Bear market is beer market for Anheuser-Busch

ST. LOUIS -- Investing may lose its appeal in a bear market, but drinking doesn't.

So while the nation's economy sputters and Wall Street suffers, the producer of "The King of Beers" is enjoying the kind of healthy profits that most companies can only wish they had: 16 straight quarters of earnings-per-share growth.

"In three years of a bear market, what do consumers cry in? They cry in their beer," said Juli Niemann, a portfolio manager at RT Jones Capital Equities in St. Louis.

She said the company leads the industry "for one very good reason: They're so unbelievably focused."

Anheuser-Busch's stock rose 7 percent during 2002 -- while the Dow Jones industrial average sank roughly 17 percent and had its worst yearly decline in a quarter-century.

According to Niemann, its more than 40 brands -- including bestsellers Budweiser and Bud Light -- helped insulate the company from a choppy economy. "They're one huge market monolith," she said.

It also is quick to move into markets for specialty beers, nonalcoholic brews and the trendy "malternatives."

"They come up with something very hot, drop it and move onto the next thing before it gets stale," said Benj Steinman, editor of Beer Marketer's Insights, a trade publication.

Anheuser-Busch, which turned 150 in 2002, has held on to its solid reputation even after president and CEO August Busch III turned the company over to Patrick Stokes last July. For the first time in 142 years, someone other than a Busch or Anheuser family member was in day-to-day control, although Busch III remains chairman.

Many credit Busch for the beermaker's great success. As the fourth generation of his family to have led the company, he turned Anheuser-Busch into a behemoth now holding roughly half the U.S. market. In his 27 years as CEO, the company's market share doubled.

It is also a big seller around the world, marketing beer in more than 80 countries. Anheuser-Busch licenses Budweiser production in Canada and three other continents and has a 50 percent stake in Mexico's largest brewer.

The company is upbeat about 2003, projecting 12 percent sales growth as beer industry volume is driven more by demographics than the economy. And given growth in the number of beer drinkers ages 21 to 27, Anheuser-Busch expects volume to increase 1 percent to 1.5 percent annually through the decade.

Anheuser-Busch's roots go back to 1860, when soap maker Eberhard Anheuser bought the 8-year-old bankrupt Bavarian Brewery and, with a partner, dubbed it E. Anheuser & Co. Bavarian Brewery.

Anheuser got help from son-in-law Adolphus Busch, who in 1864 signed on as a salesman. Five years later, he bought out Anheuser's partner.

Busch embraced technology, becoming the first U.S. brewer to use pasteurization. The process made beer stable, no longer something that spoiled within days. And exploiting industrialization, Busch mass-produced bottles of beer by the millions.

In 1876, E. Anheuser & Co. created a light-colored lager and named it Budweiser, America's first national beer brand. Busch marketed the beer like no other, using billboards and promotional items.

By the 20th century, the St. Louis company known then as Anheuser-Busch Brewing Association was billing Budweiser as "The King of Bottled Beers."

Survived Prohibition

The company has had some trying times. The U.S. entry into World War I generated fierce sentiments in America against anything, even beer, with German roots. And Prohibition put an end to sales of alcoholic beverages for 13 years starting in 1920.

Anheuser-Busch survived Prohibition by making everything from truck bodies to refrigerated cabinets and ice cream, soft drinks and yeast. When Prohibition ended in 1933, Anheuser-Busch was one of 322 brewers to reopen -- a sliver of the 1,400 breweries nationwide in 1914.

During World War II, Anheuser-Busch's grain, packaging and transportation helped feed the U.S. war machine. Afterward, the company and several rivals traded off as the nation's market leader before Anheuser-Busch, two years after debuting its Busch brand, retook the lead in 1957 and hasn't lost it since.

In 1982, Anheuser-Busch rolled out its Bud Light brand, responding to its rival Miller Lite amid a nationwide surge in health consciousness. A dozen years later, Bud Light became the nation's top-selling light beer.

Helping propel the company was its marketing that many called ingenious and catchy, making household names and commercial stars of a dog named Spuds McKenzie, lifelike frogs croaking "Bud-Weis-Er," and dudes asking, "Whasssssup?"

"The marketing -- that's where they've been creative, and that's what wins in the beer business," Steinman said. "It's really their ability to be disciplined, focused and relentless when they find something that works."

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On the Net

Anheuser-Busch: www.anheuser-busch.com

Beer Marketers Insights: www.beerinsights.com