Why A Run On Beer In Russia is Good for Budweiser

BY ADAM GROSSMAN

It is never a good thing to run out of beer. To run out of beer during the world’s largest sporting event seems to be a particularly big “problem.” However, that appears to be exactly what is happening in Russia during the 2018 World Cup. As Reuters recently reported, “Beer-guzzling fans risk drinking parts of Moscow dry, with some bars and restaurants in the Russian capital saying they are running low and having to wait longer than usual for fresh supplies.”

This increase in beer consumption during the World Cup appears to be a surprise. Beer sales had declined in Russia for the past decade and none of the major beer companies expected a significant reversal of this trend.

So why is supply not keeping up with the demand and why is this potentially good news for the World Cup’s official sponsor Anheuser-Busch InBev? One answer could come from research from the journal Marketing Science that we featured in past blog post about the effectiveness of Super Bowl television ads. The authors completed a multi-year study focused on Budweiser (and Pepsi) and found that there was an increase in sales before and during the Super Bowl in part because customers associated consuming the products of these companies with sporting events. It was also critical that Budweiser and Pepsi were the only official partners in their category during the Super Bowl to see those increases in sales.

The same thing seems to be happening in Russia. Potential increases in beer sales means that there is a good possibility that there is disproportionate increase in Budweiser sales during the World Cup because it is the only official FIFA partner for beer. While Anheuser-Busch “did not immediately respond to requests for comment” about beer sales, Heineken stated, “sales were so far going well and it did not yet see any challenges supplying its beer.”

Another benefit for Budweiser is that these sales increases could continue around sporting events after The World Cup. The Marketing Science authors saw spikes in sales for Budweiser (and Pepsi) throughout the year but really only around sporting events that occurred after the Super Bowl. Budweiser may be in a similar position to see these spikes for other sports after the World Cup.

To be clear, the evidence here does not mean that Budweiser will automatically see a positive ROI for its FIFA partnership. However, the early evidence suggests that could be the case even though the World Cup is being played in a country not known for its beer sales and that had actually seen beer sales decline in recent years.