Earlier today, the Justice Department took a bold stand on behalf America's broke college kids, dive bar urchins, and other cheap beer aficionados when it filed suit to halt global brewing giant Anheuser-Busch InBev's purchase of Corona-maker Grupo Modelo. The suit argues that gobbling up its Mexican competition would leave InBev essentially free to jack up prices on customers. But there'll be time to talk about the legal stuff later. For the moment, I'd like to point your way to a fascinating segment of the government's filing, wherein it explains InBev's hierarchy of brews. It turns out we live in a world where Bud Light Lime-a-Rita is actually considered a higher quality beer than Budweiser itself. At least, it is in some corporate board room.
ABI groups beer into four segments: sub-premium, premium, premium plus, and highend. The sub-premium segment, also referred to as the value segment, generally consists of lager beers, such as Natural and Keystone branded beer, and some ales and malt liquors, which are priced lower than premium beers, made from less expensive ingredients and are generally perceived as being of lower quality than premium beers. The premium segment generally consists of medium-priced American lager beers, such as ABI's Budweiser, and the Miller and Coors brand families, including the "light" varieties. The premium plus segment consists largely of American beers that are priced somewhat higher than premium beers, made from more expensive ingredients and are generally perceived to be of superior quality. Examples of beers in the premium plus category include Bud Light Lime, Bud Light Platinum, Bud Light Lime-a-Rita and Michelob Ultra.
The high-end category includes craft beers, which are often produced in small-scale breweries, and imported beers...ABI also owns high-end beers including Stella Artois and Goose Island.
So to simplify, in InBev land: Natty Light < Budweiser < Bud Light Lime-a-Rita < Goose Island. To be fair, it is an 8 percent alcohol-by-volume drink that's sold as a "malt beverage" -- think Smirnoff Ice -- instead of straight beer. At the time of its roll out last march, a Bud Light VP explained: "This is our take on the traditional margarita. Beer drinkers were already mixing Bud Light Lime into margaritas to create 'beer ritas'; Lime-a-Rita just adds a new level of convenience...."
It also seems to be successfully retailing at a higher price point than traditional lagers like Bud Light and Budweiser, and from corporate's perspective, that's the most important part at all. So next time you wonder why a brewer is rolling out some weird, sort of kitschy looking malt concoction that screams 11th-grade house party, remember: They're doing it because they're more profitable than the stuff you actually think of as beer.
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