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Can Budweiser, the King of Beers, reign again?
Budweiser

Can Budweiser, the King of Beers, reign again?

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ST. LOUIS • They don't serve Budweiser at the Bleeding Deacon. No need. Customers never ask for the King of Beers at this South City bar and restaurant, says owner Mike McLaughlin.

McLaughlin's place attracts a young, hip crowd. Tattoos are common. So are T-shirts from thrift stores. The menu is eclectic, ranging from veggie flatbread to homemade meatloaf. The music leans toward indie rock, like The Pixies song playing one recent night.

It's not snobbery that keeps Budweiser off the bar's blackboard listing of 60 or so brews. Plenty of Miller High Life and Pabst Blue Ribbon moves. But the demand for Budweiser simply is not there.

"Budweiser is not a bad beer," explains McLaughlin, 32, his arms heavily inked. "It's just not a very good brand."

Anheuser-Busch knows it has a Budweiser problem. The beer's share of the U.S. market peaked in 1988 at 26 percent, sinking to 9.3 percent last year. Even more troubling for A-B is that Budweiser seems at risk of being forgotten by an entire generation. Four out of 10 people in their mid-20s have never even tried Budweiser — a rate 2.5 times higher than when it reigned supreme, according to the company.

But A-B is betting big it can persuade young beer drinkers to once again order a Budweiser, and thus get inside the door of places like the Bleeding Deacon.

"We've drawn a line in the sand," A-B President Dave Peacock said earlier this week during a talk at the KMOX/Business Owners Speakers Series.

Peacock admitted he wakes up each morning nervous about his pledge to revive the Budweiser brand in its home market. "We have a big target on my back," he said, with a slight laugh.

And yet, Budweiser consistently ranks as one of the most popular brands in the world. One of the main reasons Belgian-Brazilian brewer InBev wanted to buy A-B was Budweiser. And the merged Anheuser-Busch InBev brewery has found success selling Budweiser overseas, in places such as Great Britain and China. Last week, the company cheerfully reported that Budweiser sales were "essentially flat" in the second quarter, thanks to global sales that compensated for Budweiser's weak performance in the United States.

But gaining traction at home has proven difficult. "We know we have a lot of work to do, especially in the United States," said A-B InBev chief marketing officer Chris Burggraeve during a recent analysts' conference call. "But I can assure you that we're energized and completely committed to stabilizing the brand in its home market."

That task falls to Peacock, head of the A-B InBev's U.S. operations.

Peacock, standing on stage at Maryville University, sounded indignant when a question from the audience cast doubt on how Budweiser could be saved. The questioner was a man who appeared to be in his 20s, his sideburns long and his eyeglasses fashionable dark frames — precisely the kind of drinker that Budweiser wants to win back. But the man said he doesn't see Budweiser being consumed when he's out. He sees craft beer.

Peacock got passionate in his defense of Budweiser. It wins blind taste tests again and again, he said. "It is the perfect liquid," he said, allowing that to sink in, then adding, "I don't say that out of arrogance."

The problem, according to Peacock, is the image. A-B has not effectively used the brand's best qualities to market the beer. Budweiser has been brewed with the same yeast strain since 1876. It is the only one that is beechwood-aged, which helps with fermentation.

"We have just as good a story as they do," he said, referring to the craft brews that tend to harp on their craftsmanship and history. "We just have been remiss in explaining that."

It's not like A-B forgot how to sell beer in America. The company continues to produce almost half the beer sales in the U.S., cultivating numerous successful brands such as Bud Light, which is now the country's best-selling beer. Budweiser, however, continues to be a befuddling exception.

Peackock admitted the marketing gimmicks of the 1990s — the Budweiser frogs and ants — were a mistake, cheapening the brand's image. A new series of lighthearted, but not silly, Budweiser ads now running on TV are aimed at young male drinkers. One shows different ways to carry Budweiser bottles from the bar to the table. Another highlights the various ways young men say hello to each other.

But Budweiser's considerable history — a strong selling point — also threatens to hold it back.

Peacock mentioned company testing of changes to the iconic Budweiser label that found consumers strongly against doing anything, no matter how small. He said even consumers who hated Budweiser didn't want anyone to mess with the label. Peacock said he was moved to wonder, "Why don't you buy it if you're so passionate about it?"

He also recalled that after the A-B InBev merger in 2008, he was approached by people upset that A-B and Budweiser were being bought by a foreign company. He sounded flummoxed. "If you bought more (Budweiser), it probably wouldn't have sold," he said he told them.

Outside the company, there is doubt that Budweiser can be revived.

Craig Hutson, beverage analyst with Gimme Credit, said he was "guarded" that A-B could pull it off. He would have the company focused on growing Budweiser in foreign markets.

Tom Pirko, a veteran beverage industry consultant, said Budweiser's troubles were part of a trademark's natural life cycle. The brand is stale. "The brand is in the midst of an identity crisis. It is feeling the ravages of time," he said.

Budweiser needs a major makeover, a way to convince a new generation that Budweiser has something to offer beyond contributions to history, Pirko said. "Their problem, I think, is a bravery question. Is there a willingness to take risks with an established brand?" he said.

Peacock declined to share A-B's emerging strategy for Budweiser, citing competitive concerns.

Maureen Ogle, author of "Ambitious Brew: The Story of American Beer," said she thinks a renewed emphasis on Budweiser's strong heritage would be effective: "Bud as the original craft beer." But, she added, the brewer has been undercutting its efforts with humorous messages.

Back at the Bleeding Deacon, McLaughlin said he saw a way forward for Budweiser — A-B must sell the beer using its working class, traditionalist roots and stop "marketing it like it was fruit juice."

And Budweiser has one thing on its side, he noted.

"No one else has got a good beer that is over 130 years old."

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