A WELL-AGED BREW

JOHN KAROLEFSKI

ST. LOUIS -- Once upon a time, Adolphus Busch, founder of a famous brewery called Anheuser-Busch, decided to make the best beer in the world. He called it Michelob. The brew was available only on draft, and it stayed that way for more than six decades. "I'm sure my great-great-grandfather would be thrilled if he could see how far Michelob has come in the 100 years since he launched the brand," says August Busch IV, vice president of brand management at Anheuser-Busch here, now the world's largest brewer.

How far has Michelob come? The self-proclaimed "beer for connoisseurs," a term coined in 1896, has grown into the Michelob family of brands. In addition to the flagship brew, the Michelob portfolio includes Light, Dry, Golden Draft, Golden Draft Light, Classic Dark, Amber Bock, Hefeweizen and a Centennial Special Brew to celebrate the 100th anniversary. "When you're trying to introduce a light beer, a dry beer or a dark beer, it really helps to put that Michelob name on it. That equity is so strong. I wouldn't say it's as strong as Budweiser, but from a retailer's and consumer's perspective, it's powerful," says Carol Kelleher, senior brand manager of the Michelob family of brands. But crafty line extensions tell only part of the story of this durable brand. The other parts of the Michelob mystique include:

Quality: Michelob has carved for itself an exclusive category of superpremium domestic beer. Over the years, its only direct competition nationally has been imported beers such as Lowenbrau.

Special Occasions: A recurring theme in advertising for decades has been that Michelob is a special beer for special occasions -- whether it be weekends ("Weekends Were Made for Michelob") or certain days (the current "Some Days Are Made for Michelob").

Design: Its teardrop bottle with gold foil around the neck has become a packaging classic with instant consumer recognition. Eighty percent of Michelob brands are sold in bottles today. The design tradition continues with the label of the Centennial beer. After a century of brand building, A-B is pleased to see that there is still opportunity for growth in this high end of the taste scale. Ironically, it is Michelob's latest competition -- specialty beers and microbrews -- that is prodding the brewer to expand that Michelob magic. "People are more aware of quality and different taste profiles," Kelleher explains. "People are realizing that Michelob is right above premium beer. We have the micro and specialty people drinking and kind of trying to experiment in that area. Instead of coming back down to a premium brand or a subpremium brand, they might stop at Michelob. That has really helped us find the niche for our marketing programs." Kelleher notes that on the East Coast, for example, there are aisles of specialty beers in supermarkets to serve as competition. "But retailers realize that those [brands] are not always turning," she adds. "You're going to get the volume from Michelob. People realize that Michelob has always been that special beer. It's safe. It's a name that's recognizable. It still is perceived as a quality and accessible brand that is great tasting."

Nevertheless, there's been a surge of consumer interest in the last few years in "craft" beers that are presumably brewed in small batches. The Michelob family is responding with its own specialty beers such as Amber Bock and Hefeweizen. "There's a lot of equity in that bottle and the name," says Kelleher. "That is what's helped us in our specialty strategy. Line extensions are extremely difficult. But when you put on the Michelob name, it gives a quality image. It gives a strong perception that, hey, it's worth spending $5 a six-pack on. I'll try it vs. Jack's Blue Sky Beer, or something like that." Another response to craft brews has been stepped-up in-store marketing with creative point-of-purchase displays (see story on Page 42). It is in the store where packaging, display and value-added promotions combine to attract shopper attention.

Here's Kelleher's plan for the Centennial year:

January and February: A Michelob Light Ski Program in which packaging features on-can and on-bottle graphics of great U.S. ski runs. Each 12-pack includes a certificate good for a free day of skiing at 15 participating resorts. Included is point-of-purchase support on- and off-premises.

January Through December: Golfers' 18-pack. The third year of promotion that involves the Professional Golfers Association. Each can in the 18-pack features a graphic of one of the 18 best golf holes from the PGA Tour or Senior PGA Tour.

March: National launch of Michelob Centennial Special Brew. Special 100th anniversary logo on Michelob bottles and secondary packaging.

April Through June: The Great Golf Ball Giveaway. Each golf 18-pack contains a certificate good for a free sleeve of Ram Tour Balata balls.

July Through September: Each golf 18-pack contains a certificate good for a free golf hat.

November and December: Thanksgiving and Christmas holiday programs. All packaging features Currier & Ives-style holiday motifs. Twelve-packs of bottles and cans include certificates for free merchandise from a specialty catalog. Programs involving golf and skiing are part of A-B's effort to create a more youthful image and zero in more on Michelob's target consumer: males and females about 25 years old and up. "It was a little bit older five or six years ago," explains Kelleher. "We tried to contemporize a lot of our programs, still keeping that quality image message. Bring it into the '90s with skiing and golf, for example. Golf is just exploding. Not only with men, but with women." The sports programs are part of A-B's "display incidence" increasing 40% in 1995 compared to the previous year, according to Kelleher. "Retailers say it's an added value for consumers coming into the store. Those kinds of things work. They're extremely expensive to implement, and a big headache, but they work," said Kelleher, who took over as manager of the Michelob brands in August 1995. The plans and promotion for the 100th anniversary are hers. "We're fired up about the year," she says. "We have all the tools in place to improve that display incidence."

Retailers through the years have understood the quality image and the brand equity of Michelob, Kelleher says. "But just in the last three to four years, they've understood that -- with that niche of specialties and micros -- there's a place for Michelob. They can see that they can put up a display, and that volume is going to come off the shelf a lot faster than with another specialty or micro beer," she says. Since A-B considers retail execution key to success, the national accounts group each year brings retailers and wholesalers to the corporate headquarters here for three-day meetings. Past and future programs are analyzed and planned. Gripes are aired. What's the most valuable information that Kelleher has heard from retailers in these meetings? "That the totally integrated program from Michelob in the last three, four years has been a key to their success. They get that. They understand we've taken a program like golf and fully integrated it with TV, with packaging, promotions, with sponsorship of a tour and of an event. They understand that," she says. When all the hoopla of the centennial year ends, Michelob begins its second hundred years. What's on tap for the brand?

Kelleher is pleased that senior management at A-B's recent national convention in New Orleans included Michelob among its key initiatives for the future. "When you have senior management talking about the Michelob family coming on strong, it makes wholesalers take a look at their sales and strategy. 'I have a whole portfolio of brands,' they say. 'Where does Michelob fit in all my accounts?' "That's powerful," she says. "Wholesalers listen to Mr. Busch [August Busch III, chairman of the board and president]."

Overall, A-B is concentrating on its core beer business. It spun off its Campbell Taggart baking business, sold the St. Louis Cardinals baseball team, and closed its Eagle Snacks subsidiary. All of these moves are welcome news to people like Kelleher, who are dedicated to extending A-B's beer empire. "We feel we have our guns placed," she says, apparently ready for the beer wars of the next hundred years. "Let's spend some time and effort and work with the tools we have, those tools being our brands." She feels there's plenty of potential in the Michelob family. For example, Michelob Light, which is not yet available in all 50 states. "We'd like to continue the double-digit growth of Michelob Light. We feel that we haven't scratched the surface yet. Light beers continue to growth in popularity.

"In Texas, it's almost nonexistent. Same way in California and Pennsylvania. If we can turn some of those states around, we could again see double-digit growth from Michelob Light," she predicts. Michelob Golden Draft and Golden Draft Light are other brands -- the only ones in clear glass bottles -- that are poised for growth, according to Kelleher. "We look at Golden Draft as the younger Michelob," she explains. "We try to market it a little bit younger, a little bit rowdier. We call it the baby of Michelob."

These brands have found a home in Minnesota, where 50% of the volume is sold. A-B sells about 600,000 barrels in six states (it's only available in seven).

As for new Michelob brands, Kelleher says, "What we'd like to do is take a look at our whole specialty portfolio and maybe introduce one [beer] a year." But that's not definite, she adds. She's looking to sell more than 5 million barrels of Michelob brands in this centennial year, which would be a 4% increase over 1995. "My strengths are getting out talking with retailers and working with wholesalers. That's always been my philosophy because I came from a field background," she says. "Get them fired up to sell Michelob."