Anheuser-Busch Companies Inc

Executive Summary

Anheuser-Busch Companies, Inc. continually seeks opportunities to maximize

shareholder value and increase efficiency. Through their extremely effective marketing

strategies A-B has gained control of over 47% of the global market share. In the process of doing this, Anheuser-Busch has become one of the most recognizable trademarks.

This is not without its faults though. Anheuser-Busch's aggressive advertising campaign has targeted more than who they bargained for. Through A-B's catchy advertisements, they have attracted customers other than the 21+ age group, and recreational drinkers.

It is the opinion of many researchers that Anheuser-Busch is negligent in their advertising, and insists that changes need to be made. Through proper regulation of their advertising, consumers would be allowed to make choices free of media persuasion.

Situation Analysis

Environment:

Cooperative

Anheuser-Busch Companies, Inc. continually seeks opportunities to maximize shareholder value and increase efficiency. As noted in the Annual Report for 1999, Anheuser-Busch remains focused on three major objectives to enhance shareholder value:

 Increasing per barrel profitability which, when combined with continued market share growth, will provide solid long-term earnings per share growth.

 Profitable expansion of international beer operations by building the Budweiser brand worldwide and making selected investments in leading brewers in key international beer growth markets. The company has made significannot

marketing investments to build Budweiser brand recognition outside the United States and operates overseas breweries in China and the United Kingdom. The company also has a significannot

equity position in Grupo Modelo, Mexico's largest brewer and producer of the Corona brand.

 Continued support of profit growth in packaging and entertainment operations. Packaging operations provide significannot

efficiencies, cost savings and quality assurance for domestic beer operations, while entertainment operations enhance the company's corporate image by showcasing it's heritage, values and commitment to quality and social responsibility to 19 million visitors annually as well as adding their profit contribution.

The company's strong commitment to achieve these objectives benefits all firms and individuals that maintain a vested interest in their corporation.

Competitive

With an estimated 47.5% of the total market share for 1999, Anheuser-Busch continues to widen the gap separating them from their nearest competitors. Budweiser and Bud Light are the No.1 and No. 2 best-selling beers in the world. Miller, their closest rival maintains 22.1% of the market share. The following chart illustrates market share in 1999 for the nation's leading breweries.

1999 Market Share

(Estimated)

In 1999, they achieved record sales and earnings, selling over 100 million barrels of beer worldwide for the first time in history. August A. Busch III, Chairman of the Board and President, says his company owes its success to, "The combination of outstanding domestic beer industry fundamentals, the highest quality and freshest beer in the industry and exceptional marketing and sales execution."

According to Fortune Magazine, the company applies venerable marketing techniques more vigorously and imaginatively than the competition. The company's most important technique is target marketing. Anheuser-Busch sponsors events and runs advertising specifically aimed at all sorts of consumers: blacks, whites, blue-collar workers, computer-buffs, and sports fans. Sports fans make up a large, diverse population. The company has strategically positioned themselves to promote to this target audience, with 70% of their advertising dollars going towards sports programming. They have exclusive deals with 21 of 24 major league baseball teams, 21 of 28 National Football League franchises, 300 college sports teams, and most professional basketball, hockey, and soccer teams. Anheuser-Busch has been very effective in maintaining a competitive advantage over its fellow rivals.

Economic

The primary economic issue affecting this company's environment is taxation. The company is significannot

ly impacted by federal, state and local taxes, including beer excise taxes. Beer excise taxes are a sin tax, which raise revenue for the government. The national median is 18 cents per gallon of beer (St Louis Post, 98). An increase in taxes effects costs to the company, hence, costs to the wholesalers and consumers.

According to the Annual Report for 1999, taxes applicable to 1999 operations (not including the many indirect taxes included in materials and services purchased) totaled $3.0 billion an increase of $114 million, or 3.9%, vs. 1998 total taxes of $ billion. Taxes in 1998 increased 8.1%. The increases in taxes in 1999 and 1998 are primarily due to higher excise taxes on increased beer volume. The economic constraints beer excise taxes impose considerably affect the company's overall performance.

Social

The social environment plays a key role in how Anheuser-Busch effectively markets their product to its consumers. For apparent reasons, such as, alcohol abuse, underage drinking, and drunk driving, not everyone is in favor of promoting alcoholic beverages. Many individuals and organizations lobby against the brewing industry and have a strong voice in the political arena. MADD, (Mothers Against Drunk Driving) is well known for its prominent position in the fight to end alcohol abuse.

There has been much controversy on how Anheuser-Busch chooses to advertise its beer products. Over the years, some of their most successful advertising campaigns have been targeted for promoting underage drinking. Listed below are article summaries related to this controversial issue.

 Controversy: Frothing Anti-drink Forces Set Out to Nip Spuds in the Bud (People, 10/26/87) MADD member, spots stuffed Spuds MacKenzie doll in toy