Defensive Strategy

Bud Light Golden Wheat

20 Oct 2009  

Saturday Night Live’s October 17 broadcast was a notable event.  For the first time in the show’s 35 seasons, a single advertiser, Bud Light, bought all the national advertising time. 

Bud Light used the sponsorship to launch new Bud Light Golden Wheat, the latest addition to the Bud Light family.  Golden Wheat follows the 2008 introduction of Bud Light Lime and gives the Bud Light family three main products: Regular, Lime and Golden Wheat.

The new product is a clearly designed to drive growth.  Beers sales are flat, so Bud Light needs something to steal share from competitors and increase volume. 

In terms of execution, the Saturday Night Live program was a winner.  By sponsoring the show, Anheuser Busch drove huge awareness for the new product.  The brand also likely generated an enormous amount of talk value.  This is a wonderful illustration of how a brand can break through and stand out in a cluttered world. 

Strategically the new product launch is far more questionable.  A new flavor will certainly lead to trial; people will probably pick up a six pack to see what it tastes like.  It will also give distributors something to sell.  

It seems unlikely, however, that the move will really generate substantial incremental volume.  The people most likely to try the product are presumably people who already like Bud Light, since the new product is clearly branded Bud Light.  I suspect the new product will heavily cannibalize regular Bud Light and Bud Light Lime. 

The new product will create a lot of complexity for the Bud Light business.  Managing inventory will be a greater challenge.  It will be harder to optimize shelving.  It will be difficult to allocate marketing efforts across the Bud Light portfolio.  Worst case, the Bud Light brand could find itself becoming more and more reliant on new products to drive sales.  There will be pressure to have something new each year.  Over time the incremental volume of each new product will likely decline and the complexity of managing the inventory will increase.  This is a dangerous road.

In the long run a brand like Bud Light needs the core product to do well.  Line extensions can provide a short term sales jump but are not a sustainable growth strategy.

1 Response

  1. Mark Gallo says:

    What would you say if these line extensions bring new consumers to beer category? No doubt there will be some cannibalization, but the difference in price point is something to factor in as well. These new products will have a higher margin and profit mix. It’s a fine line to walk with (revenue and/or share growth).

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