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The Spokesman-Review Newspaper
Spokane, Washington  Est. May 19, 1883

Anheuser-Busch takes hard look at hard liquor


Anheuser Busch's new aluminum bottles and Peels, their new natural fruit flavored malt liquors, are on display at the Food Marketing Institute show last month in Chicago.  
 (Associated Press / The Spokesman-Review)
Associated Press The Spokesman-Review

ST. LOUIS — Tourists on a recent walking tour of Anheuser-Busch’s brewery 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 liquor shots.

The bartender said Anheuser-Busch Cos. Inc. was testing out a new line of fruit-flavored liqueurs 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 golden Pilsners like 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 a liquor industry group earlier 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.

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

“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 like 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 that are intended to be mixed into a single drink.

Last summer, Anheuser-Busch released “Tilt,” a raspberry-flavored malt beverage with caffeine and herbal additives like ginseng. The drink has an alcohol content ranging from 4 percent to 6.6 percent, depending on state laws.

Schumann said future expansion into hard liquor will likely be done through partnerships with other distillers instead of Anheuser-Busch making its own drinks. This would let the brewer cash in on growing liquor sales while avoiding the risk of sinking investment into new infrastructure, Schumann said.