Anheuser-Busch Cos., the world’s largest brewer, is considering entering the liquor market as consumers drink fewer of its domestic beers, according to company President August Busch IV.
Liquor’s greater availability at restaurants and promotions on television have contributed to a drop in beer’s U.S. market share since a peak in 1995, Busch said recently in a speech before the National Conference of State Liquor Administrators.
Chief Executive Patrick Stokes has tried to lure drinkers by introducing a fruit-flavored malt beverage and testing a liquor brand called Jekyll & Hyde. The brewer’s domestic beer volume fell 1.8 percent in 2005.
“This trend could have a significant impact on the beer business,” said Busch, who is president of Anheuser-Busch’s U.S. beer unit. Should the trend continue, the company would have to “re-evaluate our business model,” Busch said.
Busch’s remarks were “the most explicit yet” about the brewer’s intent to sell spirits, said Eric Shepard, executive editor of Beer Marketer’s Insights, a trade journal.
“This was the first time that they’ve said they have a model and that the decline in beer is not ending quickly,” Shepard said. “It would make a lot of sense for A-B if they can buy some brands that already have some equity and have their distributors in the same states going to the same accounts take it over.”
Anheuser-Busch controls about 51 percent of the U.S. beer market, and has a network of more than 750 wholesalers.
Widmer Bros. Brewing Co., 40 percent owned by Anheuser-Busch, purchased Goose Island Beer Co. earlier this month to boost distribution of craft-style beers beyond Goose Island’s home region of Chicago. Anheuser-Busch also agreed to distribute Hansen Natural Corp.’s Monster Energy drink through its system.
Last year, the company formed Long Tail Libations Inc. to develop and market spirits brands such as the licorice- and berry-flavored Jekyll & Hyde. Anheuser-Busch has also created the alcoholic-energy drink B-to-the-E.
The brewer could form a joint venture or partnership to enter the spirits industry, the Wall Street Journal reported Wednesday. The company has made inquiries with the Iowa Alcoholic Beverages Division about possibly distributing liquor there, the Journal said.
Anheuser-Busch declined to comment further.
Busch told the conference that consumers demand “more variety, value and sophistication” in the products they choose.
