Volume decline is off-set by price increases, driving revenue growth
AB InBev, the brewer behind the Corona, Budweiser and Stella Artois beer brands, has hailed record full year volumes in 2022, as well as the strong performance of its premium portfolio.
The beer giant says this success was “driven by the investment in [its] marketing capabilities,” according to Marketing Week reporting.
While sales and marketing investment fell in 2022 compared to the year prior, CEO Michel Doukeris told investors on March 2, 2023 that AB InBev will continue to invest in marketing its brands because their “power” drives growth at the business.
Across the full year, volumes grew by 2.3% to reach an “all-time high”, AB InBev reported.
However, the business did see softening towards the end of 2022, with volumes declining 0.6% in its fourth quarter.
This is the first time the business has reported a volume decline since the beginning of the pandemic.
However, price increases more than offset this volume decline, with revenues rising 10.2% year-on-year to $14.47bn.
Across the full year, revenues rose by 11.2% to $57.79bn.
Aggressive marketing strategies
AB InBev invested $6.8bn in sales and marketing in 2022, compared to $7.3bn marketing spending in 2021.
CEO Michel Doukeris did not provide a figure for anticipated 2023 marketing spending, but pointed out marketing investment has remained around the $7bn mark since 2019.
Effectiveness of spend is as important as level of spend for the company. AB InBev has stepped up its effectiveness in its creativity through its digital transformation and its in-house creative agency DraftLine. AB InBev was named the world’s most effective marketer in the Global Effie Effectiveness Index.
Approximately 63% of the business’s revenues are now generated through B2B digital platforms. As the company steps up its digital capabilities both in B2B and DTC offerings, it is generating the ability to apply data at scale to its campaigns.
Effectiveness means that beer giants such as AB InBev deploy tools and data to target and reach specific groups and people are much as possible to drive consumption of their brands. For example, AB InBev is focusing on converting women to alcohol consumers. Another example is the at-home consumption that AB InBev seeks to promote aggressively, for instance through the at-home beer tap PerfectDraft. AB InBev reported that there were now more machines in homes than there are pubs and bars in the UK and France.
Another strategy of AB InBev is to create and exploit more alcohol consumption occasions.
Three ways alcohol marketing causes harm
Alcohol marketing causes harm to children and youth. Alcohol marketing also saturates society with alcohol, and perpetuates the harmful alcohol norm. And alcohol marketing prevents evidence-based alcohol industry regulation. These are the three ways how alcohol marketing causes harm.
In a comprehensive article, Maik Dünnbier provides state of the art analysis of how exactly alcohol marketing is causing harm and presents state of the art evidence.
Exposure to alcohol ads is directly linked to subsequent alcohol use by children.
Early onset of alcohol use, higher amounts of alcohol consumption, more high-risk ways of consuming alcohol, shaping positive attitudes, expectancies, and judgements towards alcohol, and determining brand allegiance and loyalty for an entire life – these are the harmful effects of alcohol marketing on children, adolescents, and youth.
The alcohol industry invests aggressively in all kinds of alcohol marketing. For instance beer giant AB InBev is the ninth largest advertiser in the world. Globally it spent an estimated $6.2 billion on advertising in 2017. This dwarfs the advertising spending of the Coca-Cola Company (spending $4 billion globally in 2017), widely known as a big spender on marketing.
For Big Alcohol, this is a great investment.
A study of youth aged 15–26 years in the U.S. found that young people consumed 1% more alcohol for each additional ad seen per month. They consumed 3% more alcohol with each additional dollar spent per capita on alcohol ads in their media market. Youth in markets with more alcohol advertisements showed increased consumption levels into their late 20s. But alcohol use plateaued in the early 20s for youth in markets with fewer advertisements.
That’s why the alcohol industry put children and youth in harm’s way.
The alcohol industry makes a substantial amount of their profits from under-age alcohol use in the U.S. market alone. The total sales revenue from minors consuming alcohol was $17.5 billion (7.4%) out of $237.1 billion in 2016.
Alcohol companies are among the dominant players in the advertising worldwide. And their astronomical advertising spending makes Big Alcohol’s brands, imagery, and slogans ubiquitous. Alcohol is everywhere, all the time. Through TV broadcasts, in sports stadia, in music concerts, on billboards – even right next to schools and kinder gardens, in print outlets, through social media, through product placements in movies and series, through merchandise, alcohol marketing reaches into all corners of society, even into children’s rooms, schools, and playgrounds. Most societies of the world are affected by this avalanche of alcohol promotions because they do not implement common sense rules for alcohol marketing.
Alcohol advertising and marketing is a massive and expanding phenomenon. Global companies spend billions of dollars each year on marketing.
Big Alcohol dollars enable the major companies to use a wide range of marketing strategies, including target marketing focused on special populations such as women, racial and ethnic minorities, young adults, older adults, adherents of particular sports, and so on.
The last decade has seen a shift from traditional marketing to digital landscapes. The new merged marketing channels, techniques and platforms make alcohol advertising an even more ubiquitous phenomenon with multiple forms of expression. The mantra is “open your world” and it is an order because Big Alcohol wants in on our values, desires, hopes and dreams and they want to reach us at any time, anywhere they can.
Alcohol marketing hijacks positive experiences to attach them to their products. It undermines self-esteem and replaces human capacity with consumption of alcohol products. Alcohol marketing misrepresents reality, excluding people from that reality, conditioning expectations about social environments and the role of alcohol in them. This is fueling and perpetuating a harmful alcohol norm that excludes people and harms people. Alcohol marketing also hijacks values and social issues to sell alcohol products. And alcohol marketing pushes the presence of alcohol into all aspects of human life.
How alcohol marketing causes harm to vulnerable groups and society at large
- The concept that everyone likes alcohol, all the time, everywhere; that everyone enjoys the effects of alcohol; and that everyone welcomes the ubiquity of alcohol is harmful. It eliminates legitimate preferences and concepts of social interaction that do not include alcohol. People feel compelled to consume alcohol, even if they do not like it or just do not want to in a specific context.
- Alcohol marketing also harms people who want to reduce or quit alcohol consumption. And it harms those who want to live alcohol free because they are in recovery from alcohol use disorder (AUD) or because they have any other health condition. Being compelled to navigate environments that literally push alcohol, a health harmful and addictive substance, on people increases the risk of relapse or to succumb to the pressure of the alcohol norm and in this way to aggravate a health condition.
- Alcohol marketing is harmful to people with an AUD in another way: they get stigmatized for the health problem they have. Alcohol marketing perpetuates the misconception that alcohol use problems are rare and only affect people who do not know how to use alcohol “responsibly”. But AUD, like other alcohol harms are determined by the environment where people live. And alcohol marketing shapes these environments, creating positive attitudes to alcohol, promoting brands, shaping values and concepts of a good life and making alcohol available and desirable.
- Alcohol marketing is disproportionately present in vulnerable communities and neighborhoods with lower socio-economic status. And the alcohol industry has developed specific marketing strategies to target vulnerable groups, such as children, women through appropriating feminism, ethnic minorities (for instance in the U.S.).