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ast week the Manchester Union Leader ran a story about the impact the rumored bid by InBev SA to takeover Anheuser-Busch would have on the Merrimack, New Hampshire A-B brewery.
http://www.unionleader.com/article.aspx?headline=Brewery+bid+
raises+eyebrows+in+Merrimack&articleId=835a0b35-10ef-440e-a9a9-91f4a1b249
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I think they are being a bit paranoid.
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InBev is known for their cost cutting so there is a chance that there would be some cuts and your local operation could be one of them.
The reality is InBev is going to buy either AB or SABMiller and AB would be smart to sell vs stand against a stronger competitor like a unified InBev/SABMiller. If InBev buys SABMiller your town could still see their local operation shut down because of decreased market share from this new competitor.
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The Concord Monitor newspaper in New Hampshire’s capital city published an editorial today decrying the whole thing...
http://www.concordmonitor.com/apps/pbcs.dll/article?AID=/2008
0609/OPINION/806090304/1027/OPINION01
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The local talk rado station I listen to devoted a whole hour to call-ins about people worried that Budweiser is going away.
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That would be too much of a dream come true
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The question of whether A-B should sell is wrapped up in a lot of other issues. Right now, they are not really a player on the global beer scene. I mean, you can buy Bud in a lot of countries but it only really sells in a handful. A-B is big, but only because of their overwhelming presence in the US market. A declining presence. Aside from China, they don’t do shit overseas and as such are running a very different model than InBev.
The risk to the New Hampshire plant specifically relates to capacity issues in the Northeast. InBev has plants under capacity in Canada already, and while they wouldn’t make Bud for the US market in these they could make all manner of lesser brands. Losing a plant or two is a very likely consequence of a purchase by InBev.
As for A-B’s willingness to sell, that’s a different matter. It depends on how realistic their view is. Right now they have a declining product and no real sense of how to turn that around. Cultural and demographic factors are against them. Yet they are probably optimistic because Budweiser has withstood changes in the beer market before. So many leading brands have died out and these problems did not affect Budweiser. They may, though, have shot themselves in the foot by allowing Bud Light to overtake their flagship brand. I do not envision a healthy long-term future for that entire market segment for a number of reasons.
So while I think A-B’s shareholders might be better off cashing out now while they’re still on top, they probably won’t. Empires at the top don’t think they can ever fall.
For the record, I don’t think InBev has any sort of long-term future either. Ultimately, to justify the purchases they’ve made they would need to see some genuine benefits from the fact they own so many breweries. I’m sure they think they’re a pack of genii sitting there in Brussels, but unless they’ve got Kublai Khan on staff they probably don’t have the administrative skill to manage their empire. InBev may own a lot, but they’re not doing anything with it - they’ve failed to make Stella and Hoegaarden ubiquitous in North America, for example. So they just own a lot and will eventually attempt to realize value from those purchases by selling them off.
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I think you underestimate the impact InBev has had in getting brands like Stella into the US market. Five years ago it was all but unknown except in major metro areas and even there it wasn’t that common. Now I can find Stella at C-Stores and small bars all across the country, even in tiny backwaters in Idaho.
To support my point here’s a little data. These are the top 30 best performing beers in 2007. Notice Stella is #4.
Total US Supermarkets
Blue Moon Belgian White Ale
Samuel Adams Seasonal
Heineken Premium Light Lager
Stella Artois Lager
Newcastle Brown Ale
Coors Light
Bud Light
Yuengling Traditional Lager
Miller Lite
Samuel Adams Boston Lager
Keystone Light
Corona Light
Tecate
Guinness Draught
Samuel Adams Variety Pack
Model Especial
Michelob Ultra Light
Dos Equis XX Especial Lager
Samuel Adams Light
Sierra Nevada Pale Ale
Michelob Golden Draft Light
Heineken
New Belgium Fat Tire Amber Ale
Grolsch Lager
Dos Equis XX Amber Lager
Steel Reserve High Gravity Lager
Red Stripe
Busch Light
Shiner Bock
Guinness Extra Stout
http://www.just-drinks.com/store/product.aspx?ID=61761
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Stella Artois advertisements are shown on many US networks now. There’s one ad that is particularly amusing with a couple of archaeologusts trying to save the Stella Artois from burning in a fire rather than the artifact they found.
In New Hampshire the A-B Brewery is a popular tourist stop. As a matter of fact I was there yesterday for the 6th annual Ribs and Rock Fest, where some of the best ribs barbecuers get together for some cash prizes in a competition. There had to have been 30,000 people there.
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I don’t think I’m underestimating anything. The study is based largely on percentage growth, which means far more at the bottom end than at the top end, so the survey is biased towards products at the low end of the sales scale.
Moreover, the survey is just one year. Stella did some nice numbers in Canada in the early part of this decade but could not sustain them. Sustained growth is a far better measure than one year’s numbers.
In addition, InBev isn’t looking for their products to dominate some specialty category - they want a bigger pie. They want it to be here like it is in England. Stella isn’t even the biggest InBev product in the US, much less the major factor they’d like it to be.
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It’s looking like A-B is having a change of heart and might be going for the InBev deal.
http://www.nashuatelegraph.com/apps/pbcs.dll/article?AID=/200
80711/NEWSBLOG/366993262
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