Imported Lagers

Budweiser, a product of Anheuser-Busch InBev NV (NYSE:BUD), is looking to expand its brand name in emerging economies like China and Russia, according to a recent interview with the Wall Street Journal. The move is a welcome one for shareholders, given that Budweiser has seen its sales slide for the last 21 years, even though the beer remains the second largest U.S. beer brand after Bud Light.

Carlos Brito, a 50 year old native of Rio de Janiero, and chief executive of Anheuser-Busch InBev NV of Brazil, is good at one thing: frugality. The CEO is the mastermind behind the no-frills culture in which executives abstain from individual secretaries and company cars. Such cost sensitivity has helped finance the deal-making extravaganza that culminated in the $52 billion purchase of Anheuser-Busch Cos. in 2008 by InBev NV, the Brazilian-Belgian hybrid.

However, Brito would like to see a halt to the iconic brew’s decline in its largest market in the U.S. while expanding sales in China and Russia. Bud Light, together with Bud Light Lime and Bud Light Golden Wheat, may have seen a growth in market share last year, but the Budweiser brand has stagnated. Brito believes that, although the poor economy forced some consumers to trade down, other consumers still have respect for craft beers which he considers products of Budweiser.

In an interview with the Journal, the CEO was quick to note that Budweiser utilizes a different brewing process than the rest of the beers out there – beechwood aging. The process increases the surface area that the yeast used in the brewing process can cling to, giving the beer a cleaner finish. The process is also rumored to help lower costs at the same time.

Budweiser is the second leading beer company in Russia, behind Carlsberg A/S, but the company has faced high taxes and other economic strains. They are addressing these issues by shifting to low-price brands to brands, such as Budweiser, which the company believes will stabilize business in five or 10 years.

As well, China is a big beer market, but Budweiser faces a lot of competition with cheap beer there. The tough pricing environment has them focusing on enhancing the mix and selling more Budweiser and Harbin instead of their local brands. “The Chinese are very open to premium brands,” stated Brito.

Anheuser-Busch InBev NV has seen revenue soar from $23.5 billion in 2008 to $36.8 billion in 2009. The company also saw a rise in net income from $3.1 billion in 2008 to $5.9 billion in 2009.