Anheuser-Busch is wedging its way back into the Mexican beer market. The beer giant is importing its first Mexican lager to select Southwestern states to target Latino consumers. First stop: Dodger Stadium.

 

The beer giant, a division of Anheuser-Busch InBev of Belgium, announced Wednesday that Montejo beer will be available in bars, restaurants and grocery stores in California, Texas, Arizona and New Mexico, where 70% of America’s Latino population lives.

 

Anheuser-Busch said Mexican beers account for nearly 60% of imports, highlighting a growing demand for Latin products. Mexican beer imports grew twice as quickly as total beer imports, according to a report by IbisWorld, a market research firm.

 

This isn’t Anheuser-Busch’s first forray into Mexican beers. The beer maker agreed to sell its U.S. rights to distribute Corona and Modelo last year as part of an antitrust agreement with the Justice Department before it could go ahead with its $20.1-billion takeover of Grupo Modelo of Mexico.

 

Reluctant to let go of the booming market, Anheuser-Busch decided to import Montejo in February because of increased demand, said Ryan Garcia, vice president of regional marketing.

 

“We’ve been watching this market for a while, and the consumer demand is huge,” said Garcia, explaining that the beer will be marketed in Latino radio, digital, print and restaurant industries.

 

Americans are clamoring for more imported beer in general. Nearly 43% of U.S. consumers drank imported beer last year, according to a report by research firm Mintel, but Mexican brands lead the pack in terms of affordability, popularity and successful marketing strategies — think Dos Equis and its “the Most Interesting Man in the World” campaign.

 

“Contrary to popular belief, the fastest-growing beers in the U.S. right now are not craft beers, but Mexican imports,” said Harry Schuhmacher, publisher of trade journal Beer Business Daily. “Anheuser-Busch would be foolish not to attempt to tap into that growth.”

 

But the market is already cramped. Mexican brands make up 8% of overall U.S. beer volume, and experts expect that to grow.

 

Information Resources Inc., an industry research firm, reported that Corona Extra topped imported beers at more than $1.2 billion in sales last year in supermarkets, drugstores, mass merchandisers, gas and convenience stores.  Modelo Especial, a sister brand of Corona, had the highest growth in the imported beers segment in 2013 compared with the year before.

 

Montejo is “a tough sell because the brand isn’t very well-known in Mexico,” Schuhmacher said.

 

Garcia said Anheuser-Busch targeted Los Angeles for its campaign launch because the city is home to 9% of the nation’s Latino population. The beer will first be sold at Dodger Stadium on Aug. 15 before its full release in September, the first time Anheuser-Busch has launched a beer exclusively with a sports franchise before making it available at retailers.

 

“We’ve partnered with the Dodgers and are converting the Bud Light bar in right field to a Montejo bar,” Garcia said. The company is also bringing in a brew master from Mexico to head the bar.

 

The Dodger launch will also be the first time Montejo, founded in 1960, will be sipped outside Mexico.

Source: http://www.latimes.com/

InBev’s $52 billion purchase of Anheuser-Busch Cos., announced six years ago this weekend, remains the biggest deal in beer history.

 

But there’s another merger of brewers that could eclipse it.

 

A number of industry analysts say they have reason to believe that A-B InBev could be preparing another blockbuster purchase by acquiring rival SABMiller, the world’s No. 2 beer company.

 

Rumors of a tie-up between Belgium-based A-B InBev, already the world’s largest brewer, and London-based SABMiller have been around for years, but talk of a deal between the two is heating up.

 

“I think that we’ve come to a break point, a decision point,” said Tom Pirko, president of Bevmark, a food and beverage industry consulting firm in Buellton, Calif. “I think that we’re close now.”

 

Speculation was already brewing when the Financial Times, or FT, Britain’s equivalent of the Wall Street Journal, reported in early June that traders believed bankers were working to raise $60 billion in debt to fund some kind of European takeover, and that SABMiller was a possible target.

 

“The chatter has intensified,” said Harry Schuhmacher, publisher of Beer Business Daily, a trade publication.

 

He noted that the FT broke the news six years ago about InBev’s takeover plans for A-B. Though the newspaper has yet to write a story confirming that a deal is indeed in the works, Schuhmacher drew parallels between the 2008 sale and the current flurry of speculation.

 

“It’s like ‘Groundhog Day’,” he said. “When there’s smoke, there’s usually fire.”

 

Robert Ottenstein, a senior managing director at New York-based research firm ISI and head of its global beverages team, believes a combination between the makers of Budweiser and Miller Lite could happen this year or 2015.

 

“More than at any point in the last 10 years, SABMiller appears ripe for a combination with ABI,” Ottenstein wrote in a May research note, adding A-B InBev has digested its 2013 $20.1 billion acquisition of Mexican brewer Grupo Modelo, with most cost-savings expected to be realized by the end of this year.

 

For Ottenstein, a former investment banker who headed investor relations for A-B InBev after A-B’s sale, the deal is compelling.

 

A combination of the two companies would bring together eight of the 10 leading global beer brands: A-B InBev’s Bud Light, Budweiser, Corona Extra, Skol, Stella Artois, and Brahma; and SABMiller’s Aguila and Miller Lite.

 

The only top-10 global beers not under their control are Heineken and Guinness.

 

Combined, A-B InBev and SABMiller would account for about $65 billion in sales and nearly 30 percent of global beer volume.

 

Ottenstein contends A-B InBev’s strong global brands would pair well with SABMiller’s extensive global footprint. A-B InBev has invested heavily in building flagship Budweiser’s sales globally following its purchase of A-B, he pointed out in the May report.

 

In 2010, Budweiser grew its global sales volume by 1.7 percent, even as its U.S. sales declined. Budweiser has continued its sales momentum globally, increasing volume by 6.3 percent in 2013, with sales in China, Brazil and Russia, among other major markets.

 

Meanwhile, SABMiller’s market position is strong in regions with high growth potential, including Africa and China.

 

“The potential to introduce (A-B InBev’s) global brands to SABMiller’s regions extends their growth and margin potential,” according to Ottenstein’s report.

 

Additionally, A-B InBev could reap $2 billion in cost-savings through an acquisition of their largest rival, through global procurement and shared services, and eliminating job redundancies, he wrote.

 

Successfully implementing those kinds of cost-saving measures is what A-B InBev Chief Executive Carlos Brito and his management team are known for.

 

“They’re not great brand builders, but they’re the smartest bankers in the world,” said beer industry consultant David “Bump” Williams, chief executive and president of Stratford, Conn.-based Bump Williams Consulting. “No matter what they buy, they find ways to eliminate waste and reductions.”

 

Growing through acquisitions is in A-B InBev’s DNA. The deal to buy Anheuser-Busch came just four years after Belgium’s Interbrew and Brazil’s Ambev combined to create InBev. Last year, A-B InBev bought the rest of Grupo Modelo, maker of Corona and other beers, that it didn’t already own for $20.1 billion. And this year, it acquired the leading brewer in South Korea, Oriental Brewery, for $5.8 billion.

 

SABMiller’s strength in Africa, China and other countries where InBev wants to grow makes it an attractive combination, Williams said.

 

“I think SABMiller is their number one target,” he said. “InBev wants to be the global, dominant player in beer, and this would help them do that.”

 

ROADBLOCKS

A combination of the two beer giants would be closely watched on Pestalozzi Street, where A-B InBev’s North American operations are based. The 2008 deal made some A-B executives and shareholders very wealthy, but it also resulted in job losses. What impact a deal with SABMiller would have in St. Louis is unclear, but many analysts say it would be minimal as SABMiller would likely have to divest its U.S. operations to satisfy antitrust concerns.

 

If a megasized deal is in the works, many roadblocks would stand in the way, including the high price SABMiller would command and antitrust battles domestically and overseas.

 

Some analysts are speculating SABMiller could make a defensive move and partner instead with London-based Diageo, maker of Smirnoff, Guinness and Baileys, to stave off a hostile bid. A-B had considered a similar move with Grupo Modelo in 2008.

 

“Logistically and strategically, the best pair-up would be A-B InBev and SABMiller,” said Morningstar equity analyst Philip Gorham. “I certainly think a big deal could be done. A-B InBev has the cash to do something. It should be SABMiller.”

 

However, the high price it would take to acquire SABMiller makes the deal out of reach even to A-B InBev, Gorham said. “I don’t see how (A-B InBev) could create value at today’s price.”

 

A-B InBev already has the largest market share in the United States, followed by Chicago-based MillerCoors, a joint venture created in 2007 by SABMiller and Molson Coors Brewing Co. to sell their beers in this country.

 

A merger would likely require the sale of SABMiller’s stake in MillerCoors in the U.S. to another party to satisfy antitrust concerns, akin to what happened with Modelo. In a January interview with Bloomberg News, SABMiller CEO Alan Clark said a case could be made for a combination between SABMiller and A-B InBev, but it would likely require U.S. divestitures. “You could get the numbers to work,” Clark told Bloomberg. “There would be value loss and value destruction because they’d know that they’d have to sell the U.S. though.”

 

In late June, Denver-based Molson Coors Brewing Co.’s Chief Executive Peter Swinburn wouldn’t rule out the possibility of his company acquiring MillerCoors in an interview with the Wall Street Journal. “The important thing for me is to put the company in position to take advantage of whatever comes our way,” Swinburn told the financial newspaper.

 

The U.S. Justice Department sued to block A-B InBev’s purchase of the rest of Modelo in early 2013, arguing that the merger of the nation’s No. 1 and No. 3 biggest beer-sellers would be bad for beer-drinkers. The Justice Department relented only after a deal was struck for New York-based Constellation Brands to acquire the Grupo Modelo’s U.S. beer business from A-B InBev.

 

Bevmark’s Pirko said Brito has a track record of looking beyond obstacles to make a deal come together.

 

“There are antitrust issues galore here, but the way Brito thinks and acts, this is just the sort of ‘go for the gusto’ thing he likes,” Pirko said.

 

Pirko also doesn’t agree that there’s a price too far out of reach for A-B InBev. “That’s the same thing we heard about the St. Louis deal,” he said. “This really is a workable deal.”

Helping to quench a growing thirst for American craft beer overseas, some of the United States’ largest craft breweries are setting up shop in Europe, challenging the very beers that inspired them on their home turfs.

 

It’s the latest phenomenon in the flourishing craft beer industry, which got its start emulating the European brews that defined many of the beer styles we drink today. The move also marks a continuing departure from the status quo of mass market lagers or stouts, demonstrating a willingness of American breweries to explore — and innovate — old world beer styles from Belgium, Germany and the United Kingdom.

 

The U.S. craft beer scene is so fresh and dynamic, Europeans are becoming as excited about it as Americans, says Mike Hinkley, co-founder of San Diego-based Green Flash Brewing Co. “Even though they’re used to all these amazing European beers, now there’s just more variety.”

 

U.S. craft beer exports grew six-fold during the past five years, jumping from about 46,000 barrels in 2009 to more than 282,500 barrels in 2013, worth an estimated $73 million, according to the Brewers Association, the Colorado-based trade group for the majority of the 3,000 brewing companies in the United States. Of course, it’s still a fraction of overall production; U.S. craft brewers produced a total of 15.6 million barrels last year.

 

Just last week, Green Flash became the first U.S. craft brewery to begin making and selling fresh beer in the European market under a deal with Brasserie St-Feuillien, a Belgian brewery founded in 1873. Under the watchful eye of Green Flash brewmaster Chuck Silva, the brewery is making and selling fresh West Coast IPA for distribution in the U.K., Belgium, France, the Netherlands and Italy.

 

Meanwhile, 500 miles away in Berlin, Stone Brewing Co. is taking a different approach to meeting overseas demand — spending about $25 million to renovate a historic gas works building into a brewery, packaging and distribution center, restaurant and garden set to open late next year or early 2016. Escondido, California-based Stone — one of the top 10 biggest craft breweries in the U.S. — will make beer for its bistro and distribution throughout Germany and Europe.

 

“The idea that we’re going to go across the pond as it were to brew our style of beers fresh in Europe is an exciting prospect for us,” said Stone CEO and co-founder Greg Koch, who announced the overseas expansion plans over the weekend. “When we started out at Stone 18 years ago, we were inspired by a lot of the European brewers … and now to see an inspiration bounce back around the world, that’s amazing.”

 

Brooklyn Brewery’s brewmaster Garrett Oliver agreed, saying what used to be a one-way street in the beer world is coming full-circle: “The creative spirit and ideas that have been developing in the U.S. are flowing back in that direction. Now it’s a two-way street and we all have something to offer.”

 

In the spring, New York’s Brooklyn Brewery and Carlsberg Sweden opened a craft brewery and restaurant making new beers that are being distributed throughout Scandinavia. The staff of Nya Carnegie in Stockholm was hired by Brooklyn Brewery and trained by its brewmaster. Brooklyn Brewery is still exporting its own beers to more than 20 countries in addition to its joint venture and also is looking at similar projects in other European capitals, South America and Asia. Around 30 percent of its business is exports.

 

But the thirst for American craft beer hasn’t always been there.

 

When the Brewers Association first gave presentations overseas about the American craft beer scene about 10 years ago, people would laugh aloud. They’d even quote a Monty Python skit comparing American beer to water.

 

“They’re not laughing anymore,” said Bob Pease, chief operating officer for the U.S. beer trade group. “The word is out now that the highest quality beer, the most diverse beer, is coming from American craft brewers.”

Source: http://money.msn.com/business-news/article.aspx?feed=AP&date=20140721&id=17791735

A few numbers illustrate the heady rise of beer in the United States. In 1983, there were only 80 breweries operating across the nation, the smallest count for at least 150 years. At the end of last year, that total had surged to 2,722 breweries.

 

And this June, the number of operating U.S. breweries reached an astounding 3,040, with nearly 2,000 more in the planning phase. Let all of America’s beer drinkers now take a moment to lean forward and issue a joyful BRRAAAPPP over their favorite tipple’s meteoric success.

 

These figures come from Bart Watson at the industry group Brewers Association, who alleges that today the “majority of Americans live within 10 miles of a local brewery.” Watson also says this is probably the first time (“probably” because the records are a little murky) that the brewery population has surpassed 3,000 since 1873, when the IRS logged 4,131. That’s not to say that the 1870s, rather than now, should be considered the boom-time for beer in the U.S. Part of the reason there were so many breweries back then was because they hadn’t streamlined the ways to make the process efficient, including refining refrigeration and automation.

Watson, who wins today’s award for best job title with “chief economist for the Brewers Association,” claims that despite some worries there is not a “beer bubble” about to burst in America. However, he does think that breweries should prepare for more intense competition and pay particular heed to the quality of their products. That last point is being echoed on the forums of Beer Advocate, where one person rails that new breweries need to “really step up their game and try to make really awesome (not just good) beer.” Watson elaborates:

 

What it does not mean is that we’ve reached a saturation point. Most of the new entrants continue to be small and local, operating in neighborhoods or towns. What it means to be a brewery is shifting, back toward an era when breweries were largely local, and operated as a neighborhood bar or restaurant. How many neighborhoods in the country could still stand to gain from a high-quality brewpub or micro taproom? While a return to the per capita ratio of 1873 seems unlikely (that would mean more than 30,000 breweries), the resurgence of American brewing is far from over.

 

In support of this argument is the fact that the largest slice of America’s beer pie (recipe to come) is local, smaller-scaled operations. Out of the 2,722 U.S. breweries in operation at the end of 2013, a full 1,376 were microbreweries and 1,202 were brewpubs.

 

What will the country’s sudscape look like a few years from now? Watson says to expect big beer-production growth rates in North Dakota, Alabama, and West Virginia. That’s because these states, along with a few others, are “growing off small bases, and so even if they aren’t adding the most new barrels in absolute terms, their percentage growth rates are still quite impressive.”

Source: http://www.citylab.com/