Blog: King of beers deposed, but so what?
Chris Brook-Carter | 5 March 2004
One of the biggest questions that seems to have arisen from the confusion that has followed the proposed creation of InterbrewAmbev, is how it will affect the current world's number one brewer Anheuser-Busch.
Most obviously, the deal is going to cost A-B bragging rights to the title of the world's largest brewer, as it wil be relegated to the silver medal spot in terms of global volumes.
However, of more concern to A-B and investors is how the US giant will respond, firstly, to having missed out on a golden opportunity to tie up with AmBev itself, and secondly, to the creation of such a giant on its doorstep.
The investment community so far seems split, although there is certainly no sign of panic from either A-B or its supporters. Of major concern is A-B's reluctance to really throw its hat into the consolidation ring. Yes, it has taken small stakes in overseas brewers, but, while it is doing so, its competitors are fast catching it up by forging mega deals such as this one, or the acquisition of Miller Brewing by SABMiller.
Furthermore, InterbrewAmBev cuts off another potential alleyway to growth and once again highlights Anheuser's reliance on the US for profits.
The deal is "a clear loss for Anheuser-Busch," said Andrew Conway, beverage analyst for Credit Suisse First Boston in New York.
That said, in a research note yesterday Mark Swartzberg, an analyst with Legg Mason, wrote: "If completed, the proposed Interbrew-AmBev combination relegates the king of beers to being king only of the global profit pool. A-B would continue to have the largest share of the global beer profit pool. But, on a volume basis, A-B would become the number-two global brewer behind the proposed InterbrewAmBev."
He went on: "But all scale is not created equally, and the proposed combination is of limited consequence to the current A-B's future cashflows and the certainty ascribable to realizing those cashflows, in our view. A-B continues to hold the distant share of the global beer profit pool, and the proposed combination brings little, if any, lasting top-line synergies to either party's US and Mexico business, where A-B makes its money. Nor does the combination represent a material change to the competitive landscape in China, an important cashflow driver for a future generation of A-B shareholders."
Could it happen? According to this report, a section of the beer community wants to ditch the word craft. They prefer instead the term “Indie” for brewers they believe follow the enlightened path of t...
The global elite were in Switzerland last week for the World Economic Forum in Davos, the annual corporate huddle for the rich and powerful. The CEO of The Coca-Cola Co, Muhtar Kent, was there too, de...
With The Coca-Cola Co stealing yesterday's limelight with its new united marketing strategy for brand Coke yesterday, a Forbes interview with PepsiCo North America Beverages' new CMO, Seth Kaufman, sl...
It is a bold attempt to regain a measure of control in the ever-spiraling debate about sugar. But will The Coca-Cola Co's new marketing strategy - which for the first time ties all of the Coke family ...
- What's so special about Islay anyway? - Comment
- Six key trends for alcoholic drinks in 2016
- What do Bourbon and craft beer have in common?
- Aus wine industry pays price for past failures
- Ten things to know about spirits in the US
- Alcohol industry warning over Kroger plan
- SABMiller hits back in UK corporation tax row
- Diageo's Orphan Barrel The Gifted Horse - NPD
- Suntory bids for Lucozade, Ribena Nigerian network
- American rye whiskey sales leap 600% in five years
- What Next for Beer and Brewers Following the MegaBrew Deal?
- Global travel retail insights - market forecasts, product innovation and consumer trends
- Global Beer Trends 2015 : Global Beer Trends and Long-term Forecasts
- Global Whiskey Market 2016-2020
- Global sparkling wine insights - market forecasts, product innovation and consumer trends research