Anheuser-Busch: Innovating Beer Through Crowd Sourcing
Anheuser-Busch InBev (AB InBev) is the world’s largest brewer and commands approximately 25% market share of global beer consumption. AB InBev employs over 150,000 people across the globe and has a portfolio of 200 brands (primarily beer). Despite its large workforce, well capitalized innovation group, and diverse portfolio of beers, AB InBev turned to the masses to help create a new beer.
Several years ago, AB-InBev noticed an increasing trend toward craft beers. As consumer tastes changed, AB-InBev knew it had to change its offering. AB-InBev was faced with a decision: acquire a smaller, established craft brewery or develop its own craft beer. In the past, AB-InBev had grown through acquisition, but this time it made a different decision.
Leveraging and Incenting the Crowd
AB-InBev combined a competition between brewmasters with consumer-tastings to develop a new craft beer. The project had over 25,000 participants and it resulted in the creation of the golden-amber lager “Black Crown.” According to AB-InBev’s CMO, the company was initially concerned about the level of participation the project would create. Why would brewmasters create a beer for a different brewery, without pay? Would consumers be willing to try untested beers with unknown tastes?
Their concerns, however, were quickly alleviated by the overwhelming response. Brewmasters and consumers flocked to the various locations to provide recipes, suggestions, and feedback. Ultimately, “being part of developing a new product” for a company like AB-InBev was all the incentive individuals needed to participate. Some brewmasters suggested being able to tell their customers that they helped create an AB-InBev product was the reason they participated. Others noted a sense of pride they got and were honored that AB-InBev even asked for their help.
Creating and Capturing Value
For AB-InBev, the primary benefits were two-fold: 1) it created a new “craft” beer to capture value from the growing demand in that category, and 2) it allowed the company to show the broader beer community that they still cared about and listened to consumers – an image issue they had been struggling with for some time. The action of including others helped boost AB-InBev’s reputation amongst many of its consumers…even those who did not actually participate in the competition.
Outside of creating a new “craft” beer, the value AB-InBev created for its customers is less apparent. Some would argue that the new beer alone is enough value add; however if the beer ended up being a failure, then this experiment would likely have created limited value for the broader beer community.
Results and Potential for Future Crowd Sourcing Initiatives
The results were mixed. Black Crown was less of a success then AB-InBev hoped for. While the beer itself got positive reviews, competition from other craft breweries significantly increased since this time. Nevertheless, the crowdsourcing initiative did provide value to the company as its reputation improved.
AB-InBev has also leveraged the crowdsourcing model in other ways, such as its new video-production company that uses over 35,000 videographers from around the world. Other food and beverage companies, too, have launched similar crowd-sourced product development campaigns, including: Lays, Ben and Jerry’s, and Mountain Dew. It will be interesting to see if AB-InBev turns to this model again for future product development.
Student comments on Anheuser-Busch: Innovating Beer Through Crowd Sourcing
This is a great post. The role of crowd sourcing in a company’s product development cycle is a great way to implement the technique, however its success hugely depends on the companies agility and ability to implement it. AB-InBev used existing recipes from small breweries to help streamline this process, but I wonder how this would work when a customer without training gives suggestions and feedback.
This was a really interesting initiative. I actually got to taste several early test versions of Black Crown through a friend who was an engineer at AB during the competition. I think there are a number of factors that make a beer a commercial success, but based on the outcome of Black Crown I’m not sure that the crowdsourcing selling point translates into commercial success particularly well. The failure could simply be indicative of AB’s inability to compete in the craft beer segment though, and I think positioned differently a crowdsourced beer actually could’ve been more successful and create value for consumers considerably beyond the messaging of “we care about our customers”.
I agree that this is an interesting initiative. Especially peculiar that the AB-InBev didn’t have to monetarily incentivize the brewers or the testers. Similar competitions, such as the “Lays Do Us a Flavor” campaign, in which customers submit ideas for the next Lays chip, offered a $1mm prize to the winner. It’s possible that craft beer is such a passion for certain people that they chose to participate. I wonder if such a strategy would incentivize participation for other projects. Furthermore, is this even the best way to create new projects? It seems that Crown hasn’t been doing very well, and that the copmany hasn’t really focused on it since 2013.
I think this initiative is not well aligned with the overall strategy and vision of the company, as well as the nature of the craft beer market. AB is a global company pursuing large scale product rollouts. The craft beer market is the complete opposite, local, and small in size. I guess, the reason why they did not succeed is because of that, not the crowdsourcing (which seemed to work quite well)…
As mentioned in the post, despite not having resulted in a new hit product, this crowd sourced competition did appear to have a positive impact on AB Inbev’s reputation, given the significant level of participation and media buzz surrounding the campaign. As seen in other examples (Lays, Dominos, Ben & Jerry’s), crowdsourcing for consumer goods companies does not have to just be about identifying new products and can instead serve as a very low-cost form of marketing as you can let your customers / partners do the work themselves by sharing and promoting their ideas via social media. Obviously, you need to make sure the focus of the crowdscouring is aligned with your brand identity (which Craft beer may not have been for AB)..and there are also the inherent risks in using crowdscouring as a marketing platform (letting go of some control over your brand).
Thanks for the post Drew. I think that the problem with testing consumer products through crowdsourcing campaigns is a risky way to introduce new products to the market, as the sample size of people who actually tried this product is a small fraction of beer consumers, which would result in a result that is not representative of the actual market preferences. To have more relevant data points, the company should try to involve beer enthusiasts who actually truly understand beer and have different taste profiles, which would result in varying viewpoints that could lead to outcomes that are more relevant for the company. I think the best way to do this is by testing the taste profiles of people who are interested, and having various beer tasting tests to ensure that people can tell the different between their favorite beers. This way, the company would ensure that people that are affecting the results of their campaign actually truly understand beer and can add value to the outcomes being provided. I am not sure that this would create a better product, but it would be slightly better than bringing in a random set of people who might not be able to tell the difference between different beers and understand what they like/ dislike about a beer vs another. The only challenge with this is getting people involved in a campaign that is more time consuming that a random tasting, and might require providing different incentives, such as money or adding names of people who contributed to the product description, which could bring a lot of pride to beer enthusiasts.