Nobody at the National Football League headquarters can be happy that the biggest story that came out of Sunday’s Super Bowl was about the ingredients for cheap beer.
The game itself could generously be described as a little slow, and the name of the halftime show performer might have been forgotten already. But thanks to advertising by Anheuser-Busch InBev, we all know that Bud Light isn’t brewed with corn syrup.
Those who suspected that the use of corn syrup isn’t a big deal in brewing light beer turned out to be right, based on the thousands of words written since Sunday about the controversy. Those a little unhappy with AB InBev included corn growers here and everywhere else.
For those who missed it, the controversial spot during the game was part of Bud Light’s long-running campaign with a kings and castles theme. Like the other ads in the series, it features a king with a curious fondness for Bud Light.
He leads a small group on a harrowing quest to return a huge barrel of corn syrup that had been delivered to their castle by mistake. They stop by Miller Lite first and then Coors. (Never mind that both brands are in the same competitor’s portfolio.)
The Coors prince or royal brewer finally accepts the barrel of corn syrup. Then he adds, just in case anyone who watched that far missed the point, “to be clear, we brew Coors Light with corn syrup.”
It’s not just corn farmers who were at least a little bugged by this. Brewing beer requires a source of sugar, and corn syrup works just fine. Bud Light is brewed with rice, and that also works fine.
But for students of business, the whole episode seems baffling. For one thing, the Belgian-based AB InBev, an industry giant with more than $55 billion in sales, is really only known for one thing these days. That’s trying to make money by cutting costs. Zero-based budgeting, stretched terms to suppliers, consolidated purchasing and so on are all hallmarks of AB InBev and other companies associated with the investment firm 3G Capital.
So the rice used to brew Bud Light must be cheaper than corn syrup?
“It’s paradoxical, although they are known for their cost-cutting prowess, they also do spend a ton of money on marketing, including the most they ever have on the Super Bowl,” said Benj Steinman, publisher and editor of the publication Beer Marketer’s Insights. “Almost six minutes of airtime. I doubt they would use that prime-time space to advertise that they are using a cheaper ingredient.”
Big Beer’s big challenges
What’s worse than the weak, at best, claim is that AB InBev seemed to highlight the very reason consumers are leaving the light beer category.
Big beer has certainly had a rough go of it lately. The company now called AB InBev has about 10 years of history operating in the United States, its CEO explained to investors last fall, and its revenue has been consistently disappointing. Bud Light slipped in market share not quite 1 percent in the first nine months of last year. This showed progress, according to the company, as the market share wasn’t slipping as fast as it had been.
Competitors are not doing any better. In the U.S. market, Molson Coors Brewing Co. said its Coors Light global volume decreased more than 3 percent in its last reported quarter, even though sales grew outside the U.S. and Canada. The Miller Lite brand volume declined only 0.4 percent, although the interesting claim here is that Miller Lite shipments declined, yet the brand still gained market share in the U.S. light beer segment.
AB InBev said its U.S. brands like Bud Light are still overrepresented in the segments of the market that haven’t been doing well. Its CEO last fall said that “major consumer trends, such as premiumization, health and wellness, along with demographic changes in the population” all worked against Budweiser and Bud Light.
These are some of the same things the traditional packaged food producers like General Mills have faced. Younger consumers who value fresh and organic foods, farm-to-table restaurants and the like almost certainly know that traditional beer still uses malted barley in the brewing process, not corn syrup.
MillerCoors responded to AB InBev, of course, including in a letter to the beer drinkers of America. It thanked its rival for the opportunity to point out that Miller Lite uses corn syrup to produce a product that both tastes better than Bud Light and has fewer calories and carbohydrates.
What we watched Sunday from Bud Light and the counterpunch from its competitor over ingredients would strike fresh and organic food enthusiasts like an argument between mattress makers over whether pine board sawdust works better for a good night’s sleep than oak sawdust.
With the outrage from farmers in places like Iowa, said Steinman, Sunday’s Bud Light advertising “can’t have gone exactly according to plan.”
“But I don’t know what they were planning,” he added. “There is certainly a lot of attention.”
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