Anheuser Buschs New Beer

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Now, innovate has apparently given way to imitate. May 5 marked the launch of the first Bud Light line extension: Bud Light Lime, "a crisp light lager beer that combines the superior drinkability of Bud Light with a splash of 100 percent natural lime flavor," according to the company's press release. The company has to find substantial growth somewhere, and Bud Light Lime, with a premium price, is a big play to do that. Although the beer was reportedly two years in the making, it's hard not to look at last year's success of Miller Chill and not see "me too" written all over Bud Light Lime.

Its launch date of May 5—Cinco de Mayo—also evokes an iconic brand: Corona Extra, the Mexican giant that is nearly always served with a wedge of lime. And, in fact, Bud Light Lime sports a Corona-like clear bottle and a lime-wedge graphic. Corona sales have weakened due to price increases and a loss of novelty, which would seem to offer opportunity to Bud Light Lime, but that opportunity comes at a price. Corona is brewed by Grupo Modelo, the Mexican brewery approximately half-owned by…Anheuser-Busch, which has been offsetting some of its losses on Budweiser and Bud Select through money reaped from the success of Corona.

Regardless of origins or strategy, A.B. needs this beer to succeed. Budweiser and Bud Light make up over two-thirds of the company's sales; Bud is still dropping, and Bud Light has hit a wall. The company has not had a solid hit since Michelob Ultra in 2002, a success that is a poor predictor for the new product. Ultra was as well-defined—a low-carbohydrate light beer—as Bud Select was not (Bud Lighter?), and Bud Light Lime is as clearly defined as a name can get. But Ultra was also a real innovation, the first low-carb beer, and it has crushed imitators. Bud Light Lime's imitator image already has some analysts concerned, notably Credit Suisse's Carlos Laboy, who wondered if Anheuser-Busch would "walk away" from the brand as it has in the past 10 years with brands like World Select and Tequiza.

A lot is riding on Bud Light Lime. It may or may not be about staving off being acquired. There is plenty of skepticism about a possible acquisition that's been rumored too many times. How big a success does A.B. need from Bud Light Lime? Steinman thinks A.B. would be happy with a million barrels. "That would be a pretty significant pop at this point," he said.

The beer's on the shelves now, and the next two months should tell the tale as reorders come in. If repeat sales are strong, and new spending on Budweiser manages to slow that decline, the outlook for Anheuser-Busch might get rosy enough to start thinking about turning the acquisition threat around and going shopping.

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