How Anheuser-Busch is positioning its advertising, brand exposure ahead of the Super Bowl

Anheuser-Busch CEO Michel Doukeris spoke with Yahoo Finance's Julie Hyman and Brian Sozzi about rising beer prices and TV advertising ahead of the Super Bowl.

Video transcript

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SEANA SMITH: Our coverage of the World Economic Forum in Davos, Switzerland continues. Yahoo Finance's Julie Hyman and Brian Sozzi spoke with the CEO of Anheuser-Busch about rising prices in the beverage industry. Let's take a listen.

JULIE HYMAN: One of the things that we saw happened in December in the United States, just to speak specifically there, beer prices went up. And sales went down, at least for some of your competitors. And we also saw some industry data to support that. What did you all see?

MICHEL DOUKERIS: I think that there was a lot of things in play at the end of the year, including the coldest weather that we have seen many, many years. But definitely there was the impact of two price increases overlapping in December. So now in January, you are comping the first price increase of last year. Inflation was very high. It was the first time, I think, in many years that we had two price increases in one year to catch up with inflation. And we need to see now that's coming Super Bowl season, let's see how things are playing in January and February.

JULIE HYMAN: So are more price increases coming?

MICHEL DOUKERIS: I think that most of the price for the industry, they were done in October, November last year. Now, you are comping the year before price increase. So during this period of October, November, December, there were two price increases-- one done in February and one in October. So there was a load for consumers to digest and retailers. And now you are getting into an easier comp because the last year January price increases already into the books and you have only the regular price increase of October.

BRIAN SOZZI: You mentioned Super Bowl it is very, very close. Am I going to flip on the TV, do I see the Budweiser Clydesdales? Or how are you showing up at this year's big game?

MICHEL DOUKERIS: So there is a lot brewing there. [INAUDIBLE] is going to be releasing some of the TV commercials now. But you can expect Bud Light, Michelob Ultra, and some other of our brands showing up during that.

BRIAN SOZZI: Do you still get the same bang for your buck marketing on TV as you did a decade ago during the Super Bowl?

MICHEL DOUKERIS: It is a combination. So the mix of channels, they change. But Super Bowl is the Super Bowl. Everybody loves the game. We love sports. And our teams, they work creatively to reach consumers in digital, in physical experiences, and also using TV as part of the market mix.

JULIE HYMAN: Have you pulled back on your digital marketing at all?

MICHEL DOUKERIS: Not really. I think that changing different channels, different ways of connecting with people, but digital has been growing over the years. And I think that continues to grow. But the [INAUDIBLE] remains very important.

SEANA SMITH: It was interesting there what he said, Dave, just about advertising during the Super Bowl. The amount of money that these brands pay makes your head spin.

DAVE BRIGGS: 7 mill.

SEANA SMITH: $7 million, record this year for just 30 seconds of airtime. But that is a company that's been doing it forever. When you take into account, I guess, why people do spend during that time, they must see it pay off. But certainly the brand exposure that you are getting compared to maybe some of the other events, but also just how much people have paid over time with Nike. They're 46 minutes and 37 seconds leading the way. But certainly, will be interesting to see what comes from this game. And the brand advertisers, not so much the game, but the brand and the advertising the amount of money that's paid.

DAVE BRIGGS: Well, there's just not many opportunities. In fact, there's only one opportunity to reach 100 million Americans in one 30-second bang. So I guess you can justify that. They've had an interesting year. I mean, you can keep in mind what happened with the World Cup, the massive amount of money that AB InBev spent to be the exclusive sponsor of the World Cup only to have that pulled, no beer sales allowed. They did well with Bud Zero, their no alcohol beer there. So that was an interesting play for them where it is, they still feel like they broke even there in terms of the exposure.

But the Super Bowl and now we have Coors, Miller Coors back in the game. We're not sure if it's going to be Miller Lite or Coors Light featured in the game. They're not going to tell us until actually you see that ad run. But you get so many exposures leading up to the game now with teasing it and with floating some digital ads and Instagram exposure. It seems to be a several week build up for them.

Back to the price increases, that's what's been really dramatic in that space. You're talking about beer outpaced wine by two, spirits 5x, and even outpaced grocery increases 3x in terms of the price increases the last four weeks of the year. And that demand came right down with it. So that's one of those stories you look at the general economy. They clearly saw an inflection point in which they cannot continue to raise prices, people will simply move on and find something else to drink. And they did late last year.

SEANA SMITH: And they did. Yeah, we'll get results from Anheuser-Busch next month. And we'll be very interesting to see. Because analysts have become a little bit cold when it does come to their outlooks on Anheuser-Busch. Right now, they did get a downgrade here not too long ago from UBS downgrading to sell from neutral, lowering its price target there because of the fact that we are seeing beer sales slip so much or really start to level out.

You mentioned rising-- higher prices. Clearly, so many consumer-facing names have been forced to raise prices as they have tried to put less and less pressure on their margins here. I think we might have reached an inflection point that you were talking about, just in terms of the fact that we are in a downturn right now. More and more layoffs, it seems like, by the day. People are going to start adjusting how they are spending. And these consumer-facing brands will probably have a tough couple of quarters as a result.

DAVE BRIGGS: And it's January. And dry January has taken off. Morning Consult says 15% of US adults are at least trying dry January. That's not to say they'll complete it. But bars, restaurants are saying it's taking a serious dent out of their bottom line, some say between 10% and 15% hit now they're seeing in dry January. And that's why some of these companies are getting in on the act, launching their own non-alcoholic beers and non-alcoholic cocktails and the like.

SEANA SMITH: Are you getting in on dry January? Did you?

- I don't think I made it four hours, five hours maybe.

SEANA SMITH: Yeah.

DAVE BRIGGS: [INAUDIBLE]

SEANA SMITH: I don't think I made it a day either.

DAVE BRIGGS: Did you?

SEANA SMITH: No, no. I've never done it.

DAVE BRIGGS: I have no interest.

SEANA SMITH: I've never done it. But I do applaud everyone out there who's doing it.

DAVE BRIGGS: I do too.

SEANA SMITH: It's a healthier choice.

DAVE BRIGGS: Not for me though.

SEANA SMITH: It's not for me, at least right now.