AB InBev, the global brewery that owns many of the world’s most famous beer brands, has decided that it will keep that name even after it purchases SABMiller.
Is that a good idea? My answer: It doesn’t matter.
Brand naming is an important process in gaining preference but, in this case, the name AB InBev is only as important to its beer brands as P&G is to its products. That is, consumers don’t even know the parent brand name and preference, if there is any, comes from the individual beer brands themselves.
AB InBev owns Budweiser, Corona, Stella Artois and many others, and you’d be hard pressed to find drinkers of those beers who know the name AB InBev. It’s the same thing with SABMiller. Consumers know all the Miller beers, plus Henry Weinhard and Fosters. But SABMiller? Not a chance.
The AB InBev brand structure is not for everybody.
It should be noted, however, that this is a very inefficient way to build a brand. For one thing, it’s extremely costly. Being a house of brands means you have to invest in each product like it is its own entity. There’s no relationship between, let’s say, Budweiser and Corona. They each have their own unique brands that have to create preference by themselves.
Most companies do not have the cash to do that. If you are a medical device company, for instance, giving each of your products its own unique brand name – instead of a descriptive one – means your parent brand does little to affect market share. Without the cash of a P&G, you don’t even create preference for those products.
Yet, it’s a parent brand that presents the easier path to preference. P&G has put some effort into highlighting the parent brand but it’s being half pregnant. The P&G brand, whatever it means, doesn’t really help Tide or Febreze.
It’s important for CEOs to remember that, if you have a powerful umbrella brand, then the success of one product lifts the preference of the rest.
So, is AB InBev keeping its name a good thing? It won’t matter until it invests in the parent brand.