Industry
August Busch IV Speaks at Webster
Recipient of the Success to Significance 2006 Presidential Award

August A. Busch IV

The St. Louis community gathered in masses to listen to August Busch IV, President of Anheuser-Busch, give insight into the strategy to success in the ever-changing beer and alcohol industry on April 4, at Webster University.

"He began his career at Anheuser-Busch more than 20 years ago, and in his two decades with the company, he has acquired experience in every discipline of the business —brewing, packaging, shipping, marketing, business planning and management—just to mention a few," said Dean Benjamin Akande. This special speaker event was part of the School of Business and Technology's Success to Significance 2006 Presidential Lecture held in Loretto-Hilton's Browning Theatre on campus.

"He oversees the company's U.S. operations, with the responsibility for marketing, production, quality and financial performance," Akande continued. "He oversaw the launch of a number of innovative new products and packages, including Michelob Ultra, Budweiser Select, he has orchestrated significant initiatives, which have improved brewery asset utilization and enhanced the effectiveness of selling processes. Through his leadership, the company has grown to a nearly 50% market share."

August Busch IV received this year's 2006 Presidential Award from the School of Business and Technology at the event. Former honorees include such corporate luminaries as Andrew Taylor, CEO of Enterprise Rent-A-Car; Ed Whitacre, Chairman of AT&T; and Lee Scott, CEO of Walmart Corporation.

A Busch received the 2006 Presidential Award from the School of Business and Technology as this year's top CEO. Former honorees include such corporate luminaries as Andrew Taylor, CEO of Enterprise Rent-A-Car; Ed Whitacre, Chairman of AT&T; and Lee Scott, CEO of Walmart Corporation. Busch also received an honorary Doctor of Business Administration from Webster that was presented to him at the Leiden, the Netherlands campus at the commencement ceremonies where he was also the speaker. (Photos by Claudia Burris)

Busch IV's accomplishments have brought many significant recognitions, including USA Today's top-rated Super Bowl advertisement award eight years in a row and the Grand Cleo award for the Budweiser "Whassss-Up" commercial.

In addition, Busch IV was named corporate marketing executive of the year by the Delaney Report in 1999, inducted into the American Advertising Federation's Hall of Achievement in 2000, and was honored as the Advertiser of the Year in 2001.

"What I have achieved in my years so far is the result of the people that I have the opportunity to work with," began Busch IV. "I'd like to speak with you about one of my favorite topics. Obviously, that is beer; more importantly, it's about Anheuser-Busch and our leadership role and the future of that leadership role in the beer industry."

A company that has a product portfolio for 40 brands of beer and has two of the top-selling beers in the U.S.—Budweiser and Bud-Light, A-B has a leading brand in virtually every category in the U.S. "There are many reasons for this success, a part of which, I believe, is an unwavering devotion to product quality at every level of the business. We also have the best distribution system in the industry," explained Busch IV.

"Since the company's founding 154 years ago, Anheuser-Busch has become an iconic mainstay in the lives and livelihood of millions of Americans, and as much a part of our country as baseball and apple pie," said Akande. "This position was built on the innovative development of great products and sustained through the recruitment and retention of ordinary hard-working people, who have in turn, generated extraordinary results, day in and day out."

In addition to the presentation of several of Anheuser-Busch television commercials at the event such as "The Magic Frig" and "Clydesdale American Dream", Busch IV talked about the strategy of the beer industry —past and present. "Of course, our art team plays a vital role in our success. "I'm very proud of the many breakthrough campaigns that our creative teams—our brand teams—have developed over the past several years," Busch IV explained. "They've created frogs, ants, and lizards and the world-renowned campaign where they took our locked-in eight-horse hitch and made the Clydesdales a free-running horse. We took these Clydesdales and gave them personality. We showed them playing football, arguing over referees' calls, even interacting with other animals."

The company has created a variety of characters and catch phrases through the years that have become part of the country such as 'Yes I am.'; 'I love you, man.'; 'Whaass Up?'; and the 'Real Man of Genius' radio campaign.

By maintaining consistent and strategic marketing messages, Anheuser-Busch has built a high level of trust with its customers, continued Busch IV, who earned his bachelor's degree in finance, an M.B.A., and a degree in international brewing from the International Brewing Institute in Berlin, Germany. "They know what to expect from our company and our brands, and as a result, one out of every two beers sold in this country is an A-B product. However, along with the entire beer industry, we are now faced with a new set of challenges, and these challenges are putting pressure on the ability of brewers like Busch to grow."

With stories in the media reporting that the alcohol industry is changing, Busch IV explained that the death of beer in these stories has been greatly exaggerated. "Back in 1970, beer held 51.5 percent share of alcohol, while hard liquor was 40.1 percent and wine was 8.3 percent. Then through the 1970s, '80s and early '90s, beer enjoyed strong growth, eventually reaching 61.3 percent of total alcohol served in the U.S. After reaching that peak 11 years ago—in 1995—beer's overall share of alcohol servings began to decline slightly, even though our portfolio of A-B brands continued to grow share within the industry. Meanwhile, wine continued steady growth and began to reach its current levels. While beer is still holds a nearly 57 percent share of total alcohol servings—larger than both wine and liquor combined —we recognize that there is obviously something going on with today's consumers."

In the midst of a major revolution in consumer expectations, attitudes and preferences with satellite TV, cell phones, PDAs, broadbands and Internet connections, this global and yet personal access to information has led a dramatic shift in consumer culture, ideas and lifestyles, according to Busch IV. "People are demanding more variety, more novelty, more sophistication in the products that they choose, and suppliers are using technology and innovation to make it easier to personalize and then upgrade virtually everything that they buy—from their coffee to the style of clothes they wear—to the expanded entertainment options they choose."

"In this environment, it only makes sense that the alcohol beverage landscape will be involved as well," he said.

In recent years, hard liquor companies have been effective, not only in targeting beer occasions, beer retail channels, and beer advertising outlets like TV, but also at offering consumers more variety and more choice. These efforts have translated into more consumers buying their products, he explained. "At the same time, the aging of the U.S. population has been good for wine. The baby boomer generation has more disposable income. Some older adults tend to gravitate towards less carbonation in their beverage choice. In addition, people have become more concerned about health and dieting, and somehow the misperception has grown that wine is healthier than beer. Finally, some shorter-term economic conditions have been happening here, like sky-rocketing gasoline prices, which shift directly at our core consumer base—blue-collar, hardworking—and all of these factors are impacting the beer industry today."

Anheuser-Busch's mission is to transform the beer industry and return to growth this year and beyond. "At Anheuser-Busch, we realize that if consumers are changing, we have to meet that change. In the past, our strategic focus has always been to make great beer. Today our strategy must also be to make beer great," explained Busch IV. What makes beer great? There are fundamentally four strengths of beer that set it apart."

1) Beer is genuine.
2) Beer is real.
3) Beer lacks the pretenses often associated with wine or liquor.
4) Beer brings people together; beer is about refreshment, enjoyment and fun.

"To return our industry to growth, it's imperative that we reaffirm these four strengths of beer. We must reassert the universal appropriateness and appeal of beer to today's developing consumers," he explained.

Anheuser Busch has identified five strategic platforms to build their case, Busch continued.

The first strategic platform is the product side. "We need to build a greater appreciation for beer. That literally begins with the way we talk about beer. Whether we indicate beer's superior refreshment or describe the taste or appropriate use of the product or promoting the image of a specific brand, the language we use must be unique, must be intriguing; we must romance the experience of beer, whether in TV commercials or when speaking one-on-one to a customer."

The second strategic platform is the historic nobility. "Beer has a remarkable history," explained Busch IV. "Before there was bread, there was beer. The oldest written recipe in the world, carved on a clay tablet a thousand years B.C. is a recipe for beer. Beer has played a part across every continent, in nearly every culture all over the world. Beer has also played a significant role in our nation's history. From the time the pilgrims landed on Plymouth Rock to today, beer has always been there. Even the craft of brewing has a history and tradition like no other [industry] and at Anheuser-Busch, we are brewers first and foremost and dedicated to the art of making and selling the finest beers in the world."

The third strategic platform is that beer can contribute to a healthy lifestyle. "Many physicians tell us that moderate drinking is better than abstinence for most adults," he continued. "They have validated that beer can help prevent diabetes, beer can improve bone density and cognitive skills, and people who drink alcohol in moderation tend to weigh less and are less likely to have cardio-vascular disease than people who do not drink at all. Nutrition experts tell us that beer contains vitamins and minerals not found in wine or liquor. Beer has virtually no sugar, no fat, no sodium and no cholesterol. And hops and grain are key components of recent health trends."

The fourth strategic platform focuses on the subliminal benefits of beer. "Beer is a social drink. It helps bring people together after work, at family gatherings and sporting events," Busch IV said. "Every day we can walk into taverns and restaurants and events across the nation and find adults, from all walks of life, from different cultures and different communities, sharing beer and conversation. Beer is part of the social fabric of this country. It's real, authentic, true, with no pretense."  

The fifth strategic platform is the business case of beer. The beer industry—from the farmers who grow our raw materials, to the brewers and wholesalers who bring the products to market, to the retailers and bartenders—contributes over $162 billion to the U.S. economy every year, outlined Busch IV, who currently serves on the strategy committee for Anheuser-Busch, Inc. and is a board member at FedEx Corp. "Our business accounts for 1.8 million jobs, more than $54 billion in annual wages, and more than $30 million in federal and state tax revenues. And with more than 92 billion beer consumers, over $82 billion in annual sales, and with nearly 60 percent of all alcohol servings in the U.S., beer is by far the largest segment in the alcohol beverage category. Those are incredible numbers and they illustrate that beer and the beer industry are a part of virtually every community in the U.S. today—providing jobs, revenue, supporting charities, local programming and helping out in times of need.

"These are the components behind the story of beer - the product, the history, the goodness and social value, and the business case," said Busch IV. "These are the things that make beer great. These are the messages that everyone in the beer business—the brewer, the wholesaler, and retailer  —must build on and grow. That's why we have implemented a new initiative to promote the brand that is beer. We have created an entirely new department with the singular objective to make a case for beer and to lead our industry in promoting all the good things that beer represents. We believe the entire beer industry must have a single-minded industry-wide initiative to promote all the inherently good qualities of beer, to nurture a positive role for beer in today's lifestyles, to arouse interest and excitement in our products and to cultivate new occasions for beer.

"Nothing like this has ever been done in the beer industry before," explained Busch. "But the challenges we face today will require new solutions. Anheuser-Busch has led the industry for nearly 50 years and we've learned that great results don't just happen, and sustainable success definitely is not random. These things are earned, and they require long-term thinking and intelligent planning. Significant leadership demands that we know where we are and where we're going and what our objective is. Leadership requires that we believe in our objective and remain committed at every level of the organization."  

In 2006, Anheuser-Busch was, once again, named America's most admired beverage company by Fortune magazine. "Our business has been built on the success of brands like Budweiser, Bud Light, Busch and Natural Light," said Busch IV. "We've capitalized on this with major brand extensions like Budweiser Select and now Michelob Ultra Amber. At the same time, we are pursuing relentless innovation in the areas of products and packages and new ways to sell and market our brands. The challenges we face today energize and excite us—because in these challenges, lie opportunities, opportunities for change, for growth and for making our vision a reality.

"But how do we do all this? We will do it by staying open to new ideas, by thinking differently and by listening very, very carefully. We do it by building the stakeholder mentality in every single person in our organization by challenging them to take action to be bold, to be leaders, regardless of their role or position in the company, to lead from where they are and act like owners in everything that they do. We do it by encouraging and protecting the mavericks in our company, the people who are willing to break the rules and challenge the status quo, the people who wake up every day asking themselves how can I do it better, how can I do it differently, what more can I do to make this team stronger and ultimately more successful. We do it by embracing change and driving change by involving ourselves and our people who work at Busch, by letting them see they should not be afraid to fail—because mistakes will happen, mistakes are inevitable, but in failure there is learning and in learning, there is experience. That's how you improve and grow. As John F. Kennedy once said, 'Leadership and learning are indispensable to each other.'"

The pace of the world is accelerating, continued Busch IV. "Our competition, our consumer, our marketplace, our technologies are all changing, and we'll continue to change faster than ever before, and it is our job to be in front of that change. At Anheuser-Busch, we obviously have a tremendous foundation to build upon, like the integrity and the transparency of our company. The quality of our products, the quality of our people and the partnership we share with our wholesale dealers. But we cannot afford to think, just because we have offered certain products or marketed a brand a certain way, that people will continue to seek them out in a rapidly evolving marketplace. We must create a better future and we'll do that by changing our attitude and, in some ways, our culture, by tearing down processes that don't work in today's world and transforming ourselves, transforming our future by becoming more nimble, innovative, flexible, efficient and ultimately more relevant to today's consumer. At our company, we believe that success is only limited by our ability to come up with new ideas and develop innovative solutions to the opportunities and the challenges that we face. We also believe we have the best people in our industry—in any industry—but we must continue to challenge them by giving them the freedom, the support and the motivation to think, to dream and to explore, to try new things and find out what works and what doesn't, and then to apply this learning to our business. Leadership may begin with a vision, but it requires people, dedicated people with a passion for what they do, to execute and turn that vision into reality, and we believe that is the key to meeting the challenges that we face in our industry today. The plans that we make now are for a new passion—a new passion for beer—and we must bring that passion to our customers in everything that they do. The future will offer many, many challenges and it may provide many opportunities as well. That's how we will set the important foundation for growth of Anheuser-Busch in 2006."

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