Comment - Wehring's Way - Anheuser-Busch InBev and Grupo Modelo: That Ought To Do It
It would appear that either Anheuser-Busch InBev doesn't have the stomach for a courtroom battle with the US Department of Justice (DoJ) - would anyone? - or it has had 'a bit of a chat' with the department, to see if they can iron out their differences.
The news today (14 February) that the brewer has revised its agreement with Constellation Brands about the latter's JV with Grupo Modelo in the US, should see the DoJ finally unclip the velvet rope and let A-B InBev make party.
But, how happy is the brewer with the concessions it has agreed to make?
A-B InBev has given up its ten-year call option on Constellation and Modelo's Crown Imports unit in the US. It has also agreed to sell Modelo's brewery on the Mexico/US border to Constellation for US$2.9bn. The facility, which provides 60% of Modelo's US volumes, will be expanded by Constellation over the next three years to account for 100% of volumes for the US.
Now, A-B InBev must wait by its phone; we have no idea how long for.
Much as recent speculation has suggested that the brewer would baulk at giving up the Piedras Negras brewery, A-B InBev will drive home its claim that its move for Modelo has "always been about Mexico and making Corona more global in all markets other than the US". That's the line CEO Carlos Brito used today: Watch it become a mantra because, with no control over US supply, the buy can be about little else than Mexico and the rest of the world.
Short-term, then, A-B InBev could be forgiven for sulking a little about what it has had to do. But, with its global distribution prowess and the world's keenness to play with premium, its Modelo play should eventually provide payback; just not as spectacularly as the brewer may have initially hoped.
Anheuser-Busch InBev (A-B InBev) is facing challenges in the mature US beer category by focusing on premium and craft beer. As the US Justice Department precluded A-B InBev from controlling the lucrat...
Alcoholic Drinks in Mexico industry profile provides top-line qualitative and quantitative summary information including: market share, market size (value and volume 2007-11, and forecast to 2016). Th...
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