• U.S. Challenges Busch-Modelo Beer Merger

    No Anheuser-Busch

     

    When the big get too big there is only one entity that can stop them, the government.  It seems the US government may think InBev Anheuser-Busch may be getting just a little too big.

    The U.S. Justice Department is trying to keep Budweiser and Corona apart.

     

    Justice is challenging the proposed $20.1 billion buyout of Mexico’s Grupo Modelo, brewer of Corona beer, by Anheuser-Busch InBev, brewer of Budweiser.

     

    Anheuser-Busch inBev owns 49% of Grupo Modelo, this deal would give it the rest.

     

    The government, though, says the merger would put too many top beer brands in the hands of a single company, limiting competition. The concern is especially high in 26 U.S. cities. The suit has been filed in federal court in Washington D.C.

     

    Investors reacted negatively to the news. Industry consolidation has been rampant in the beer and spirits industry and is viewed as a way for companies to boost profit by cutting costs.

     

    Shares of Anheuser-Busch InBev were down $5.58, or almost 6%, to $88.56 Thursday.

     

    Budweiser and Corona are among the most dominant beer brands in the country. Bud Light is the best-selling U.S. brew, while Corona Extra is the No. 1 selling import.

     

    Shares of Constellation Brands, a top spirits maker with brands like Robert Mondavi, fell $6.77, or 17%, to $32.40. Constellation is the U.S. top beer importer through its distribution joint venture with Grupo Modelo.

     

    Constellation stood to benefit from the proposed merger of Grupo Modelo, though, with Anheuser-Busch InBev and potentially suffers if it falls through, says Ken Perkins, analyst at Morningstar.

     

    Back in June 2012, when Anheuser-Busch InBev proposed the buyout of Grupo Modelo, it created a deal with Constellation to manage anti-trust concerns, Perkins says. As part of the deal, Anheuser-Busch offered to give Constellation a long-term deal to control the joint venture with Grupo Modelo, replacing the current deal that expires at the end of 2016, Perkins says. That would have given Constellation a long-term deal giving it the rights to distribute Grupo Modelo products in the U.S.

     

    Now, with the Anheuser-Busch buyout of Grupo Modelo in question, investors, too, worry that constellation could lose those distribution rights at the end of 2016.

     

    Regulators are apparently worried that even if Constellation has U.S. distribution rights for Grupo Modelo products, it will still be Anheuser-Busch InBev calling the shots when it comes to pricing.

     

    Lacking that competition, Anheuser-Busch would be able to boost beer prices, says Bill Baer, assistant attorney general for the department’s antitrust division.

    Source: http://www.usatoday.com/

  • Anheuser-Busch Selling Its Craft Beer Nationwide

    Last year Anheuser Busch (InBev) bought Goose Island, a Chicago based craft brewery.  Using typical big beer methods, it was easier to buy an existing product with an established, dedicated following than it would be to develop something in-house (i.e. Bud Platinum).  AB paid $38.8 million dollars for the deal.  Now, it an effort to further dominate as many markets as they can, AB will start distributing the Goose Island beers to all 50 states.  Back in 2000 Goose Island could only be found in the Chicago area.

    Goose Island will be available in all 50 states by the end of November, placing it alongside Sam Adams and Sierra Nevada as craft brands with national footprints — even if Goose will produce significantly less beer than those larger breweries, at least for now.

     

    The move will continue remarkable growth for what began as a small brewpub in its current Clybourn Avenue location in 1988, and has arguably become the beer most synonymous with Chicago. But a national reach also seemed inevitable once brewery founder John Hall sold the company to AB at a time when craft beer sales were soaring and macro breweries were struggling to enter the marketplace.

     

    Goose’s Chicago brewery on Fulton Street will continue to be the sole source of the company’s higher-end brands, like Bourbon County Brand Stout, Sofie and Matilda. There are no plans to export production of such beers to AB facilities, Goose Island said.

    I’m not surprised about that last sentence.  Why would AB brew more of one brand of craft beer when they could just buy a completely different craft beer to help push the small guy out of the market.  Goose Island may have once been a beer only available in Chicago, but now that they have joined the ranks of big beer, they’re also big beer, no matter how small they stay.

    Source: http://www.chicagotribune.com/

  • Heineken Moves Closer to Buying Asian Brewer

    One of the largest beer brewers in the world has been looking to become larger, and it seems an agreement has finally been reached between Heineken and the Asian brewing group which makes Tiger beer.

    “The deal has been agreed by Heineken and F&N’s management, and the agreement will now go for approval by the F&N board and then be announced officially,” said one of the sources.

     

    Heineken already owns 42 percent of APB, which runs 24 Asian breweries, and taking F&N’s 40 percent stake will help the Amsterdam company to defend its turf against Thailand’s second-richest man.

    I’m not a fan of seeing big beer get bigger as it almost always tends to be more about the money than for the love of brewing good beer.

    By winning APB, Heineken gets full ownership of Tiger, Bintang, Anchor and other brands of beer plus two dozen breweries in 14 countries including Singapore, Malaysia, Indonesia, Vietnam, Thailand and Cambodia. Around 30 percent of APB’s volumes are for the Heineken beer brand.

     

    The deal is vital for Heineken in the fast-growing Asian market. For the world’s third-largest brewer, control of APB is set to raise the proportion of profits it gets from Asia to 15 percent from 6 percent, analysts said, boosting the growth rate of the whole group.

    So there you have it, the world’s third largest beer brewing doing what it can to keep pace with InBev and MillerCoors and helping to ensure mass produced, flavorless beer will be available for everyone.

    Source:  http://money.msn.com/

  • Craft breweries represent more than 95% of the breweries in America, but make only 6% of the beer

     

    A map of the states with the most breweries per capita.
    Source: Brewers Association
    Credit: Lam Thuy Vo / NPR

    In non-beer markets there are issues where the vast majority of the companies making a product are only producing a fraction of the actual product in the market place when compared to one or two major stake holders.  This issue, however, is most pronounced with beer.   It seems that while making up 95% of the market place, craft breweries only produce 6% of the beer.

    Three multinational corporations own most of the 20 gigantic, highly industrialized breweries that produce the vast majority of American beer. It’s been a great Wall Street bonanza, but the results are sobering. The largest brewer in the US, Anheuser-Busch, belongs to Brazilian multinational InBev, the largest brewer in the world. American number two, Miller, is part of SABMiller, headquartered in London, the second largest brewer in the world. Coors was acquired by Canadian brewer Molson, now the Molson Coors Brewing Company, fifth largest in the world. As if that weren’t enough deal-making, SABMiller and Molson Coors Brewing Company formed the joint venture MillerCoors. However, Pabst Brewing Company is still independent.

     

    But craft beer brewers operate in their own micro climate. In 2011, production jumped 13% to 11,468,152 barrels, for a 5.7% share of the US beer market in volume, according to the Brewers Association. With craft beers being more expensive, retail sales jumped 14.5% to a record $8.7 billion—for a 9.1% share of the $95.5 billion US beer market.

    Even with this relativity small market share, big beer is not happy.  They continue to exert their force in the market place pushing their nationally distributed craft beer brands into every corner of the market, forcing out locally brewed beers.

    Big beer knows that nationally produced and distributed beer representing the largest market share can easily be replaced by brewing your own beer or going down to your local brew pub for a beer that was brewed locally.  It is for this reason that they market their product so aggressively.

    That being said, you can make a difference.   Producing your own beer or buying local beer helps keeps money and jobs in a local economy.  So next time you’re out buying your beer remember, think globally, but act locally.

    Source: http://www.businessinsider.com/

  • Of the Top 100 Beer Brands, Anheiser-Busch InBev and MillerCoors Control the Majority.

    You know that here at Indy Beers we love to promote the little guy.  Well, we also like to let you know the monopoly the big guys have in the market.

    Last week’s announcement that Anheuser-Busch InBev had agreed to buy Corona maker Grupo Modelo is the latest move in a long trend of consolidation in the beer market, leaving it increasingly about two giant players — AB InBev and Chicago-based MillerCoors.

    The folks over at www.chicagotribune.com put together a great graphic showing who owns what, so check it out below and see who owns what beers.

     

     

    Source: http://www.chicagotribune.com/

  • InBev to buy Modelo

    InBev is at it again.  This time they are looking to buy Modelo.  The deal, which would include Corona, would be worth an estimated 15 billion dollars.  InBev already owns a 50.4% stake in Modelo.

    Mexico is the world’s sixth biggest beer market and the fourth most profitable and is a virtual duopoly between Modelo and Heineken. Analysts say it would be a good strategic deal for AB InBev.

     

    Modelo has a 50-percent-plus market share of the Mexican beer market, but a relatively low profit margin of around 26 percent which AB InBev would look to push towards the margin of 60-65 percent it earns in Brazil.

     

    The move would increase AB InBev’s focus on North and Latin America which already accounts for over 90 percent of profits with its half share of the U.S. market and 70 percent of Brazil.

     

    So it looks like InBev wants to just buy portfolios instead of developing new beers.  Yet another sign of a failing corporate business process.  Why be innovative in the market place when you can just buy an existing customer base.

    Source: http://in.reuters.com/article/2012/06/25/modelo-abinbev-idINL6E8HP3ND20120625

  • InBev Threatens Beer Industry with Big Stick

     

    Looks like InBev is ready to play dirty to get its sales numbers up.  In a recent WSJ post Luiz Edmond, the president of North American operations for Anheuser-Busch InBev, let it be known the he was ready to strong arm out the competition.

    Last November, Anheuser also told more than 500 wholesalers who distribute its products across the U.S. that it wants them to sell fewer rival brews. The company warned that wholesalers who aren’t tightly “aligned” with Anheuser might be prevented from acquiring other wholesalers through equity agreements, a type of business contract, that Anheuser holds with the wholesalers.

     

    The toughening rhetoric has made a growing number of wholesalers “anxious,” said Joe Thompson, president of Independent Beverage Group, a beer-industry consultancy. Brewers and distillers are required to distribute alcohol through intermediaries instead of selling them directly to retailers.

     

    Mr. Edmond isn’t making any apologies, saying wholesalers will have to decide which brewer they want to partner with most closely. “I’m loyal to my wholesalers. Why would I not expect the same loyalty to me,” he said.

    Well, that seems a little anti-competitive in nature to say the least, and that isn’t InBev’s only bad marketing strategy.  In addition to doing what they can to stifle the competition, InBev will be bringing 19 new products to market:

    This year, Anheuser plans to launch 19 new products in the U.S., its biggest such push since Belgium’s InBev acquired St. Louis-based Anheuser-Busch for$52 billion in 2008. New offerings include small-batch “craft” brews, cider and an expanded lineup of malt beverages that take their cues from tequila and tea instead of beer.

    Looks like they are finally reading the writing on the wall about the American consumer wants to drink, to bad their going to do their best to not the let consumer know they are drinking a mass produced product that could very well be taking away money from local, family owned breweries.  They’re just not getting that people don’t want to buy their products.

    Anheuser is trying to stabilize Budweiser, whose U.S. shipments have fallen 23 straight years

    I for one am going to stick with the independent beers, how about you?

     

    Source: http://online.wsj.com/

  • Adele doesn’t know good beer

    I saw this post on MSNBC And couldn’t resist the opportunity to make fun of celebrity ignorance.  Since when are beers made by InBev/Anheuser Busch the “best quality European lager beer”?

     

    But, for as charitable as Adele may be, there’s one area where she’s not to be messed with: beer. For after the show, the singer requests 12 bottles of “best quality European lager beer. ie Becks, Stella Artois, Peroni etc. North American beer is NOT acceptable.” What did North American beer ever do to Adele?

     

    Source: http://scoop.today.msnbc.msn.com/_news/2011/12/06/9251333-adele-doesnt-want-your-north-american-beer-thank-you-very-much

  • Miller may be bought by Anheuser-Busch

     

    Not that it is a big surprise to see consolidation in any market, but this one is very interesting.  #1 and #2 looking to combine forces.  This can’t be good for beer.  As if our choices weren’t limited enough, they are about to get more limited as Anheuser-Busch flexes it muscle to grab an even larger market share with a purchase of Miller.  It’s time like this that I like to encourage those around me to drink good craft beers by independent breweries.  We’ll have to see how this pans out, but I can’t imagine it will be anything but bad news for the little guy.

    “Analysts downplayed the speculation, saying such a deal would be contrary to recent guidance by AB InBev management.  The Budweiser brewer is “the right size” and is focused on so- called organic growth, Chief Executive Officer Carlos Brito said in an interview with Dutch newspaper De Tijd in July”

    Source: Bloomberg