In an era when many beer drinkers are looking for the newest, hoppiest or most local brew, it is surprising that a light beer that has been around for nearly 15 years has emerged as one of the fastest growing brands in the business.
Michelob Ultra, long known for its low calorie, low carbohydrate composition, is shaping up to be a bright spot for Anheuser-Busch InBev.
Michelob Ultra sales rose 17 percent in the year ended May 17 from the same period a year ago, according to Chicago-based market researcher IRI's multi-outlet and convenience store data.
While many craft brands are also putting up double-digit growth, the achievement is more remarkable when you consider Ultra's size and scale. It also comes in an era when Anheuser-Busch's flagship brands of Budweiser and Bud Light are struggling to retain their audience.
"It's unusual. We don't see a lot of big brands growing at this pace, and it's priced at a premium to other premium lights," said Edison Yu, vice president marketing, value & premium light brands at Anheuser-Busch InBev. "Usually when you're big and expensive, it's harder to grow."
Yu added that the billion-dollar brand is also growing in absolute volume year-over-year faster than any brand in the U.S.
Michelob Ultra's rebirth is the latest transition for a brand that has continually evolved over the years. Ultra made its national debut in 2002, when the low-carb Atkins diet was in full swing and the brand promoted itself with a tagline of "Lose the carbs. Not the taste."
Later, the brand would become known for promoting itself as the beer of choice for the serious athlete—a chapter in its history defined by its sponsorship agreement with cyclist Lance Armstrong.
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"In the past, Ultra had a strong association with competitive athletes and competitive sports," Yu explained. The company noticed that "while that was very relevant to a small set of consumers, most beer drinkers workout not because they want to win championships but because they want to be healthy and they care about their well being."
In turn, the company worked to broaden Ultra's appeal by tweaking its promotional focus toward the more active consumer, but with a more social and less intense feel.
"Health and well being is a very strong trend in the U.S. and consumers care about what they drink and what they eat," said Yu. "They want things that are better for them without sacrificing taste." While the pitch may sound like an attempt to appeal to the ever-changing tastes of the millennial consumer, that's not the case, said Yu.
"There are a lot of beers that target themselves to millennials. We don't," said Yu. "We target people that are a little more mature, more educated, with a higher income. That's a segment of the population that is growing, actually, so that's a trend that is in our favor."
With Ultra on a hot streak, Anheuser-Busch is looking to capture the moment.
"We're stepping up our [promotional] investment," said Yu. "We had plans to go extremely strong in the summer, and because of the performance we've seen so far, we've decided to extend the investment though the end of they year."