Anheuser-Busch (BUD) and Facebook (FB) are teaming up to allow Facebook friends to buy each other a brew.
Anheuser-Busch is testing the idea of e-gifting alcohol in two test markets — Chicago and Denver — in an effort to maintain and ignite interest in Bud Light and the Budweiser family, which is steadily losing market share in the U.S.
The promotions, dubbed “Buds for Buds,” and “Bud Light Birthday,” allow online vouchers to be redeemed at local bars for Bud Light. “Bud Light Birthday” is the more generous of the two promotions, giving FB users a free beer on their birthdays by merely posting on Facebook.
Unless the test miserably fails, the programs should roll out across the U.S. in 2015.
Anheuser-Busch, the largest publicly traded brewer in the world, is trying to combat changing consumer tastes, which are increasingly changing in favor of craft beers made by smaller breweries. That’s a problem for BUD, which is a mass brewer — to be considered a craft beer, production must be below 6 million barrels annually and less than 25% of the company can be controlled by major brewers.
The problem is a perfect embodiment of the problem all companies have when they get too big — namely, achieving growth becomes much more difficult.
BUD’s difficulties with growth haven’t necessarily been in the business — revenues have been steadily increasing over the past few years — but BUD stock has been underperforming the market for the past couple years. Over the past 52 weeks, BUD has returned a total of 17.4% to the SPY’s 20.4% — not abhorrent performance, but it’s not giving anyone a compelling reason to favor it over other investments.
This test run with Facebook vouchers shouldn’t have much of an immediate effect (if any effect at all) on BUD stock; it’s another marketing strategy in a business with thousands of them.
The more game-changing goal for BUD will be to penetrate the craft brewing market, which it has been trying to do in recent years through the acquisitions of craft brewers like Goose Island Brewing, Blue Point Brewing Co. and others.
In the meantime, Anheuser-Busch has no choice but to use mainstream promotions like the Facebook beer voucher program to try to buoy its struggling flagships.
As of this writing, John Divine did not hold a position in any of the aforementioned securities.