This week there has been some controversy over the possible takeover of Budweiser by InBev. If you don't know who Inbev is they are a huge global presence brewing/distributing company based out of Belgium. They own brands like Becks, Stella Artois, Leffe, and Hoegaarden as well as several hundred others. This buyout makes sense because much of AB's product line and InBev's brands don't really cross the same retail footprint.
I am rather mixed about this possible takeover. Supposedly InBev is willing to go as high as 67$ a share and Budweiser closed on the American markets at $56.51 up from $52 dollars a share on this speculation. I imagine a big part of this is coming on because I would assume that five years ago Bud wasn't able to be bought because of the stronger dollar, but now that the dollar has tanked this is now a much more attractive buy for InBev. The buyout price is only 42 Euros for InBev whereas five years ago it would have been around 56 Euros. That is a big difference for them. There is much more to the story than just that, but that factor is helping.
What would this mean though? It would mean no more macros in America would be owned by American companies. SabMiller out of South Africa owns Miller and MolsonCoors owns Coors out of Canada. Brewing operations would still continue in the States of course and some jobs would be lost, but I would assume those would be at the top though.
Would this mean that outside large multi-national brewing companies would be possible to dictate the price of goods from farmers? Would the three conglomerates be the perpetual 900lb gorillas? What would this mean for our favorite local craft brewer? Would the conglomeration spell bad things for smaller craft brewers? Is it in America's best intention to keep Budweiser an American company? I will admit I am way out of my league on this one in terms of what might happen, but something internally just tells me this isn't a good thing for anyone except for InBev. August Busch says that this "won't happen on his watch," but he runs a public company where cash and shareholders are king. There is a tidy profit to be made by greedy shareholders right now. I am not sure AB can use a poison pill strategy in this situation or other takeover avoidance measures like taking on extreme debt right now, but that is just my guess. I don't know how AB can make itself look significantly less attractive to avoid a takeover. I will wait and see how this will shakes out, but personally even though I am not a regular drinker of AB products I don't want to see AB become a foreign company. What are your thoughts?
Cheers!
Matt
17 comments:
I'm completely out of my depth in discussing matters like this, but I agree with you--this doesn't sound like it would be a good thing.
It would be a disaster!! Even though us craft beer drinkers don't like AB, we must remember that they are a great US brewing company and when they started in the mid-late 1800's, they too were small at about 1000 bbl per year. Apparently they are pretty good at what they do.
Most importantly, they are focused on beer flavor and if you have ever had the opportunity to talk to an AB Brewmaster, you will find that they are passoniate about beer flavor and this approach comes from the very top... they are run by brewers. Imbev, on the other hand, are run by accountants, and although this might make sense from business standpoint, it is bad for beer flavor. Now I know all you out there are saying, "so what!! Bud tastes like watery piss anyway!" But they make Budweiser because its what they want to make and because it sells not because its cheap... who else uses chips/shavings in brewing anymore?? This is not a cheap operation and would surely go away with Inbev. Also, if you have seen there breweries, there is a lot of capital invested that is unique and because it takes ~32 days to make Bud; I am sure this process would also be cut with Inbev and they would go the route of SAB Miller and Molson Coors... god help us all who appreciate beer!!! As one who has brewed a fair amount on my own, I can honestly say that it is much harder to make a light beer (like Budweiser) then it is any craft beer. The balance is harder to achieve and the beer is easily knocked out of profile because it is so light. With a strong IPA, for example, many off notes can high behind the many intense flavors. So let's not confuse light beer flavor with quality and hope like hell for the brewing indusrty that Imbev does not takeover Anheuser-Busch.... it would be a disaster for all!
Thank you for your thoughts Stephen and Jim.
Stephen,
I am certainly not knocking AB as a brewer, but I personally do not like the light lager category, but I know it is damn hard to produce and the consistency that AB brings to the table is remarkable for the light lager category. If there are any mistakes in the beer it is out there for God and everyone to see and taste, so I see that point.
I wonder if InBev will keep or drop Buds new American Ale coming out this year if they do buy it out.
I think the effects would be minimal. The buyouts of Miller and Coors didn't really do much to those lines. I don't see a big reason why it would effect the Bud line in the long run.
Of course, I'm a know-nothing and am speaking out my arse.
Well I had typed out a large post but blogger erased it when I tried to publish. Anyway, good conversation here but I don't think it will be the disaster Stephen thinks.
It's hard to imagine that it would be a "good" thing for AB to become part of a foreign-based international conglomerate; most likely things here in the US would stay pretty close to how they are (see Coors' "I like the way I'm livin'" ads, pandering to the Be American Buy American crowd), but I think just in general, it's a "bad" thing for American companies to sell out overseas, especially when they are the last American competitor on the largest scale. For example, what if international conglomerates bought Ford and GM? Even if they didn't start shutting down plants and discontinue the Ford Mustang :), the interests of a foreign company in the other countries they operate in are different from the interests they have in their "home" country (look at the various water concerns in India or South America, in this case largely US based companies that don't give a crap about other countries).
On the other hand...wouldn't this actually lend a hand to the smaller brewers, who could use something like a foreign takeover as a rallying cry? Hmmm... "Want to try a REAL American beer?"
I wonder if they'd keep the Clydesdales, or replace them with the hideous Belgian Draft Horses?
Excellent thoughts everyone.
I am with Elia on this. I just don't think it is a good thing. As I've said I don't enjoy Bud/Bud Light, but they do take meticulous care in the quality control for that style. Would that change? Would InBev cut corners to lower the price per unit and people would just switch from one macro to another or would people actually look to their own backyard and make the move to craft beer for good?
My fear is that the big three being foreign owned is the contracts they might put in place with farmers. Would they tell farmers they could only sell their product to them? If the contract is big enough they will. It is the same thing that Wal-Mart does in some cases.
And Elia, I dream of the day when Belgian draft horses will have their day in the sun on Superbowl Sunday.
There is a potential bright spot to this happening. As posted on the Miller Brew Blog, InBev implements many cost cutting techniques and one thing that may get cut is the massive amounts of money that A-B spends on marketing. I don't know about you guys, but I could definitely stand a drastic decrease in insipid Bud and Bud Light commercials. It somewhat sounds like InBev is so entrenched in smaller lesser developed countries where beer sells itself without the need for massive advertising budgets that they may be behind how cut throat the US market is between Bud Miller and Coors.
with being employed by ab this would be a disaster for america not just for us who work there. we need to stop giving away our country to foriegn interests. the city of stl would suffer alot and would hurt everyone here more than any place else. we need to band together to get the capital together to have the employee ourselves by the company.
with being employed by ab this would be a disaster for america not just for us who work there. we need to stop giving away our country to foriegn interests. the city of stl would suffer alot and would hurt everyone here more than any place else. we need to band together to get the capital together to have the employee ourselves by the company.
with being employed by ab this would be a disaster for america not just for us who work there. we need to stop giving away our country to foriegn interests. the city of stl would suffer alot and would hurt everyone here more than any place else. we need to band together to get the capital together to have the employee ourselves by the company.
with being employed by ab this would be a disaster for america not just for us who work there. we need to stop giving away our country to foriegn interests. the city of stl would suffer alot and would hurt everyone here more than any place else. we need to band together to get the capital together to have the employee ourselves by the company.
with being employed by ab this would be a disaster for america not just for us who work there. we need to stop giving away our country to foriegn interests. the city of stl would suffer alot and would hurt everyone here more than any place else. we need to band together to get the capital together to have the employee ourselves by the company.
And how about those superbowl ads.
I don't know hardly anything about making beer, but I know alot about drinking it. I also know that as an American and an almost lifelong resident of St. Louis,MO, I will NEVER touch another AB product as long as I live if the buyout goes through!
I agree with the concerns Matt has voiced, from experience as a small family farm (hops) in operation for the past 70+ years (there are now only about 60 such farms remaining in the United States, down from 600 in the 1960's), AB has been one of the best and most honorable companies to work with in the entire industry, the held us up when others did not care what happened. Farms may not provide middle class jobs, we give 150+ employees the opertunity to make a decent living wage and the chance to suceed in the future. I have seen many employees move on to take full time jobs at many different location around our region. InBev has already tried to flex their muscles from a farming standpoint in the last few years and are already changing the dynamics. Only time will tell the impact they have on the industry.
Seems everybody thinks: a) Bud is a bad beer (its taste is not great) and b) the take-over can only be bad as Inbev will cut corners and this would affect quality. Doesn't anybody see the controversy in this?
Inbev can only improve the quality or at least keep it (as crappy) as it is.
Inbev's motto is "the world's largest local brewery". In every takeover they have left the beer as it is but used it's bargaining power to get better prices from suppliers & use their marketing power to promote the beer. I don't undertsand why they would waste their effort on this for Bud (it is horsep.... after all), but I think that is what they will do. And their record proves it.
So all you Americans get over the fact that foreign companies are taking over US companies. It had been hapening the other way round from 1950 on. The times they are a changing. Deal with it.
Post a Comment