Beer Marketer's Insights - Michelob Ultra's Moment; Ascends to #1 By Volume; 3 AB Brands At #1 in Last Half Century

Only 3 brands in the last half century reached #1 by volume in the US beer industry. All 3 are made by Anheuser Busch and all 3 are still top 10 brands today: First Bud, then Bud Light and now newly anointed Michelob Ultra. But the differences between the trajectories of each of the 3 illustrate how the industry has changed over time, i.e. it&#39;s become more fragmented and less dominated by AB. That includes some huge shifts in just the last few years. When Budweiser was the King of Beers (literally), the Bud brand ascended to almost unimaginable heights. At its peak, Budweiser totaled almost 50 mil bbls. That was in 1988. Back then Bud was over 3x Ultra's size now. Bud was 1 of every 4 beers sold in America. But it has declined every year since then (that's 37 years). And it's on track to sell under 7 mil bbls in US this year, we estimate, now the #8 brand (tho much bigger globally).Bud Light took over from Bud in 2001. Undoubtedly, it sourced much of its exceptional growth from the Bud brand as American beer consumers increasingly gravitated towards light beer and AB gave drinkers an option with the Bud name. When Bud Light passed Bud in 2001 it sold 34 mil bbls, and kept on growing. It peaked at over 41 mil bbls in 2007-2008 (the year before and during InBev's takeover of Anheuser-Busch). And it too has declined every year since, including colossal drops in the last 3 years. This year it will be under 14 mil bbls in US, about one-third of its peak, INSIGHTS estimates.50, 40, 30? How High Is Up for Ultra? So Bud peaked at 49.3 mil bbls, Bud Light at 41.65 mil bbls. Michelob Ultra will be near 15 mil bbls as it achieves #1 status. Nowadays, it's much harder to attain anywhere near the heights of previous megabrands. There is such a bewildering array of beer, alc bev and NA bev choices. Bud Light grew 34 mil bbls in its first 20 yrs. Ultra nears 15 mil bbls in its 23d yr.Can Ultra double in size from here? Even that would mean a peak of about 30 mil bbls, far less than Bud or Bud Light. Doubling would not be easy for Ultra. Even with a 4% or so gain this yr, it's only up about 8% in last 3 yrs (down slightly in 2023). Plus Ultra doesn't have much pricing power these days and competitors increasingly take aim at price point it has basically owned for 2 decades. Recall, decision to hold price on Corona Extra in the late 2000s/early 2010s helped spark that brand's next leg of growth in much of next decade.Bud and Bud Light Grew Much Faster than Ultra Bud held the crown for over 40 yrs. Bud Light became #1 in 2001 and held onto that position (in volume) for 24 yrs. But each of Bud and Bud Light grew much faster than Ultra. Bud nearly doubled from the the late 70s to the late 80s, gaining about 24 mil bbls in 11 yrs. Bud Light exploded from 15.6 mil bbls in 1994 to 40.7 mil bbls in 2007. It grew about 25 mil bbls in 13 yrs. But it started to decline in 2009 (27 yrs after intro), a more-or-less typical generational product life cycle. Ultra will hit 15 mil bbls in yr 23, growing at far slower pace than either of those big brands at a similar point in their trajectories. So that raises questions about how long its growth can continue, tho it is presently still healthy and growing.Premiumization; Modelo Especial Still #1 by $$; But Slips to #3 By Volume Just as Bud Light sourced from Bud, Michelob Ultra has sourced a good chunk of its growth from Bud Light as the industry premiumized. And Modelo Especial benefited mightily from trade-up too. Indeed, it is still #1 by $$, by hundreds of millions of $$ in scans. Bud Light was still #1 by volume last year, despite its gargantuan losses. But Modelo Especial was ahead of Michlob Ultra in volume as well as $$ in 2024 scans. This yr Especial volume down and Ultra is up, while Bud Light is still way down. And voila! We have a new #1 in volume, leapfrogging both.Ultra passed both Bud Light and Modelo Especial in Circana multi-outlet + convenience data yr-to-date thru 9/7. INSIGHTS reported this and AB then put out a press release, using 52-week numbers thru 9/14. Projecting all-channel volume totals for the full yr, INSIGHTS estimates Ultra will be #1 at close to 15 million barrels in US. Michelob Ultra has earned its moment. Interestingly, AB's release didn't mention that it had passed Bud Light to become #1 or that it passed Modelo Especial by volume or that Modelo is #1 in $$. But many media reports ran with misleading/inaccurate info about Ultra passing Especial, leaving out Bud Light, with CNBC calling it AB's "triumph." It is certainly a massive triumph for Mich Ultra, but company-wide it remains a more nuanced tale.

Michelob Ultra's Moment; Ascends to #1 By Volume; 3 AB Brands At #1 in Last Half Century

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