Busch sales heady despite economic uncertainties

As premium beer consumption climbs, the brewer's profits have grown to record levels while other brewers have suffered.

By MARK ALBRIGHT, Times Staff Writer
© St. Petersburg Times
published April 24, 2003

ORLANDO -- A dissident shareholder's proposal that might have undermined the founding family's control over Anheuser-Busch Cos. was soundly thumped. The audience of 500 laughed as they savored the latest witty Budweiser and Bud Lite commercials. The most demanding inquiries came from two shareholders who strode to the microphone just to ask if Chairman August Busch III would pose for photos with them.

"Of course," said the scion of the beer making empire.

Later, shareholders wandered off for a free day and two free beers at Busch's Sea World Adventure Park, where the corporate pep rally was held.

So it went at the brewing giant's annual meeting. Despite war, recession and a shaky stock market, people have kept on drinking beer, and trading up to pricier premium brands. The trends helped push Anheuser-Busch to record sales and profits in 2002 and lifted the St. Louis company's stock while the rest of the market slumped.

Busch released first-quarter earnings Wednesday that proved the point. Net income rose to $485-million, or 57 cents a share, up from $456-million, or 51 cents a share, in the year-ago quarter. Revenues rose 4.6 percent to $3.28-billion.

"The demographics, a favorable pricing environment and continued plant closings by competitors show we are on target to continue 1 to 1.5 percent-a-year growth in beer volume and 12 percent growth in earnings per share," said August Busch IV, who is waiting in the wings as head of the company's domestic beer business.

It's been a good run for August Busch III. He doubled the company's beer share to 49 percent of the U.S. market. Budweiser remains the world's best-selling beer. Bud Lite last year surpassed Budweiser as the top-selling brew in the United States, and a new low-carb, high-profit brew called Michelob Ultra is exceeding expectations. Among imports, Corona is 40 percent of the market -- and Busch holds a 50 percent stake in its Mexican makers.

Fueling the company's optimism: the 21 to 27 age group is forecast to grow by 4-million prospective drinkers in the next decade. Last year, Busch was able to increase both prices and volume.

Although one of the company's nine theme parks provided the stage for the annual meeting, the Busch Entertainment Corp. subsidiary got only a few mentions during the 90-minute meeting.

Park attendance was flat at 20-million in 2002. But earnings were up 8 percent as Busch switched to a more conservative strategy for slower times after the terrorist attacks of 2001 depressed travel.

The parks are turning more to locals, who are lured to the turnstiles more frequently by deep discounts and cheap annual passes. Instead of pouring money into pricey blockbuster attractions, Busch is spending on fancier restaurants, more retail shops, events and facilities that get local residents back more frequently and get them to stay longer.

Sea World, for instance, opens a new five-acre, themed entertainment district called the Waterfront on May 24. It includes two cafeterias, one with a night-time Hawaiian luau show, a 200-seat bar with live entertainment, and a bevy of street performers. To get guests to stay until the 10 p.m. closing, the park will have nightly fireworks.

Busch is adding new attractions to its parks. A Haunted Lighthouse attraction, based on R.L. Stine's books for children, opens next month at Busch Gardens in Tampa. The ride will be reproduced at three other Busch parks.

The company's single big new attraction this year will be at Sea World San Diego. But it is a replica of the Journey to Altantis flume ride that has been at Sea World Orlando for several years.

One theme park investment Busch has no intention of making is in the recently closed Cypress Gardens in Winter Haven, which the company once owned.

August Busch III, who has a winter home in Lakeland, was asked if his company might make a bid to reopen the park.

"We sold Cypress Gardens to a very capable management team eight years ago," he said. "But we are not going back into a business that we know is not economically viable."

-- Mark Albright can be reached at albright@sptimes.com or (727) 893-8252.

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