Budweiser aims to pocket jeans market

Budweiser’s move into the jeans market may be surprising, but Britain’s number-one premium packaged lager stands to lose little.

Cigarettes, alcohol and style have always been closely linked. Too closely for some. But now consumers will be able to wear Budweiser jeans with their Marlboro jackets and Camel boots.

The world’s largest brewer, Anheuser-Busch, is following the example of tobacco companies like Philip Morris, owner of Marlboro, and RJ Reynolds with its Camel brand by producing a range of Budweiser-branded clothing which will be launched in March (MW January 31).

Anheuser-Busch marketing director Peter Jackson says the move “into quality clothing is a natural brand extension and endorses our premium positioning. The ranges reflect our heritage and will support our future”.

Budweiser, the UK’s biggest selling premium-packaged lager, is positioning its clothing range in the premium price range with jeans, for instance, costing about 60 – more expensive than Levi 501s but cheaper than “designer” labels and even the cigarette-branded licensed alternatives.

The company is targeting the 18 to 28 age group and is planning to offer two ranges of clothing, named Budweiser Jeans and Budweiser Sport, exploiting its sponsorship of basketball to foster consumer interest.

In the UK, though not the US, Budweiser counts as a premium-priced product – just – so pricing clothing at this level is consistent. But with prices this high it seems unlikely that Budweiser clothing will find it easy to break into the “mainstream fashion and sport retailers” that Jackson says it’s aiming at.

It has hired Bolton International to handle all distribution deals. Anheuser seems intent on launching its clothing ranges exclusively in the UK to capitalise on its position as the best-selling premium lager. There are no plans to roll it out across the US or the rest of Europe.

“Strategically it is the right thing for the company to do if it wants to keep the brand young and fresh,” says Graham Harding, managing director of brand consultancy The Value Engineers.

He adds, “There is a case to be made for saying that in the US, for instance, Budweiser is the ‘brand of your father’ rather than your own, and perhaps Budweiser in the UK is testing the waters, as well as acting pre-emptively.”

Its most recent advertising offers the kind of images which could be extended into a clothing range if the example of Marlboro and Camel is any guide.

It is upping its marketing spend to 25m this year from 17m last year as part of its attempt to hang on to the number one spot.

Budweiser’s UK ads through BMP DDB provide images of Americana. The ads range from the lone Red Indian in a hostile town (which was eventually pulled because of the outcry over its apparent association of native Americans with alcoholism) to the blue-collar car enthusiast searching for his first love – a Fifties car – amid the wreckage of a scene of urban decay.

Anheuser appears to be pursuing the same strategy as both Marlboro and Camel in at least one crucial respect. Both are mass-market, packaged goods which use premium clothing lines to enhance their brand image.

“Companies have to be careful about risking their core brand equity with all brand extensions, and although Anheuser is principally a brewer it doesn’t mean it can’t make money in other areas. Clothing would certainly demonstrate the power of the big brand trademark,” says John Farrell, group chairman of D’Arcy Masius Benton & Bowles, which handled the Budweiser advertising account before it moved to the DDB Network (MW November 18 1994).

There is, however, a vital difference between Philip Morris, RJ Reynolds and Anheuser. The tobacco companies are severely restricted in their ability to advertise, while the brewers remain comparatively free and self-regulated. That goes some way to explaining why tobacco brands like Marlboro and Camel need to find means other than advertising to keep consumers aware of their brand values. Drinks companies don’t.

“The cigarette companies’ motivation is different but it’s possible that the drinks companies are preparing for a day when the advertising regulations change,” says Farrell.

It is possible, though it does appear unlikely. After all, the voluntary code on alcohol advertising has recently been relaxed to allow ads for spirits on TV, which hardly seems to indicate an incipient moral backlash against the industry.

Certainly, some observers of the drinks industry are puzzled by the move. “I believe it is wasting its time,” says drinks analyst Charles Winston at BZW, who sees no reason why a brand as successful as Budweiser needs to divert its resources from what it does best.

But in a market – premium packaged lagers – where it is the leader, now is perhaps the best time to branch out. If the clothes ranges fail, the damage to the core brand will be minimal, but if they are successful it could give Budweiser the added impetus to stay ahead of its closest rivals.

NHS LOTO 1988-1997

1988 – NHS Loto created and registered with Royal Borough of Kensington & Chelsea. Low-profile operation with a revenue of 384,988 in its first year.

1995 – June: after seven years relaunched with television draw in response to the National Lottery. November: Stenworld takes control of Pascal and announces plans to invest 20m in marketing. It starts an ad agency review.

1996 – August: Kensington & Chelsea wins court battle and withdraws NHS Loto’s registration on the grounds that it is a national, not a local lottery. September: the Gaming Board asks for information on NHS Loto’s activities and refers Pascal to the Crown Prosecution Service when it does not receive the information it requires. October: the CPS says there is no case to answer.

1997 – February: the National Hospital Trust delivers an ultimatum to Pascal demanding that it stumps up the funding 14 months after it was first promised, or drops out. The company’s search for an ad agency continues.

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