World Cup offers Budweiser maker chance to score market share

BRUSSELS, June 12 Thu Jun 12, 2014 1:22pm EDT

BRUSSELS, June 12 (Reuters) - Anheuser-Busch InBev, the world's largest beer maker, is relying on the World Cup to grab market share from rivals and make its top-selling Budweiser a truly global brand.

The brewer says it has increased its marketing budget by a "low to mid-teens percentage" this year to sell more beer - extra spending of between $600 million and $1 billion.

While it has traditionally held on to its No.1 spot by cutting costs and rising prices, Anheuser-Busch has room for an extra publicity outlay this year because of a boost to income from its takeover of Mexico's Grupo Modelo last year.

"This is the year they can say let's give it a proper go and see what the result is," said RBC Capital Markets analyst James Edwardes Jones.

While Budweiser has been the official beer of the World Cup since 1986, AB InBev only acquired the brand in 2008 and so has only sponsored one World Cup so far: In South Africa, in 2010, a market dominated by rival SABMiller, it increased its marketing spend by 2 percent.

This year is different. AB InBev has a near two-thirds share of the Brazilian market, so is firmly in home territory. Brazil is also one of the new target markets for its leading brand.

Companies have paid an estimated $120-160 million each to be sponsors of the 2010 and 2014 World Cups, according to Sports Sponsorship Insider. Its editor Matthew Glendinning believes AB InBev, as a brewer with more obvious marketing potential, is likely to have paid towards the top of that range.

"This is the biggest global marketing campaign ever for Budweiser," Andrew Sneyd, the brand's marketing director, told Reuters.

WORLDWIDE BRAND

Global brewers see beer consumption growing 3-4 percent in Latin America, as well as in Asia and Africa, over the next five years, and expect even more rapid expansion of premium brands, such as Budweiser, which bring higher margins and profits.

For now, Heineken leads in those fast-growing markets, with some 20 percent of the international premium segment. But in Budweiser, Stella Artois and Corona, AB InBev has the next most popular brews.

Budweiser's World Cup sponsorship initially puzzled some analysts as the beer had a limited global presence outside its U.S. home market.

But since InBev's 2008 purchase of Anheuser-Busch, it has pushed Budweiser wider around the world. It now has 2 percent of the Chinese and Russian markets and is growing in Brazil.

AB InBev is currently selling Budweiser in golden bottles featuring the World Cup in more than 50 countries, has teamed up with Fox Sports for a series of soccer documentaries and is giving fans the chance to tweet in their man of the match votes.

The brewer is also linking its local brands in other countries to the tournament: In Mexico, it has offered 1,000 World Cup tickets to drinkers of its Corona brand - gaining market share from Heineken-owned rival Femsa.

The World Cup should increase overall beer volume in Brazil by 1 to 2 percentage points - some 1.2 to 2.4 million hectolitres - and if the Brazilian team is successful that may even be a 3 percentage point bump, says Bernstein Research's Trevor Stirling.

AB InBev will be hoping to persuade those drinkers to switch to its Brahma or Budweiser brands - ideally permanently.

SUNSHINE EFFECT

AB InBev may be wise to push its beers in Brazil. It has extended Budweiser's sponsorship to include the 2018 edition in Russia and the 2022 World Cup awarded to Qatar, but those countries are unlikely to produce a rise in beer sales.

"You really have to be a beer-loving, football-loving country to benefit," said Societe Generale beverage analyst Andrew Holland.

France, hosts and winners in 1998, secured an impressive 4.6 percent boost to beer sales that year, according to Plato Logic's. But for 2002 hosts Japan and South Korea, beer consumption slowed or dropped.

Equally important, says Stirling of Bernstein Research, is the weather. He cites data showing that while British beer shipments jumped in World Cup months, they grew most in years when there was no tournament but good summer weather.

"It's clear that it's more important for the sun to shine than for the football team to do well," said Stirling. (Editing by Sophie Walker)

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