ANHEUSER-BUSCH TAPS NEW BEER TO GRAB GENERATION X MARKET

RICHARD TURCSIK

ST. LOUIS -- The days of keg parties are on the wane, so Anheuser-Busch here is seeking to tap into the 21-27 year-old age bracket with the introduction of Crossroads, a new wheat beer.

Crossroads is a cloudy, unfiltered beer that uses wheat malt instead of the barley malt used in traditional beers, and a top-fermenting Hefeweizen (or German) yeast instead of the bottom-or middle-fermenting yeast used in traditional lagers and ales. The result is a beer with an "almost fruity or clovey taste" and high effervescence that has a very clear finish and little to no after taste, according to Paul Stoddart, Crossroads senior brand manager at Anheuser-Busch.

It is initially being brewed out of Anheuser-Busch's Merrimack, N.H., brewery and will also be produced out of a new plant in Los Angeles as of June 1.

Crossroads began an 8-12 week test marketing in March in the Minneapolis/St. Paul, Denver, Raleigh/Durham, Columbus, Ohio; and certain Florida and Texas markets. Initial feedback shows that in the test markets the product has about a 65-70% acceptance among 21-27 year-old-men, and a 75-80% acceptance among women in the same age bracket.

"Initial sales have been excellent," Stoddart told SN. "We're doing extremely well in Columbus, Denver, Raleigh and Key West. In Minneapolis we still have some work to do, but we don't have the distribution we wanted there. We've had great initial trial amongst the product and great acceptance amongst our target."

Stoddart said Crossroads will be marketed as a new mainstream brand, and not as a microbrew or specialty beer, although that is the type of drinker it is attracting.

"Our intention is to put this in front of consumers in a very aggressive fashion; we're not using this as a micro marketing project. As the industry leader we feel that we need to be out there on the forefront leading the industry with innovative products," he said, noting that it will be heavily advertised.

"If you're a staunch Budweiser drinker, you are not going to switch from Budweiser to Crossroads. If you're a micro specialty drinker that is trying many different products and looking for a unique tasting beer, this may very much appeal to you," Stoddart added.

Crossroads is premium priced -- about the same as Michelob -- and is currently available in six-packs of long-neck bottles and 22-ounce bottles. Draft will soon be available, as will loose containers and 12-packs.

"This isn't a product that works well in a can because of its uniqueness with the high carbonation level. I don't think any of the micro or specialty products do well in cans, but as the market calls for cans we plan to do cans, probably in four to six months," he said.

Roy Burry, a securities analyst with Oppenheimer & Co., New York, said a beer like Crossroads has a good chance at success with Generation X.

"The beer market is fragmenting and the typical younger beer drinker is extremely experimental. If something catches on a little bit everybody in the group wants to drink it. Wine is not that way, spirits are not that way, but beer is because it is a social drink," he said.

Andrew Conway, a securities analyst with Salomon Bros., New York, said Anheuser-Busch has been focusing its brand mix towards the premium segment. He said while the brand has a good chance at success, he doesn't see it rivaling ice beers, which are now 5% of volume.

"There may be partial cannibalization, but depending on where they set the displays in the supermarkets they will probably get a separate display or a separate marketing packet and that will probably move it away from the traditional cannibalization," he said.