Beer Goliath Anheuser-Busch Takes Steps to Tap Harder Stuff

Tourists on a recent walking tour of Anheuser-Busch’s brewery here passed by Clydesdale horses and giant fermentation vats before ending at the well-known finale -- free Budweiser on tap. But they got something extra at the bar -- free malt liquor shots.

The bartender said Anheuser-Busch Cos. was testing a new line of fruit-flavored shots to be mixed with beer. The drinks highlight a larger change for the nation’s biggest brewer, which is selling hard spirits along with its well-known brands of beer such as Budweiser and Bud Light.

“The loss of beer volume to wine and hard liquor has accelerated in recent years,” company President August Busch IV told an industry group this month.

“And if this trend continues, we at Anheuser-Busch will have to reevaluate our business model going forward in terms of expanding beyond beer and broadening our position within the total alcohol industry,” Busch told the National Conference of State Liquor Administrators, according to a transcript of the speech.

St. Louis-based Anheuser-Busch is simply trying to remain relevant with consumers who are constantly searching for interesting products, said Benj Stein, whose beer industry newsletter reported Busch’s comments.

“They’re looking at the future, a future where the consumer wants innovation and wants variety,” Stein said.

Anheuser-Busch changed its thinking after beer sales went flat in 2005, forcing the company into a price war with competitors such as Milwaukee-based Miller Brewing Co., said Patrick Schumann, an analyst with Edward Jones in St. Louis.

In November, Anheuser-Busch founded a subsidiary called Long Tail Libations Inc. to develop and market spirits. The venture’s first product is Jekyll & Hyde -- two bottles of different distilled liquors intended to be mixed into a single drink.

Schumann said beer would remain Anheuser-Busch’s mainstay, but hard drinks could provide some cushion if the beer market gets tougher.