USA: Anheuser-Bush in struggle for keeping market share

Anheuser-Busch communicated on November 7 that there is a war that brewers are waging against surging consumption of wine and spirits by launching its first foray into the spirits industry according to the Financial Times.

The subsidiary, called Long Tail Libations, was set up to develop a new product, a liquorice and "wild berry" flavoured spirit called Jekyll & Hyde, launched last week for trial in 4 USA states.

This move comes as Anheuser and rivals SABMiller and Molson Coors are engaged in a fierce price war that executives hope will stem a decline in market share for mass-market beers.

The "alcohol servings" of beer's share fell to 59.6 per cent from 58.1 per cent from 1998 to 2004, according to Adams Beverage Group,as drinkers switched to wine and the broad range of spirits-based cocktails served in bars.

Pat Stokes, Anheuser chief executive, said recently that the brewer was "fighting the battle for share of alcohol". Last month, Anheuser warned that its full-year earnings would be 10-11 per cent lower than last year as it delivered a third consecutive quarter of lower profits because of pricing discounts.The US drinks market has become increasingly fragmented along income and age lines, forcing beer companies to launch new niche products such as "premium light" beers and new foreign beers, such as Brahma, a Brazil-branded lager from Belgian brewer Inbev.

The American brewing giant has sought to drive bar traffic with new alcoholic drinks such as Tilt, a malt-based beverage with guarana and ginseng. Chris Growe, an analyst at AG Edwards, stated: "If Long Tail is a success, an acquisition into spirits could be in the offing down the road as Anheuser tries to position itself ahead of the demographic trends favouring non-malt-based alcohol."