When You Say Budwater, You've Said It All
Americans are willing to suffer declines in income, net worth, lifestyle, health, and even the integrity of their corporate and political leaders -- but one thing they will not tolerate is a decline in alcohol.
The maker of Budweiser went into crisis-communications mode over the weekend following allegations in a phalanx of federal lawsuits that it waters down its beer.
Anheuser-Busch took out full-page ads in newspapers across the nation on Sunday, claiming "the beer in your hand is the best beer we know how to brew. We take no shortcuts and make no exceptions. Ever."
Earlier this month, Maker's Mark addressed the extreme blowback it received from customers after announcing it would reduce the alcohol content in its whiskey because of a supply constraint.
Maker's Mark is owned by Deerfield, Ill.,-based Beam Inc., which also owns the Jim Beam label. When the company very transparently announced it would cut back the alcohol content from 45% to 42%, its customers went into a rage. The company very quickly issued a press release reversing its decision. It read, "You spoke. We listened."
"We've been more than humbled by the overwhelming response," Maker's Mark Chief Operating Officer Rob Samuels told USA Today. "This was about the worst four or five days of my life." (Yes, when you are a top executive for a whiskey company, this is as bad as life gets. I am guessing Mr. Samuels could not face an entire army of angry drunks, so the alcohol level went right back to 90 proof.)
In a sluggish economy, where job creation is mostly just an empty boast, people will always want more alcohol. The Distilled Spirits Council of the United States estimates a 3% growth in volume and a 4.5% growth in revenue for 2012. It says distilled spirits are still taking market share away from beer, which has a lower alcohol content. U.S. beer shipments were up 1.9% in the first eight months of 2012 after falling for three straight years, according to the Beer Institute.
In this environment, St. Louis-based Anheuser-Busch cannot afford headlines about watered-down beer. So it doesn't just deny this allegation, it scoffs at them.
Its ads showed a can of water that the brewing giant said it donated to the American Red Cross for disaster relief "71 million times." The ads said anyone complaining about watered-down beer "must have tested one of these." (Maybe lawyers for the American Red Cross should test Anheuser-Busch water to be sure there isn't any beer in it.)
Anheuser-Busch also has been defending itself in social media. "Thanks to all of our #Budweiser fans for your support in the face of the groundless alcohol content lawsuits," reads one tweet on Budweiser's Twitter account.
In a coordinated legal attack in courts across the nation, lawsuits allege several Anheuser-Busch products misrepresent their alcohol content: Budweiser, Bud Ice, Bud light Platinum, Michelob, Michelob Ultra, Hurricane High Gravity Lager, King Cobra, Busch Ice, Natural Ice and Bud Light Lime.
The lawsuits are quick to blame the megamerger. Anheuser-Busch is owned by Belgian brewer Anheuser-Busch InBev SA/NV, which was formed in the November 2008 of two brewing giants. "Following the merger, AB vigorously accelerated the deceptive practices...sacrificing the quality products...to reduce costs," one of the lawsuits reads.
The global conglomerate brews about 10 billion gallons of malt beverage a year, so cutting the alcohol content just a little bit here and there can save millions, the lawsuit alleges.
If true, this represents a form of inflation that the Federal Reserve does not measure: Bud-flation. You have to drink more Bud to feel the same sense of relief from this economy.
The lawsuits prompted CNN to do its own tests. The cable news network found that Budweiser contained 4.94% alcohol by volume, compared with 5% stated on the label. It also found Bud Light Lime had 4.13%, compared with 4.2% claimed on the label; and Bud Ice showed 5.35%, compared with 5.5%. An Anheuser-Busch spokesman said this was "well within the variability of the all-natural brewing process."
Anheuser-Busch is the only company I can name that has been sued for allegedly not putting enough poison in its products. Energy-drink maker Monster Beverage Corp., for instance, is currently fighting legal battles for allegedly putting too much caffeine and other stimulants in its products. Big Tobacco, you'll recall, was often being sued for allegedly putting too many addictive chemicals in its smokes.
Imagine a witness in the Budweiser lawsuit.
Q: What happened when the officer pulled you over and asked what you had to drink?
A: I explained that it was Budweiser.
Q: Did he arrest you?
A: No. He said he didn't want to waste his time on a sobriety test and let me drive home.
Q: So when you finally arrived home, did you fall and injure yourself on the front stoop?
A: No.
Q: Did you go to your bedroom in a drunken rage and beat your wife?
A: No.
Q: Did you wake up with a head-splitting, gut wrenching hangover?
A: No.
Q: Did you miss work the next day?
A: No.
Q: And this was all because there was not the advertised amount of alcohol in your Budweiser?
(Al's Emporium, written by Dow Jones Newswires columnist Al Lewis, offers commentary and analysis on a wide range of business subjects through an unconventional perspective. Contact Al at al.lewis@dowjones.com or tellittoal.com)