Comment - Corona offers A-B InBev golden opportunity
A-B InBev completed the US$20.1bn deal this week
It was a long time in the making, nearly a year in fact, but Anhesuer-Busch InBev finally completed on its swoop for full control of Mexican brewer Grupo Modelo this week.
True to form, the Budweiser brewer insisted on referring to its capture of the 50% of Modelo it did not already own as a "combination". But in anybody's language, it's a takeover.
Perhaps conscious that he doesn't want to be seen as the big bad beer wolf coming for another rival, Carlos Brito's opening quotes in the press release were telling. "We have tremendous respect for Grupo Modelo and its brands," he said. In other words: relax, we may have just bought you for US$20.1bn, but everything's going to be ok.
Over the course of the last year, historic tensions between the two companies have no doubt been ironed out and both must be eager to get back to what they know best: selling beer.
So, how big is the opportunity for the two groups?
On the face of it, it's massive. A-B InBev has talked about making Corona a "global flagship brand" alongside Budweiser, while it also gets a stronger foothold in Mexico, the world's fourth biggest beer market. Modelo, meanwhile, gets a huge ramping up of global exposure for its brands. And it's not all about Corona, of course, with Modelo Especial, Victoria, Pacifico and Negra Modelo all attractive brands.
Corona is the apple of A-B InBev's eye though. And, initially, one of the most intriguing plays is likely to come in a country set to receive a vast amount of exposure over the next three years: Brazil.
Corona is not currently sold in the country. Latin America's biggest beer market and the world's third largest is already dominated by A-B InBev, which has around 70% share. Now it has it hands on the light lager, the smart money is on a roll-out of the brand in the next month or two.
Intriguingly, Corona could be pitched to compete with Heineken, in an attempet to make it the premium international beer of choice in Brazil. How the Dutch group copes with this in a region where it already suffers an inferiority complex will be interesting to watch.
Away from Brazil, it may not be all plain sailing. Modelo already has a presence in 180 countries, but Corona has somehow never quite made the step-up to be a truly global brand. With A-B InBev's maketing clout, that may be about to change. The brewer's bosses must be hoping that lessons have been learnt from the bid to make Beck's a globally recognised beer, which has never really taken off.
The other fall-out from the deal will be working out the various distribution contracts Modelo has with other groups globally. Infamously, the Mexican brewer spurned A-B InBev on two occasions when seeking distributors for its brands overseas - once in the UK and Japan in 2010 and in China last year.
I understand that A-B InBev is only now being allowed to see the terms of the various distribution contracts to see precisely where it stands.
So, invevitably, from the merging, or "combining" of the world's biggest and sixth largest brewers, logistically there's plenty to deal with. In comparison, Constellation Brands, the other significant benefactor from the deal, would appear to have a relatively easy job, as long as it can work out how to run a brewery.
Industry rumblings suggest A-B InBev may have paid over the price for its Mexican treasures. But, as the Corona logo suggests, it could yet be its crowning glory.
InBev Italia’s strategy for the forecast period will be to continue its occasion-based marketing, and to promote its products. The company will concentrate its efforts on meeting consumers’ expectatio...
Inbev will continue to focus on premiumisation, adding value and Increasing its channel coverage over the forecast period. The company will continue to invest heavily in marketing support and new prod...
- Focus - Edrington's FY Performance by Brand
- Where Beer is Brewed Can Leave a Bad Taste
- Analysis - Storm clouds lift over Diageo Towers
- Pernod relies on Indian whiskey to crack Africa
- Analysis - Cider's Campaign Gains
- Former Bacardi exec takes De Kuyper CEO role
- Diageo lining up Gleneagles sale - report
- Diageo CFO Mahlan to head up N America
- Edrington posts FY profits drop
- TWE, Pernod hail China-Aus FTA
- Global liqueurs insights - market forecasts, product innovation and consumer trends research
- The IWSR Company Profile 2014 – Remy Cointreau
- Diageo plc (DGE) - Financial and Strategic SWOT Analysis Review
- Edrington Group in Spirits (World)
- Global Tequila insights - market forecasts, product innovation and consumer trends research