Michelob Ultra: “The Ultra Brand Mistake”- Stefan Jaworski

Saying Goodbye to a Brand and Brand Strategy

 

Stefan Paul Jaworski with Al Ries

(July 15, 2004. St. Louis, MO) There was a time when a brand was a very special thing- seen as a measure of a good relationship with the customer and the world around it. A brand was something singular that was straightforward, and above all it was focused. The whole idea was to make a brand stand for something (usually wholesomeness, family, and quality) and stay very focused on one issue, facet, skill, promise, and /or offering as much as possible- and never stray. For instance, Kentucky Fried Chicken (not KFC) was about the Colonel and good southern fried chicken…and that’s it. Long before Wal-Mart, Sears stood for middle-American value, home products, and great seasonal sales. There were two, maybe three, types of toothpaste based on brand like Crest, Colgate, and Pepsident; and GM and Ford were all about affordable cars that were basic and clearly organized according to price segment and usage. Everything seemed to be focused for the first 5 or six decades of brands in America; and then all heck broke lose. Why? Mostly because America discovered the line extension and perfected its overuse- and nothing has ever been the same or as good since.

Extensions, strategically used, can be a very good thing to stretch a brand and make it more “well rounded” in usage, usefulness, and robustness to its consumers. For instance, potato chips vastly increased their market size by moving beyond the plain variety and introducing many different flavors from Salt & Vinegar to Barbeque to Smokey Bacon. But, sadly, many brands simply have gone overboard often creating extensions without strategic thought that do not leverage the brand wisely, but instead take away from the brand’s offerings, core values, position, and even identity. The result is “brand dilution” that has significant ramifications across every aspect of the brand including equity, sales, market share, brand-consumer relationship, identity, position, and even existence. Today, go into a Wal-Mart and one sees an unholy array of so many different kinds of toothpaste that it boggles the mind- and remember these are often of the same brand! Rule in the many different brands and their extensions, and you get literally dozens if not hundreds of types of fundamentally the same thing: a paste to help keep your teeth clean. Most are separated at best by minutiae- ambiguity at the least.

Especially conspicuous in the proliferation of non-strategically based extensions is the reality of “fads” and “trends”. For me a “fad” is a very short term, novelty creative expression (music, fashion, art, thought, style, etc.) that diffuses quickly throughout a very select part of the population; a “trend” is a mid-term (length) creative expression that diffuses throughout the more general population and usually takes longer to do so than a fad. Both are not permanent to any great extent.

Sadly, a reality in the modern brand world is that every time a fad or trend appears along comes another line extension to try and benefit from it. For instance, from the high fiber health/diet craze several years ago came extensions like cereals (most of which already had fiber) with now “extra fiber”, and breads with “more fiber”, and cookies and cakes with “extra fiber”, to finally laxatives with “more fiber”- often too much fiber and in usages that really offered little additional benefit. Indeed, every second word on television during the middle and late 19990’s was “high fiber” to the point of the term becoming colloquial, ubiquitous, and finally ambiguous due to over use/”burnout”. This is what happens when there is no-strategic basis behind extensions; and today the word “high fiber” is barely mentioned. Another short term “trend” and extension nightmare was in the beer industry: “dry beer”. Indeed, the product originating from Asia was seen in America as the “next big thing”, and beer leader Anheuser-Busch with its portfolio of Budweiser, Michelob, and Busch was more than willing to “bet the farm” on a completely unfamiliar taste trend from a world away. Hence, we saw the creation of Michelob Dry and then Bud Dry. Within a few years all AB Dry beers were history and the deletion of two well known extensions from two of the world’s largest beer brands all over everyone’s lips- although Anheuser believed it was done in “stealth” and no one would notice. Sure, near billion dollar brand deletions happen all the time and they can easily be swept under a carpet as if nothing happened. And if anyone believes that then they also believe that Supernovae make a small, inconspicuous explosion that has little effect- a little blip. The outcome to Bud and Michelob in terms of core brand damage, resource damage, brand equity loss, and consumer as well as marketing credibility was staggering and still not recovered from to this day in my opinion.

Most recently, the newest fad that with the help of the media became a trend for the short term is the “Low Carb” (low carbohydrate) diet which completely ignores the fact that the human body vitally needs carbohydrates to give us energy and help keep us alive. No doubt that the Low Carb diet trend will have a short lifespan. We can already see signs that this diet fad (in reality it should be only a fad) which has pretty much swept the nation is on its last lap before finally getting extinguished. It was great at first, as all media induced trends go, but then the problems came. First, long-time skeptics came forward with credible concerns, its founder died (and was claimed obese), test results showed followers having weight lost but health problems gained, and finally studies from prestigious medical sources from around the world blaming the diet on everything from birth defects, to cancer, to heart attacks, caused the halo of perfection to suddenly start to leave its head. From the start of the Low Carb trend, our firm stated that it was something to keep away from for any type of brand, and especially as a line extension for an existing well known one- at least until the jury came in concerning its health benefits and strategic analysis was done to determine all negatives and benefits brand-wise. As with any line extension, the dangers of “transference” of negativity from the extension to the core brand are very real and dangerous- and I and our staff have had such a feeling regarding the Low Carb diet.

Sadly, a brand that from the start had to be first in line with a Low Carb extension had to be Anheuser-Busch with Michelob- a brand that has been challenged over the last few years to say the least. Whether parent AB saw the Low Carb trend as a way to pump sales and some life into Michelob, or whether they really saw what they thought was a long-term new market arising, no one knows, but it could prove to be the brand’s undoing.

There are many news briefs and tidbits that AB proudly touts as the great success of “Michelob Ultra”- including news headlines like “greatest selling beer launch in history”, “fastest growing beer ever”, “most successful launch of a beer in history”, etc. However, behind these brave headlines is a much more dark reality: the success is only temporary at best, and the long term is bleak for Ultra and possibly Michelob and AB knows it. Indeed, from early on, even days after launch, there are accurate accounts of vendors, distributors, and even AB management noticing that something was wrong and questioning Ultra: regular Michelob sales were decreasing significantly (up to 50% almost immediately) which clearly demonstrates cannibalization, and the fact that Miller Light was almost as low in carbohydrates as Ultra. In fact, AB executives were stunned and openly wondering as to why Miller was not marketing its low carb benefit; they finally came to the arrogant guess that Miller had just dropped the ball. However, maybe Miller and its new South African parent were better marketers, strategic brand planners, and simply were just smarter- not wanting to gamble the fate of their brands to a “ trend or fad”. Maybe, Miller management were biding their time, and waiting for AB to make one of the biggest marketing blunders in beer and product management history- and then benefit from it.

As the news comes in from around the world on the negatives of the Low Carb diet, and the luster peels off of its gilding, the long term for the trend is very much in question. So much so that analysts are now asking “how much longer can it last?” The foundation at Michelob Ultra is starting to crack, significantly and very fast, as AB executives and planners now see the damage it has caused even beyond its core Michelob brand- all the way across the Brand Architecture to vital core brand Budweiser! In a recent speech at Webster University in St. Louis Missouri, Anheuser-Busch President Patrick Stokes publicly admitted that Michelob Ultra has very much had a negative effect on Budweiser Light sales- to the tune of 50% of its near 3 million barrel sales coming from Bud Light with no doubt more on the way! An incredible admission from AB’s leader, as to have a temporary “trend” brand such as Ultra remove a significant amount of clients from a cornerstone brand such as Bud Light (a long-term extension and pillar of AB) is akin to exchanging a good today for a lifetime. The admission very much tells us that AB’s marketers as strategic planners are clueless and warns shareholders of things to come. To have an extension such as Michelob Ultra be conceived of, let alone generated, without hypothesizing its consequences on brand architecture realities (as well as many other vital brand aspects) is simply unthinkable at AB’s level. To have Ultra’s negative effects reaching beyond an entire brand line and into the corporation’s largest core/key brand’s territory is simply a disaster. And, on top it, to have a short-term “fad brand” like Ultra remove customers from a long-term, stable brand such as Bud Light is quite frankly amazing.

The damage to AB? First, when Ultra falls (gets deleted) most likely in the next 16 to 30 months, Michelob will be like Budweiser with Bud Dry, losing vast numbers of customers as well as credibility in the marketplace. But, this is not the greatest problem coming AB’s way. Much more devastating is the reality currently happening with Bud Light getting damaged beyond repair. With 50% of its customer based “moved” to Ultra, where will they go when Ultra dies? Back to Bud Light? I don’t think so as remember Miller is wisely marketing its product as having half the carbs of Bud and better taste from Bud drinker taste tests. Ultra customers will scatter with many ending up in arch rival Miller’s stable. This brings us to another reality for Anheuser: Miller (and its new ownership) has possibly seen this happening and is attacking the very vulnerable Bud Light and Ultra with a vengeance. I predict that as Ultra starts to fail and so many of its customers “jump ship”, Miller will only heat up the warfare against wounded Bud Light to try and “take it out”, as well as stop Ultra’s customers from “going back” to where they came from (Bud Light) and increasingly try and draw them to Miller brands (already Low Carb beer). To make matters worse, AB out of desperation has even been indirectly undermining its Michelob Ultra beer with a nationwide series of Bud Light billboard ads, literally plastered on every street corner from New Jersey to San Francisco, claiming “All Beers Are Naturally Low in Carbs”. In other words, AB is using Bud Light of all brands to say: “Michelob Ultra is a sham as you get the same thing (Low Carbs) in any beer!”

The above situation for any brand marketer is as incredible as a new supernova explosion in real time is to a cosmologist (almost an impossibility): another AB brand action that has negative consequences across the architecture within months that may also result in the damage to, and possible collapse of, not one but 2 major brand(s). But, desperation forces desperate acts and with two major brands (one very short and one long term) on the hook, Anheuser-Busch, its market credibility, a large chunk of its consumer base, and its future are very much in desperation- and in question. Billions are at stake here, in a high stakes brand poker match where AB entered the game wrongly betting on a hand of low cards (or pardon the pun Carbs!).

There is no doubt knowing AB’s past that some “creative” solution will be tried as a last ditch attempt to “right” things using funny ads, talking animals, a new hip saying, or a combination of all, but there is no humor deep inside the boardroom at One Busch Place. Maybe wringing of hands at the visibility of the world’s largest brewery making such huge mistakes with key brands like Budweiser and Michelob with the results seeming so potentially disastrous. In our opinion, Ultra should never have been a Michelob extension in the first place for more than one reason. First, the fact that a “bad” extension can destroy a core brand is well known, and to base an extension on such a flimsy and short lived “fad/trend” as the Low Carb diet craze is simply reckless. Long before the time of launch (around the time of concept construct), AB should have seen the great debate and skepticism from the medical community over the use of the Low Carb diet that has been raised for years since its start. Secondly, Michelob is a “Super-Premium” beer, according to its positioning and the tens of millions spent on creating that position, and anything that means “less” of ingredients, calories, taste/flavor, richness, or even carbohydrates indicates “less than premium”. “Something is missing” or “taken out” does not indicate premium. As an example, marketing reduced carbohydrate Michelob (Ultra) is equivalent to proclaiming fat free Godiva chocolate: you are skimping on the ingredients. Hence, reduced carbohydrate Michelob Ultra helps to reposition the entire Michelob brand in the customer’s mind as a “watered-down” premium beer brand- less than Super Premium. Finally, in today’s modern world of brand marketing, no major global brand with a portfolio around it should be making decisions without considering their effect on a myriad of brand factors, aspects, and realities- especially brand architecture. To do so is simply careless. Michelob Ultra from the start could readily be seen as a beer that would attract a large female and active lifestyle customer base- exactly the same as for Budweiser Light. Hence, cannibalism and crossover were guaranteed from day one! And this is exactly what happened- with Bud Light (a long term key brand for AB) losing approximately half of its client base to short term/temporary Ultra. So why launch Ultra in the first place?

My feeling from the start was that if AB was going to cash in on the Low Carb craze, it should just have created an entirely new brand positioned far away from the core brands of Michelob and Budweiser. And it should not go head to head against either brand in terms of targeting, identity, price, lifestyle, attributes, brand promise, or messages. It may cost more, but the risks and damage would have been eliminated and AB would not be in the mess it is currently in. Even more uncertain is that AB may not be revealing the true extent of any other brand architecture damage Ultra may be causing to even Budweiser, itself, or a host of other brands in its portfolio- or the impact on long term brand functioning across the depth and breadth of its holdings. Even more scary is the possibility that AB may not know. Indeed, Anheuser-Busch may be playing with fire and not have an extinguisher big enough to put out the flames arising.

When it comes to line extensions, a smart brand does not count its carbs, instead it counts its core brands as vital assets and tries at all cost to understand both strategic and tactical decisions regarding them- and their implications (short and long term). Michelob Ultra may be the “Ultra Brand Mistake” of the century for a company that cannot make too many more brand- wise.

-STEFAN PAUL JAWORSKI, DIRECTOR, NORTH AMERICA STUDIOX-TEMPORAL GLOBAL BRAND CONSULTING www.sxtcbrand.com

Studio X-Temporal Global Brand Consulting is a Multinational Brand Consultancy that leads the marketing world in both practical application and ideation generation in brand management and strategy. Clients have included many of Asia’s and the World’s top brands of all sizes and across all segments such as Coca-Cola, Microsoft, Motorola, Panasonic, Apple, Budweiser, EXXON, TDK, Tsingtao Beer, Heineken, Malaysian Telecom, The Hard Rock Café, as well as governments such as New Zealand, China, the UK, and Malaysia. The firm is responsible for 11 industry- leading globally published books, as well as many highly regarded white papers, articles, and case studies appearing in prestigious publications from the Financial Times of London to the Multinational Business Review. The firm has offices across Asia, in the EU, Australia, and North America. www.studioxbranding.com

Reviews:

“Dear Stefan: Your Michelob Ultra article- I think it’s a great piece.” - Al Ries, Famed brand strategist, inventor of positioning, and author of best selling brand marketing books including The 22 Immutable Laws of Marketing, Positioning The Battle For Your Mind”, and The Fall Of Advertising And The Rise Of PR .

“Stefan- The article (Michelob Ultra) is great.” -Dr. Paul Temporal, One of the World’s top Brand Gurus- author of numerous books and strategist to many of the world’s top/leading brands, countries, and corporations.

Saying Goodbye to a Brand and Brand Strategy

 

Stefan Paul Jaworski with Al Ries

(July 15, 2004. St. Louis, MO) There was a time when a brand was a very special thing- seen as a measure of a good relationship with the customer and the world around it. A brand was something singular that was straightforward, and above all it was focused. The whole idea was to make a brand stand for something (usually wholesomeness, family, and quality) and stay very focused on one issue, facet, skill, promise, and /or offering as much as possible- and never stray. For instance, Kentucky Fried Chicken (not KFC) was about the Colonel and good southern fried chicken…and that’s it. Long before Wal-Mart, Sears stood for middle-American value, home products, and great seasonal sales. There were two, maybe three, types of toothpaste based on brand like Crest, Colgate, and Pepsident; and GM and Ford were all about affordable cars that were basic and clearly organized according to price segment and usage. Everything seemed to be focused for the first 5 or six decades of brands in America; and then all heck broke lose. Why? Mostly because America discovered the line extension and perfected its overuse- and nothing has ever been the same or as good since.

Extensions, strategically used, can be a very good thing to stretch a brand and make it more “well rounded” in usage, usefulness, and robustness to its consumers. For instance, potato chips vastly increased their market size by moving beyond the plain variety and introducing many different flavors from Salt & Vinegar to Barbeque to Smokey Bacon. But, sadly, many brands simply have gone overboard often creating extensions without strategic thought that do not leverage the brand wisely, but instead take away from the brand’s offerings, core values, position, and even identity. The result is “brand dilution” that has significant ramifications across every aspect of the brand including equity, sales, market share, brand-consumer relationship, identity, position, and even existence. Today, go into a Wal-Mart and one sees an unholy array of so many different kinds of toothpaste that it boggles the mind- and remember these are often of the same brand! Rule in the many different brands and their extensions, and you get literally dozens if not hundreds of types of fundamentally the same thing: a paste to help keep your teeth clean. Most are separated at best by minutiae- ambiguity at the least.

Especially conspicuous in the proliferation of non-strategically based extensions is the reality of “fads” and “trends”. For me a “fad” is a very short term, novelty creative expression (music, fashion, art, thought, style, etc.) that diffuses quickly throughout a very select part of the population; a “trend” is a mid-term (length) creative expression that diffuses throughout the more general population and usually takes longer to do so than a fad. Both are not permanent to any great extent.

Sadly, a reality in the modern brand world is that every time a fad or trend appears along comes another line extension to try and benefit from it. For instance, from the high fiber health/diet craze several years ago came extensions like cereals (most of which already had fiber) with now “extra fiber”, and breads with “more fiber”, and cookies and cakes with “extra fiber”, to finally laxatives with “more fiber”- often too much fiber and in usages that really offered little additional benefit. Indeed, every second word on television during the middle and late 19990’s was “high fiber” to the point of the term becoming colloquial, ubiquitous, and finally ambiguous due to over use/”burnout”. This is what happens when there is no-strategic basis behind extensions; and today the word “high fiber” is barely mentioned. Another short term “trend” and extension nightmare was in the beer industry: “dry beer”. Indeed, the product originating from Asia was seen in America as the “next big thing”, and beer leader Anheuser-Busch with its portfolio of Budweiser, Michelob, and Busch was more than willing to “bet the farm” on a completely unfamiliar taste trend from a world away. Hence, we saw the creation of Michelob Dry and then Bud Dry. Within a few years all AB Dry beers were history and the deletion of two well known extensions from two of the world’s largest beer brands all over everyone’s lips- although Anheuser believed it was done in “stealth” and no one would notice. Sure, near billion dollar brand deletions happen all the time and they can easily be swept under a carpet as if nothing happened. And if anyone believes that then they also believe that Supernovae make a small, inconspicuous explosion that has little effect- a little blip. The outcome to Bud and Michelob in terms of core brand damage, resource damage, brand equity loss, and consumer as well as marketing credibility was staggering and still not recovered from to this day in my opinion.

Most recently, the newest fad that with the help of the media became a trend for the short term is the “Low Carb” (low carbohydrate) diet which completely ignores the fact that the human body vitally needs carbohydrates to give us energy and help keep us alive. No doubt that the Low Carb diet trend will have a short lifespan. We can already see signs that this diet fad (in reality it should be only a fad) which has pretty much swept the nation is on its last lap before finally getting extinguished. It was great at first, as all media induced trends go, but then the problems came. First, long-time skeptics came forward with credible concerns, its founder died (and was claimed obese), test results showed followers having weight lost but health problems gained, and finally studies from prestigious medical sources from around the world blaming the diet on everything from birth defects, to cancer, to heart attacks, caused the halo of perfection to suddenly start to leave its head. From the start of the Low Carb trend, our firm stated that it was something to keep away from for any type of brand, and especially as a line extension for an existing well known one- at least until the jury came in concerning its health benefits and strategic analysis was done to determine all negatives and benefits brand-wise. As with any line extension, the dangers of “transference” of negativity from the extension to the core brand are very real and dangerous- and I and our staff have had such a feeling regarding the Low Carb diet.

Sadly, a brand that from the start had to be first in line with a Low Carb extension had to be Anheuser-Busch with Michelob- a brand that has been challenged over the last few years to say the least. Whether parent AB saw the Low Carb trend as a way to pump sales and some life into Michelob, or whether they really saw what they thought was a long-term new market arising, no one knows, but it could prove to be the brand’s undoing.

There are many news briefs and tidbits that AB proudly touts as the great success of “Michelob Ultra”- including news headlines like “greatest selling beer launch in history”, “fastest growing beer ever”, “most successful launch of a beer in history”, etc. However, behind these brave headlines is a much more dark reality: the success is only temporary at best, and the long term is bleak for Ultra and possibly Michelob and AB knows it. Indeed, from early on, even days after launch, there are accurate accounts of vendors, distributors, and even AB management noticing that something was wrong and questioning Ultra: regular Michelob sales were decreasing significantly (up to 50% almost immediately) which clearly demonstrates cannibalization, and the fact that Miller Light was almost as low in carbohydrates as Ultra. In fact, AB executives were stunned and openly wondering as to why Miller was not marketing its low carb benefit; they finally came to the arrogant guess that Miller had just dropped the ball. However, maybe Miller and its new South African parent were better marketers, strategic brand planners, and simply were just smarter- not wanting to gamble the fate of their brands to a “ trend or fad”. Maybe, Miller management were biding their time, and waiting for AB to make one of the biggest marketing blunders in beer and product management history- and then benefit from it.

As the news comes in from around the world on the negatives of the Low Carb diet, and the luster peels off of its gilding, the long term for the trend is very much in question. So much so that analysts are now asking “how much longer can it last?” The foundation at Michelob Ultra is starting to crack, significantly and very fast, as AB executives and planners now see the damage it has caused even beyond its core Michelob brand- all the way across the Brand Architecture to vital core brand Budweiser! In a recent speech at Webster University in St. Louis Missouri, Anheuser-Busch President Patrick Stokes publicly admitted that Michelob Ultra has very much had a negative effect on Budweiser Light sales- to the tune of 50% of its near 3 million barrel sales coming from Bud Light with no doubt more on the way! An incredible admission from AB’s leader, as to have a temporary “trend” brand such as Ultra remove a significant amount of clients from a cornerstone brand such as Bud Light (a long-term extension and pillar of AB) is akin to exchanging a good today for a lifetime. The admission very much tells us that AB’s marketers as strategic planners are clueless and warns shareholders of things to come. To have an extension such as Michelob Ultra be conceived of, let alone generated, without hypothesizing its consequences on brand architecture realities (as well as many other vital brand aspects) is simply unthinkable at AB’s level. To have Ultra’s negative effects reaching beyond an entire brand line and into the corporation’s largest core/key brand’s territory is simply a disaster. And, on top it, to have a short-term “fad brand” like Ultra remove customers from a long-term, stable brand such as Bud Light is quite frankly amazing.

The damage to AB? First, when Ultra falls (gets deleted) most likely in the next 16 to 30 months, Michelob will be like Budweiser with Bud Dry, losing vast numbers of customers as well as credibility in the marketplace. But, this is not the greatest problem coming AB’s way. Much more devastating is the reality currently happening with Bud Light getting damaged beyond repair. With 50% of its customer based “moved” to Ultra, where will they go when Ultra dies? Back to Bud Light? I don’t think so as remember Miller is wisely marketing its product as having half the carbs of Bud and better taste from Bud drinker taste tests. Ultra customers will scatter with many ending up in arch rival Miller’s stable. This brings us to another reality for Anheuser: Miller (and its new ownership) has possibly seen this happening and is attacking the very vulnerable Bud Light and Ultra with a vengeance. I predict that as Ultra starts to fail and so many of its customers “jump ship”, Miller will only heat up the warfare against wounded Bud Light to try and “take it out”, as well as stop Ultra’s customers from “going back” to where they came from (Bud Light) and increasingly try and draw them to Miller brands (already Low Carb beer). To make matters worse, AB out of desperation has even been indirectly undermining its Michelob Ultra beer with a nationwide series of Bud Light billboard ads, literally plastered on every street corner from New Jersey to San Francisco, claiming “All Beers Are Naturally Low in Carbs”. In other words, AB is using Bud Light of all brands to say: “Michelob Ultra is a sham as you get the same thing (Low Carbs) in any beer!”

The above situation for any brand marketer is as incredible as a new supernova explosion in real time is to a cosmologist (almost an impossibility): another AB brand action that has negative consequences across the architecture within months that may also result in the damage to, and possible collapse of, not one but 2 major brand(s). But, desperation forces desperate acts and with two major brands (one very short and one long term) on the hook, Anheuser-Busch, its market credibility, a large chunk of its consumer base, and its future are very much in desperation- and in question. Billions are at stake here, in a high stakes brand poker match where AB entered the game wrongly betting on a hand of low cards (or pardon the pun Carbs!).

There is no doubt knowing AB’s past that some “creative” solution will be tried as a last ditch attempt to “right” things using funny ads, talking animals, a new hip saying, or a combination of all, but there is no humor deep inside the boardroom at One Busch Place. Maybe wringing of hands at the visibility of the world’s largest brewery making such huge mistakes with key brands like Budweiser and Michelob with the results seeming so potentially disastrous. In our opinion, Ultra should never have been a Michelob extension in the first place for more than one reason. First, the fact that a “bad” extension can destroy a core brand is well known, and to base an extension on such a flimsy and short lived “fad/trend” as the Low Carb diet craze is simply reckless. Long before the time of launch (around the time of concept construct), AB should have seen the great debate and skepticism from the medical community over the use of the Low Carb diet that has been raised for years since its start. Secondly, Michelob is a “Super-Premium” beer, according to its positioning and the tens of millions spent on creating that position, and anything that means “less” of ingredients, calories, taste/flavor, richness, or even carbohydrates indicates “less than premium”. “Something is missing” or “taken out” does not indicate premium. As an example, marketing reduced carbohydrate Michelob (Ultra) is equivalent to proclaiming fat free Godiva chocolate: you are skimping on the ingredients. Hence, reduced carbohydrate Michelob Ultra helps to reposition the entire Michelob brand in the customer’s mind as a “watered-down” premium beer brand- less than Super Premium. Finally, in today’s modern world of brand marketing, no major global brand with a portfolio around it should be making decisions without considering their effect on a myriad of brand factors, aspects, and realities- especially brand architecture. To do so is simply careless. Michelob Ultra from the start could readily be seen as a beer that would attract a large female and active lifestyle customer base- exactly the same as for Budweiser Light. Hence, cannibalism and crossover were guaranteed from day one! And this is exactly what happened- with Bud Light (a long term key brand for AB) losing approximately half of its client base to short term/temporary Ultra. So why launch Ultra in the first place?

My feeling from the start was that if AB was going to cash in on the Low Carb craze, it should just have created an entirely new brand positioned far away from the core brands of Michelob and Budweiser. And it should not go head to head against either brand in terms of targeting, identity, price, lifestyle, attributes, brand promise, or messages. It may cost more, but the risks and damage would have been eliminated and AB would not be in the mess it is currently in. Even more uncertain is that AB may not be revealing the true extent of any other brand architecture damage Ultra may be causing to even Budweiser, itself, or a host of other brands in its portfolio- or the impact on long term brand functioning across the depth and breadth of its holdings. Even more scary is the possibility that AB may not know. Indeed, Anheuser-Busch may be playing with fire and not have an extinguisher big enough to put out the flames arising.

When it comes to line extensions, a smart brand does not count its carbs, instead it counts its core brands as vital assets and tries at all cost to understand both strategic and tactical decisions regarding them- and their implications (short and long term). Michelob Ultra may be the “Ultra Brand Mistake” of the century for a company that cannot make too many more brand- wise.

-STEFAN PAUL JAWORSKI, DIRECTOR, NORTH AMERICA STUDIOX-TEMPORAL GLOBAL BRAND CONSULTING www.sxtcbrand.com

Studio X-Temporal Global Brand Consulting is a Multinational Brand Consultancy that leads the marketing world in both practical application and ideation generation in brand management and strategy. Clients have included many of Asia’s and the World’s top brands of all sizes and across all segments such as Coca-Cola, Microsoft, Motorola, Panasonic, Apple, Budweiser, EXXON, TDK, Tsingtao Beer, Heineken, Malaysian Telecom, The Hard Rock Café, as well as governments such as New Zealand, China, the UK, and Malaysia. The firm is responsible for 11 industry- leading globally published books, as well as many highly regarded white papers, articles, and case studies appearing in prestigious publications from the Financial Times of London to the Multinational Business Review. The firm has offices across Asia, in the EU, Australia, and North America. www.studioxbranding.com

Reviews:

“Dear Stefan: Your Michelob Ultra article- I think it’s a great piece.” - Al Ries, Famed brand strategist, inventor of positioning, and author of best selling brand marketing books including The 22 Immutable Laws of Marketing, Positioning The Battle For Your Mind”, and The Fall Of Advertising And The Rise Of PR .

“Stefan- The article (Michelob Ultra) is great.” -Dr. Paul Temporal, One of the World’s top Brand Gurus- author of numerous books and strategist to many of the world’s top/leading brands, countries, and corporations.