Reference no: EM132720928

BUDWEISER: "THE KING OF BEERS" EYES BRAZIL At the end of August 2011, AB InBev introduced Budweiser in Brazil, the world's third-largest beer market. The brewer's Brazilian roots stretch back to 1885. Its forerunner, AmBev was created in 1999 through the merger of two of Brazil's leading brewers-Brahma and Antarctica. In 2004, AmBev merged with Belgian Interbrew to create InBev. This Belgo-Brazilian company acquired the iconic American Budweiser brand in 2008 when it acquired Anheuser-Busch for $52 billion. Budweiser held a 16-percent share of the U.S. beer market, making it the best-selling beer in that market and second in the world, behind Snow Beer, a brand sold only in China. Apart from Budweiser, other global brands in AB Inbev's portfolio include Stella Artois, Beck's, and Hoegaarden. Its local brands in Brazil include three of Brazil's leading brands, namely, Skol (31.3% market share in 2010), Brahma (16.2%), and Antarctica (10.6%). Brazil's per capita beer consumption was about 47.6 liters per capita in 2010, higher than China's but lower than for most developed countries (see Table A). According to Euromonitor, AB InBev held a 63.6-percent market share in Brazil in 2011. TABLE A PER CAPITA BEER CONSUMPTION BY COUNTRY (2010) Country Per Capita Beer Consumption (Liters) Germany 110 The United Kingdom 99 The United States 81.6 Russia 58.9 Brazil 47.6 China 30.

• The plan was to sell "the American Dream in a bottle" said Chris Burggraeve, AB InBev's chief marketing officer. The Belgo-Brazilian brewer decided to position Bud as a premium brand with a price that matches Heineken and other high-end brews. The Brazilian launch included Bud-branded concerts featuring stars such as Rihanna, Britney Spears, Red Hot Chili Peppers, and Pearl Jam. To raise local awareness, the brewer hired influential Brazilians like Anderson Silva, the UFC middleweight champion, to be brand ambassadors. The latter appeared in a short documentary aired on Budweiser's Facebook page and YouTube channel. Budweiser would also be an official sponsor at the 2014 World Cup Soccer in Brazil. Budweiser accounted for 7-8 percent of AB InBev's beer production; the U.S. market still represented three-quarters of Bud's sales. AB InBev aspired to make Bud one of its key premium brands in its global brands portfolio. Bud debuted in Russia in 2010, where it held a 1-percent market share. In China, Bud sold for $1.75 per bottle (compared to $1 for most local brands). The premium market in China was just 3 percent of China's total beer sales, with Bud having a third of the segment. In Brazil, AB-InBev planned to sell Budweiser at a 15-percent premium over its local brands Skol and Brahma. The premium segment in Brazil represented just 5 percent, compared with around 20 percent in the United States and 40 percent in the United Kingdom. One other major player is Heineken, which formally established a presence in spring 2010 after it acquired FEMSA Cerveza. AB-InBev had high hopes for Bud. AB InBev decided to spend $3.1 billion in 2011 to build capacity to tap into demand in growth markets such as China and Brazil. Bud's marketing slogan for Brazil: "Great times are waiting."

Problem 1. Beer brewers such as AB InBev and Heineken hope to turn their signature brands into powerhouse global brands. SABMiller, on the other hand, aims to build up a stable of strong local beer brands. Which strategy would be most effective and why?

Problem 2. Whom should Budweiser target, and how would you position it in Brazil?

Problem 3. What strategic marketing recommendations would you make for Budweiser in order to build up the brand in Brazil?