Brand leading in a challenging market

box of mixed drinks

If her beauty doesn’t disarm you, with her short, cropped, dark hair evoking images of Audrey Hepburn in Sabrina, Valerie Toothman’s warm smile, infectious energy and friendly demeanor will. As she leans in to tell me about her promotion to vice president of innovation at Anheuser-Busch LLC., Toothman seems more like a friend sharing a secret than an executive boasting about her career.

While she may have the same inviting confidence as the movie starlet, Toothman, who holds a bachelor’s degree in biomedical engineering as well as her MBA in marketing, wields her sharp analytical mind to cut to the quick of business opportunities and challenges. She also doesn’t shy away from a challenging conversation. Our conversation, while cordial, starts with a discussion of the state of the beer market and its effects on the beer giant. AB InBev, which the St. Louis Post-Dispatch reported, in May 2015, experienced a drop in the U.S. market share for its Budweiser brand and overall revenue decline from $10.45 billion, down from $10.61 billion a year earlier. 

The industry challenge

“It’s probably no shock to anyone that beer is under attack, both within beer itself,” she remarks, “and then the wine and spirits industry is gaining some momentum with consumers.”

In Euromonitor’s July 2015 “Beer Report,” the research group noted that these market challenges are part of a larger shift in how Americans choose to spend their drinking dollars. Euromonitor reports that domestic mid-priced lagers and domestic economy lagers, presented total volume declines of 1% and 3%, respectively, in 2014. As a result, these combined domestic lagers lost total beer volume share, which declined from 69% in 2013 to 67% in 2014.

Researchers noted that AB InBev is still the largest U.S. beer manufacturer, accounting for a 45% share of total volume sales in 2014, and that two of the company’s brands—Bud Light and Budweiser—are among the top five beer brands in the U.S. Toothman credits Anheuser-Busch’s top position to an honest assessment and approach to the market. “Within beer, we were losing share,” she admits, “So we look to how to we continue to reinvent and grow our business by making sure we’re keeping our brands cool, relevant, interesting.

“We learned from our major competitors,” she adds. “As we saw some of those brands marrying up technical and consumer solutions with brand equity and seeing a lift, it spurred us to think differently about what we were doing and connecting to consumers in a 360 way.”

Making bolder choices

To do this, Anheuser-Busch is making bolder packaging choices, including using cutting edge technology such as Hewlett-Packard’s personalization software, HP SmartStream Mosaic.

“Drawing inspiration, even from brands like Coca-Cola, we looked at variable printing and the Bud Light brand,” Toothman recalls.

“Our project [with record label Mad Decent] is a huge testament to the tenacity and the new vision of the company and all the people within it,” Toothman says. “Not only are we the first beer to use this [the customization technology], we’re the first brand to do it in the U.S. Everybody, especially Gina Bazigian [innovations manager for Anheuser-Busch], the Bud Light team and the technical team, came together to challenge ourselves to do something new and it’s been an amazing experience.”

“We try to make sure that we’re dreaming big,” she remarks. “We’re making enormous investments in packaging, over $1.5 billion in the coming years. We ask, ‘What can we do that’s different and will impact the market in an enormous way, because we have the resources to do that. And we bet big and maybe we sometimes fail a bit, but if you’re not failing a little bit, you’re not really innovating.”

Bud Light Lime, Toothman explains, was one of the company’s most successful product launches. “When we launched this in 2007, it was an innovative segment,” she says. “Then the brand started to lose steam as a lot of new flavored beverages entered the market.”

Using what Toothman describes as the company mandate to look at what the brands are doing worldwide and “steal with pride,” the U.S. team explored how its Brazilian beer brand Skol was building buzz. “Skol Beats had drawn inspiration from Bud Light Platinum in using blue glass, but they had done the add-on of adding a great structure,” Toothman says. “What we did is we ‘stole back with pride’ an idea from them and also made an investment here in the U.S. to deliver the brand equity and that premium experience to the Bud Light Lime consumer.” The new bottle conveys the idea of the concept of natural with a no label look that uses embossed glass for the logo and the lime graphics, only sporting a paper necker at the top of the bottle, and a structural design that visually and tactically communicates the concepts of a twist. 

“We were in single-digit decline and closing in on double-digit decline in different points in the brand’s history, and now we’re up very close to double-digit growth for the brand,” Toothman says. “We’re super-excited about that ability to leverage our global scale to keep our brands appealing to the mass consumer in a more premium way. The turnaround we’ve seen with Bud Light Lime has encouraged us to be bolder about how we think about design, specifically design on primary.”

Innovation and invention

“In my mind, there’s no new thing to be innovated,” Toothman quips. “Yes, there’s invention. But innovation, at the end of the day, is usually bringing two ideas that otherwise haven’t been connected and connecting them in a way that creates new value in the world.

“Oculto is a very cool joint effort between the global team and the U.S. team,” she explains. The concept was derived from the successful European launch of a rum-flavored premium beer called Cubanisto, which is intended to be a celebratory drink for big nights out. “Cubanisto has beautiful graphic design—very impactful,” Toothman says. “But Cubanisto is a name that doesn’t work here in the U.S.”

With its new approach to packaging that goes beyond graphics, Anheuser-Busch looked at the whole brand experience from name, graphics and even the package’s tactile feel. “We created Oculto to resonate with people in the nightlife occasion,” she says. “When you want to feel a little risqué, having something to play with your hands is important.”

The bottle neck sports pronounced ribs, and the entire package has a variety of hidden delights. “A tactile feel on the label,” Toothman exclaims. “Back-label printing for the [graphic of the] eyes that’s also thermochromic. When the beer is cold, you see the whites of the eyes. When it’s warm, you don’t. When you drink it down, there’s a hidden message. Variable messaging printed in yellow on the back label that you can’t see when the bottle’s full.

“It was a huge feat for the team to bring Oculto to market quickly,” she adds, “but it’s paid dividends in the fact that people are remarking in social media, ‘I tried it because of the bottle, but I love the drink.’ So package can absolutely drive trial. Hopefully, it also creates that round consumer experience that brings them back. As category captains, AB is almost half of the industry [the company owns several craft brew brands in addition to flagship brands around the world], we need to be good stewards of what that shelf looks and feels like and how it appears and appeals to consumers.”

Is it really a man’s world?

“People think about beer as being very male-dominated,” Toothman remarks. “The reality is, especially with millennials, females are punching above their weight in driving alcohol choice in co-ed social situations. Female consumers still are 40% of the overall beer volume. Understanding the psyche of the female beer consumer is important, and one of the burdens of a female in this industry.

“The package design for our Lime-A-Rita and Straw-Ber-Rita products is still a story waiting to be told, ‘Will it work or will this not work,’” Toothman remarks, “For us women, a 25-oz can is often an awkward package. It doesn’t feel appropriate for sharing with girlfriends on a night out.”

Lime-A-Rita is relaunched in an 8-oz Rexam Sleek can, which encourages consumers to pour the flavored malt beverage over ice. “This project holds a special place in my heart because it not only was amazing and transformed and shaped the industry, but also because it was born out of two failures in a very similar space. When Lime-A-Rita launched, it was a good idea that didn’t have the execution behind it. But we brought back those liquids, learned from that failure and leveraged a trend that was happening elsewhere in the industry [beer over ice].”

Toothman’s proudest personal achievement is all about heart. “One of the things, I’m most personally proud of is a 14-year marriage to an amazing man who I’ve been able to partner with all the way, who continues to push me and support me at what I do at my job, which is very time-intensive,” she says. “Finding that balance, which there’s never an exact balance: You got to give here and give there at different points in time. But cultivating and maintaining that relationship, in spite of everything I’ve been able to do here, gives me a sense of personal accomplishment.

“It’s been important to me to keep the love of him and my family,” she adds. Although Toothman concedes that work is indeed important and she isn’t truly able to turn off as an innovator, she opines, “When you get to this point in your career, it can’t be all about the work because certainly who would I drink a beer with?”