Today’s $52 billion purchase of Anheuser-Busch by Belgian brewer InBev will certainly prompt execs in the latter company to hoist a few, but what will the hangover effect be on A-B’s roster of agencies?
It’s too soon to tell, but according to InBev rep Marianne Amssoms, everything will be given a second look, including DDB, Chicago, which has been the lead agency for A-B’s biggest brands, Budweiser and Bud Light, for several decades.
“While we have no immediate plans to change any of our existing partnerships, we will review these contracts, as part of our normal course of business, once the transaction has closed,” Amssoms said in an e-mail.
In a conference call with investors and analysts this morning, InBev chief executive Carlos Brito vowed there would be no marketing cuts at A-B. Still, industry watchers familiar with InBev say the company has a history of tampering with the marketing and agencies of the brands it buys.
“[DDB, Chicago] must be shaking a little over this,” said Bob Scott, principal at Ascot Marketing, a Toronto-based research and consulting firm.
InBev “has a history of changing things at the ad level,” said Derrick Daye, managing partner at consultancy The Blake Project, Rochester, N.Y. “I would imagine that there is an agency in Belgium drinking champagne in anticipation of some changes,” he added.
Note for instance that:
– InBev bought Labatt in Canada in 1995, and also operates Budweiser beers there under a licensing deal struck with Labatt in 1998. As part of running Budweiser’s Canada operations, InBev realigned the marketing structure and Omnicom’s Downtown Partners, Toronto, lost the Labatt account late last year after six years, including Budweiser and Bud Light, which represented 40% of its revenue. It has since closed the shop.
– InBev in 2000 completed a deal that included the purchase of Boddington’s Pub Ale. After that purchase, InBev shifted its adspend from traditional ads to events and sponsorships and in 2006, Bartle Bogle Hegarty, London, resigned the Boddingtons account after 15 years.
Another likely turn of events is that large, global brands will get more of the marketing pie at the expense of smaller ones. “InBev has shown that it will focus on the global brand,” Scott said. In the case of today’s announcement, he said, Budweiser and Bud Light, while they may see some changes, will likely be the favored brands.
InBev’s choices for its international brands are generally apparent. Its U.S. push for Stella Artois last year, for example: ad spend was up 66.3% to $12 million.
Budweiser, with $176 million in ad spend last year (not including online), per Nielsen Monitor-Plus, and Bud Light, with $99 million in spending, are the top two beer brands in the U.S. in terms of sales, but have not been aggressive on a global scale. About 40% of revenue from the InBev/A-B merger is expected to come from the U.S., according to a press release outlining the new arrangement.
Part of that global focus is likely to be addressing the large number of smaller brands under the A-B flags that are underperforming. A-B said before the deal with InBev that it would be doing so, and today’s announcement is undoubtedly going to be part of any changes.
“A-B has a number of SKUs and have already embarked on a program to of SKU reduction,” said Benj Steinman, publisher of Beer Marketer’s Insights, Nanuet, N.Y. “You have to imagine that’s something InBev will have to address. There are a lot of little brands that haven’t done much.”