I have been thinking a lot about beer lately. Beverages in general, but beer in particular because homebrewing has really taken a lot of my free time the past month. As I am waiting for my first batch to emerge from the bottles, I was “forced” to purchase beer at the store this week.
The walk-in cooler at the grocery store is always a mind bending experience; shelf after shelf of the same product in different packages. Would you like 12 ounce cans, 12 ounce bottles, 16 ounce cans, 16 ounce aluminum bottles, 16 ounce plastic bottles, or some kind of mini-keg? Would you like a package of 6, 12, 18, 26, or 30? In the excellent documentary Beer Wars, this was described as the billboard effect. In essence, the variety of packages creates a unified visual presence that acts as a billboard for whatever beer Anheuser-Busch InBev or SABMiller are pushing this week.
Just to give you an idea of why most people see these products on the shelves look at the annual report from Anheuser-Busch InBev. On page 43 of the document are selected financial numbers. Against revenue of $36.3 billion US in 2010, the company spent $4.7 billion U.S. on sales and marketing (figures located on page 43 of the document or page 47 of the file). This sales and marketing expense is taken against volume of 398,917,800 hectoliters or 18.734 billion six-packs. Therefore, Anheuser-Busch InBev spends approximately $0.25 US per six-pack of beer on sales and marketing worldwide.
This number may seem a little esoteric, but consider the following figures. In 2010, the Boston Beer Company—parent company of Samuel Adams—had revenue of $463.8 million U.S. The company spent $135.7 million U.S. on sales and marketing. Against a volume of 2,272,000 barrels or 1.5 billion six-packs this represents $0.09 per six pack of sales and marketing expense. Check out the annual report here.
Think about the difference for a moment. Anheuser-Busch InBev spends over 2.5 times per six pack what Boston Beer does to market its product. No wonder there is a wall of Bud Light in the walk-in cooler. It’s also making me feel quite smug about opting out of a system where a company spends billions to market an inferior tasting product rather than spend that same money on making something more palpatable.