Anheuser-Busch: Strategy for Continued Success Prepared by: Jeremy Snow and Adam Zubke May 14, 2012

History Originally founded as The Bavarian Brewery, 1852 in St. Louis Purchased by Eberhard Anheuser, 1860 Adolphus Busch (son-in-law) joined company, 1864 Original Budweiser created, 1876 – very popular, led to rapid growth Company renamed Anheuser-Busch, 1919 Sold yeast, refrigeration units, truck bodies, etc. during Prohibition, 1920’s & 30’s After Prohibition a case of Budweiser was delivered to Franklin Roosevelt by Clydesdale horses, 1933

History Cont. Owned St. Louis Cardinals baseball team, Became #1 U.S. brewer, 1957 Busch Entertainment Theme Park division, Participated in snack food business, 1980’s-1996 Introduced Budweiser into England and Japan through licensing, 1984 Increased holding in GRUPO MODELO (Corona, Negra Modela) to 50%, 1998 – focus on specialty beer sector Formed 50/50 joint venture in India, 2007

Acquisition Acquired by InBev (company formed by 2004 merger of Belgian and Brazilian brewing companies) for $52 billion, 2008 Created world’s largest brewer, Anheuser-Busch InBev (AB InBev) One of world’s top 5 consumer products companies Paying down debt from acquisition – Sold part of metal container business – Sold Busch Entertainment division – Job cuts in U.S., mainly at Anheuser-Busch HQ in St. Louis

Directional Strategies Mission: Winning with Consumers through Our Strong Brand Portfolio – Create enduring bonds – Sales and merchandising capabilities, preferred supplier partnerships with customers, consistently building equity of brands Vision: Winning at the Point of Connection – Volume growth in excess of market growth Brand strength Continued premiumization of brand portfolio Sales and marketing investment

Directional Strategies Cont. Values: – Open innovation policy on all levels – Strong company culture, investing in people and maintaining a strong target- related compensation structure – Best-in-class financial discipline spread throughout the whole organization Goal: Targeted External Growth – Selected acquisitions – Repeatedly demonstrate ability to successfully integrate acquisitions and drive revenue growth

External Environment - General Global Segment Sociocultural Segment

External Environment – Industry Specific Political/Legal Segment Competitive Segment

Service Area Primary service area: United States – 29% of global volume, 2011 – 42.6% of normalized EBITDA, North American region 2011 – AB InBev holds 47.7% market share in U.S., #1 Primary target demographic – Between ages of – 183,371,540 people in U.S. within target range, 2010 Census Brand groups – Global brands: Budweiser, Stella Artois, Beck’s – Local champions: Bud Light, Michelob Ultra – Craft beers, specialty malt beverages, energy drinks, waters

Competitor Analysis Three major players – AB InBev – SAB Miller – Molson Coors SAB Miller – 6 of top 50 beers in the world – Wide geographic reach – Relatively low U.S. market share – Limited liquidity position Molson Coors – 5th largest brewer by volume – Most revenue comes from U.S. and Canada – Formed joint venture with SAB Miller in 2007 (MillerCoors / Miller Brewing Company) direct attempt to compete better against AB InBev

Internal Environment Strengths – Market leader in volume and revenue – Brand recognition – Commitment to community outreach and green practices – Proven history of successful growth Weaknesses – Dependence on retailers and wholesalers – Large debt holdings due to various expansion activities Opportunities – Emerging market opportunities Threats – Price and availability of raw materials

Adaptive Strategy Market development – introduction of AB InBev products into Chinese market Portfolio diversification – acquisition of Chinese brewing company BCG Portfolio Analysis Product Life Cycle

Market Entry Strategy Licensing/internal venture – offer global AB InBev brands in Chinese market Acquisition – purchase of established Chinese brewer as addition to brand portfolio Why?

Strategic Posture Traditional markets (U.S. and Europe) – defender strategy – Enhance brand value – Identify and successfully serve niche markets A cquired Fulton Street Brewery/Goose Island, Midwest craft brewer, 2011 Emerging markets – prospector strategy – Growth trend exclusively in emerging markets – Successful record of entering new markets

Strategic Position Differentiation – “Continued premiumization of brand portfolio” – Ad campaigns and sponsorships – History and tradition of ‘premium’ status – 14 brands have reached ‘billion dollar brand’ status Focused position based on differentiation – craft beer and specialty segments increasing in popularity and variety – Focused on staying ahead of market trends

Questions?