Glass half-full for AB InBev as Stella sales fizz

Global beer sales may be down - but the much-maligned Stella Artois has turned a corner in the UK.

Last Updated: 06 Nov 2012

Brewing giant Anheuser Busch InBev said today that sales of Stella Artois jumped nearly 7% in the UK last quarter, helping it to grab market share from rivals. OK, so beer sales were down 1.1% across the board. But the brewer’s profits were higher than expected – and more importantly for its long-term prospects in the UK, it seems to have succeeded in revitalising a beer brand that went from ‘reassuringly expensive’ to '100 for a tenner' in the space of a few short years...

The Noughties haven’t really been kind to Stella Artois, whose brand has suffered more than any other from these cheap supermarket promotional deals. Once marketed as a premium beer - in fact it basically invented the category - it rapidly became the binge-drinker’s lager of choice (let’s face it, having your beer commonly referred to as ‘wife-beater’ isn’t exactly a marketer’s dream). But AB InBev seems to have turned things around, thanks in part to a new lower-strength variant called – imaginatively – Stella Artois 4%. And what they saved in branding consultants they’ve spent on a new advertising campaign for the original version, focusing on its heritage and quality, which has also seen sales increase.

Clearly AB InBev realised that the brand needed an overhaul if it was going to shed its unfortunate associations – even if that meant moving away from its traditional strengths. The 4% version was seen as a bit of a gamble, since Stella has always been positioned as a proper continental beer that actually tastes of something, as opposed to those watery alternatives. But the success of Beck’s Vier (also a lower-strength variant) showed InBev that it could work – and judging by the upturn in sales, it seems to be finding an audience. It’s partly just the changing times – now binge drinking is such a big issue, weaker lagers are a bit more socially acceptable – although a clever ad campaign clearly helped too. This is good news for the brewers, since making lagers weaker helps to forestall the political bun-fight that's clearly coming their way.

So overall it’s been a pretty good quarter for AB InBev, the brewing giant formed last year from the £32bn tie-up between US-based Anheuser Busch and Belgian group InBev. Although the recession did bite into sales, it’s clearly not fared anything like as badly as the beer industry more broadly – in fact, profits actually jumped 18% to $3.6bn, on revenues of $9.5bn. It’s even managed to cut its brewing costs by about 6%, helping to boost margins. So it’ll be pints of Stella all round tonight at HQ...

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