Bud Light Strategy

Market Variables

Geography

Anhueser-Busch has a very large and vast market geography. Anyone who lives in the United States and who is above the required age of 21 is a potential consumer for their products. Anheuser-Busch’s product Budweiser is the most popular beer in the world. This is why it is considered the King of Beers. With exposure to both developed and fast-growing emerging markets, AB is well-positioned geographically. They hold the No. 1 or No. 2 position in every major beer region, such as the U.S., Brazil, Canada, and Mexico. As well as in China, which has the world’s largest density. Budweiser’s strategies are geared to those markets where they see the highest growth potential. In the U.S., they are focused on accelerating the growth of Bud Light and improving market share performance for their products. In developing countries, Budweiser is maintaining strong innovation and expanding the market segment, and investing in infrastructure to accommodate regional growth. This speaks tremendously about the market coverage of their products.

Market Size

Budweiser has developed a network consisting of 12 strategically located breweries across the U.S. Since the market is so large, the use of intermediaries are needed because of high transaction costs (Resenbloom, 191) The company distributes the majority of its products to retailers through 600 independent wholesalers. This helps AB ensure quality and freshness, which has always been a distinct competitive advantage for BUD. The company has 15 international breweries 14 of which are in China due to their large geographical size and high market density. These overseas breweries sign an Equity Agreement with the company that must be followed. This agreement specifies the brands the wholesaler can sell as well as standards they must follow in order to distribute Budweiser’s products. In 2007, 94% of beer sold was distributed through this type of network. This means that BUD maintains major control over its production and distribution network. China’s population as of 2012 for the proper age demographics was 500,134,783 people (Census Bureau of China) . This is the world’s most populated country so you can imagine why AB wants to gain market control.

Market Density

In 2007, Budweiser’s U.S. beer volume was 104.4 million barrels, as compared with 102.3 million barrels in 2006. Worldwide sales of Budweiser’s beer brands aggregated 128.4 million barrels in 2007 as compared with 125.0 million barrels in 2006(U.S annual report). The company has a very wide range with attractive returns on capital and they are able to generate high margins through regional economies of scale. In Anhueser-Busch’s top 31 markets; they are # 1 or 2# in 25 of them. They have gained vast market share through their large global