Barley: The soul of beer.

There are two basic types of barley malt used in brewing beer – two-row, which produces a smooth, mild-taste, and six-row, which produces a crisp flavor.

fresh .

fresh ideasContinued Competitive Advantages in a Challenging Industry EnvironmentIn 2004, Anheuser-Busch increased its U.S.beer volume to an all-time high – 103 millionbarrels, more than 2.5 times the volume of thesecond-largest U.S. brewer. Domestic marketshare was 49.6 percent in 2004, and Bud Light,the No. 1 brand in the United States, grew by1.5 million barrels. Bud Light maintained a 2-to-1 lead over the No. 2 light beer and rackedup its 21st consecutive year of growth.

Combined, Bud Light and Michelob ULTRA grewby 2.7million barrels, and Anheuser-Busch increasedits share of the light beer market to 41.6 percent in2004. In 2005, the company also won USA Today’sSuper Bowl Ad Meter for the seventh straightyear and captured two of the top five slots.

Anheuser-Busch’s revenue per barrel, a key financialmeasure, increased by 2.5 percent in 2004. Thissixth consecutive year of 2.5 percent or highergrowth in revenue per barrel reflects a continuinglyfavorable industry pricing environment.

To meet beer industry challenges, Anheuser-Busch hasembarked on a course to generate growth by enhancing the

image of beer through new packaging, newproducts, and new marketing initiatives. Thecompany plans to give adult consumers newand exciting product choices that challengethe established perceptions of beer. In short,Anheuser-Busch is trying to add excitement to thebeer industry and expand it over the long term.

Fresh ProductsConsumers have changing tastes, and Anheuser-Busch aims to satisfy their preferences byintroducing a variety of new products designedto target a wide range of traditional and non-traditional adult consumers. New productsintroduced into test markets in 2004 includedBE and Budweiser Select. As a result of strongsales and consumer acceptance, the companylaunched these brands nationally in 2005.In 2004, Anheuser-Busch also introduced twonew Bacardi Silver low-carb line extensions:Low Carb Black Cherry and Low Carb GreenApple. These brands were the first low-carbflavored malt beverages in the marketplace.

As the industry leader, Anheuser-Busch was the first majorbrewer to infuse beer with caffeine, guarana and ginseng.BE, a distinctive new product for contemporary adults, is well

domestic beer operations

9 _ 2004 Annual Report

Domestic Beer

volume

02 03 04

�mil l ions of barrels

102.6

103.0

101.8

Domestic Beer

pretax profit

02 03 04

�mil l ions of dol lars

$3,118.7

$3,279.4

$2,919.2

Fresh ideas were generated in every department at Anheuser-Busch in 2004. By thinking fresh about the industry andthe competition, the company has positioned itself for 2005.

Following Prohibition, Budweiser was reintroduced andmade available in cans. Also at this time, the first non-returnable bottles were used. The Bud Jr. 7-ounce bottlewas introduced in the 1950s followed by the introductionof the Hi-Cone plastic wrap carrier for cans in the 1960s.Twist-off crowns that don’t require a bottle opener werealso introduced in the 1960s, and the end of that decadesaw the first pull tabs for cans. Just a decade later, Budweiserwas being packaged in nondetachable tab-top cans.

Today, Anheuser-Busch is taking a fresh approach topackaging with the introduction of applied plastic labelson all Bud Light bottles. This marketing initiative, whichenhances the premium image for the brand, has beenenthusiastically received by consumers. Rollout of the newBud Light labels began in 2004 and should be completein early 2005. Budweiser Select will also have an appliedplastic label featuring the Budweiser crown icon.

Another exciting package is the 16-ounce aluminumbottle. The new look, announced in 2004, is targeted forBudweiser, Michelob, Michelob Light, and Anheuser

World Select. The sleek new packaging is beingused in high-end restaurants and bars togenerate awareness among contemporary adults

and retailers.

The Budweiser brand will also give consumers ahands-on feel for the long-standing heritage ofthe brand. In 2005, the brand will introducea limited-edition series of three vintage/retrocans. The first is a replica of the original canproduced in 1936, the second is from the1950s, and the third is from the 1960s.

domestic beer operations

Fresh new products were a key part of Anheuser-Busch’sstrategy in 2004. In 2005, expect to see some of thesebrands move from test market to national distribution.balanced with select hops and the aromas of blackberry, raspberryand cherry. BE is designed to appeal to those contemporaryadults who are looking for beer with something extra.

The newest member of the Budweiser family, BudweiserSelect, is a premium American-style lager with a crisptaste and a clean finish. Budweiser Select has 3.1 gramsof carbohydrates and 99 calories per 12-ounce serving.It continues the tradition of quality and great tasteassociated with the King of Beers and is brewed withtwo-row and roasted specialty malts for a rich color.

The company’s two new Bacardi Silver products, BacardiSilver Low Carb Black Cherry and Bacardi Silver Low CarbGreen Apple, have the lowest carbohydrates and calories ofany flavored malt beverage in the industry. These newpremium malt beverages complement the existing line:Bacardi Silver, Bacardi Silver O3, Bacardi Silver Raz, andBacardi Silver Limón.

Innovative PackagingAnheuser-Busch has a long history of thinking fresh aboutits packaging. In the early 1870s, Anheuser-Buschbecame the first U.S. brewer to use pasteurizationin packaging its beer. During this time, thecompany also put its trademark A&Eagle on itsbeer packaging and developed a paper label toreplace embossed labels.

In the late 1800s, the company acquired itsfirst glass company, and other packagingacquisitions followed. In 1901, Anheuser-Buschbegan capping its beer bottles, instead of usingcostly and unreliable corks.

Anheuser-Busch Companies, Inc. _ 10

Competitive Advantages Stronger and More Important Than EverIn 2004, Anheuser-Busch was – once again – the undisputedleader of the U.S. beer industry, with 49.6 percent of themarket. Being the industry leader for more than 45 years hasallowed the company to develop strong competitive advantages.

One key advantage Anheuser-Busch has over competitiveU.S. brewers is its system of 12 breweries strategically locatedacross the country. This network not only reduces freightcosts, but also gives the company a second competitiveadvantage: the freshest beer of any major brewer. On average,Anheuser-Busch beers are 14 days fresher than thenearest competitor’s. This has led to one of the mostsuccessful consumer campaigns in the domestic beerindustry: Day Fresh Beer, beer that has been packagedand delivered for consumption on its born-on date.

A key part of Anheuser-Busch’s marketing efforts in2004 and beyond will focus on the company’sfreshness initiative. Last year, more than 5 million adultbeer drinkers tasted day-fresh Budweiser and BudLight during freshness promotions. One key event

was on Sept. 9, when Anheuser-Busch delivered Day FreshBudweiser and Bud Light to 200 cities across the UnitedStates to kick off the NFL season.

No one can match Anheuser-Busch’s product freshness andconsistency. This is a tremendous competitive advantage in thebeer industry in both the on- and off-premise marketplace.The company will continue to leverage this advantage bycommunicating the fact that fresh beer truly tastes better. Beerthat isn’t fresh tastes stale, and it has a strong aftertaste. Thehallmark of Anheuser-Busch beers are their drinkability.

Bringing America’s adults Day Fresh Beer would not bepossible without the dedication of Anheuser-Busch’swholesalers, another competitive advantage. With 69percent of Anheuser-Busch volume going through

exclusive wholesalers, Anheuser-Busch has apowerful strategic advantage that other brewerscannot come close to matching. This system,combined with additional resources the company isdevoting to the on-premise market, gives Anheuser-Busch a powerful team prepared to address on-premise challenges and to pursue new opportunities.

Dale Earnhardt Jr., who drives the #8 Budweiser Chevrolet in the NASCAR NEXTEL Cup Series, won the Daytona 500 in 2004.The Budweiser 8-pack was introduced in limited distribution in October 2004. It will be available in all race markets in 2005.

11 _ 2004 Annual Report

How to pour yourbeer properly.Step 1: Crack open a fresh, crisp Budweiser.

Step 2:Pour directly down the center of the glass to produce a collar offoam, which will release the properamount of carbonation.

Step 3:Enjoy the best-tasting, freshest beer available.

fresh .

Anheuser-Busch has supported about 400 community-based and national Latino organizations and special eventswith contributions of more than $45 million over the pasttwo decades. The company focuses on values that areimportant to Latinos, such as education, leadership

development, economic empowerment, public advocacy,and the arts and culture. In the last 22 years, the companyhas helped raise more than $22 million to provide morethan 18,000 college scholarships to deserving Latinos.

In the African-American market, the company’s Budweiserand Bud Light brands combined have more than 30

percent market share. Plans for this market include sports,music, and lifestyle advertising and sponsorships.

For more than a decade, Anheuser-Busch has supported thecountry’s largest annual African-American music celebration,the Budweiser Essence Music Festival. The Bud Light Loungeenlists the hottest urban and hip-hop artists to host privateparties for adult consumers in various markets. BothBudweiser and Bud Light sponsor First Fridays, the largestgatherings of African-American professionals in the UnitedStates that take place on the first Friday of each month.

Challenges Provide Fresh OpportunitiesAs always, Anheuser-Busch continues to look for fresh waysof doing business. The company will address off-premiseneeds through its Seamless Selling initiative and pursuecost reductions through the Brewery of the Future program.

Seamless Selling is an excellent example of Anheuser-Buschinnovation. By working with its wholesaler team, Anheuser-Busch is meeting the growing needs of its chain customers.Seamless Selling offers all retail customers greater valuethrough improved inventory management, data-basedselling, electronic transactions and more effective account-level planning and service.

Anheuser-Busch will continue to reduce costs throughBrewery of the Future, as it has since the program wasinstituted in 2002. This initiative is raising the efficiency andeffectiveness of overall brewing operations. For 2005,Anheuser-Busch plans to continue to maintain the high levelof quality and consistency that is a hallmark of all its brands.

In 2004, Anheuser-Busch met with its wholesalers to discussnew objectives and standards for on-premise marketing.These standards include an increase in on-premise sales callvisits and marketing activities, while maintaining a steadfastfocus on draught beer service and product quality.

The company also announced plans to fund newmarketing efforts on-premise. This initiative willinclude adding staff in key markets where on-premiseopportunities have been identified.

Further plans call for adding excitement to the company’sbrands through increased product sampling and moresupport for on-premise chain customers. This process hasalready begun in select casual dining chains.

To think fresh means to look at the marketplace differently.For Anheuser-Busch, the process began when the companystarted looking at its sales force differently. The changes toits on-premise sales force will address improved retailer service,help enhance the image of beer, and position Anheuser-Busch’sportfolio of brands as the perfect beverages for all occasions.

Fresh Marketing and SponsorshipsWhile Anheuser-Busch continued its mainstream marketingprograms in 2004, the company also mapped out plans torevitalize its ethnic marketing programs. Anheuser-Busch hasdeveloped a fresh approach to enhancing its ethnic marketleadership. For the Latino market, where Budweiser and BudLight combined have more than 40 percent market share, thecompany’s marketing plan includes television, outdoor andprint advertising, and music and sports sponsorships.

Noche de Pasion combined the hottest local and national Latinmusic acts with 3-on-3 soccer in 2004. For 2005, Esta NocheToca, a Latin version of Budweiser’s 1 Night Stand concertseries, will feature artists such as Latin Grammy-winner Bacilosin intimate settings. In addition, Anheuser-Busch’s Budweiserand Bud Light brands sponsor parties for viewing the MexicanNational Soccer Team and FIFA World CupTM Qualifier games.

Anheuser-Busch’s support for the Latino community datesback more than a century. In the 1880s, the companydelivered the first Spanish-language sales catalogs toretailers and businesses in Texas, Arizona, and NewMexico. In the late 1890s, the Escalada Brothers ofNogales, Ariz., were the company’s earliest Hispanicbusiness partners and beer distributors. Anheuser-Busch’scommitment to the Latino community is an integral partof its business tradition.

times the volumeAnheuser-Busch sold more than

2.5 times the volume of thesecond-largest U.S. brewer. 2.5

13 _ 2004 Annual Report