Is Budweiser going to be a Belgian beer?

(2 votes)

Written by DJ Spiess

Wednesday, 11 June 2008

Unless you’re living under a rock, you’ve probably heard the Belgian beer giant InBev is proposing to take over Anheuser-Busch. What does that mean?

InBev is the world’s leading brewer, and the company claims their origins date back to 1366. It’s not clear which part of InBev dates back to 1366, but they have swallowed enough beer companies to make the claim possible. InBev as a company was created in 2004 when Belgian Interbrew and Brazilian AmBev merged. InBev currently owns popular beers such as Hoegaarden, Leffe, and Beck’s. They now want to purchase Anheuser-Busch. I can’t wait for the jokes if they rename the company to InBusch.

InBev is offering $65 USD per share of Anheuser-Busch. It is a good offer since $65 USD is 35% more than the A-B value before buyout rumors started. It’s also 18% higher than A-B’s all-time stock price high of $54.97 achieved back in October 2002. It is a great deal for stock holders and InBev would become one of the five largest consumer companies in the world. But what does it mean for the little guys, us?

What happens to the breweries?

The first question one needs to ask is where will the beer be produced? In their press release, InBev states they have no plans to close any breweries. Hopefully this won’t be like Hoegaarden. They purchased the brand, then in 2005 tried to move the beer out of the city Hoegaarden production to a larger facility in another city. Moving Hoegaarden was like Brooklyn Beer being produced in Kansas City. After public outcry and production problems, InBev relented and kept the brewery in Hoegaarden. So you have to wonder if the smaller breweries of Anheuser-Busch, such as the one in Fort Collins, Colorado will last long.

Will Budweiser become the next Belgian Golden Ale?

And what will the Belgians think of Natural Light? Not all of Budweiser’s brands are great money producers. Sure Budweiser will survive, but what about redundant brands such as Rolling Rock or Michelob? Budweiser has many brands, and not all will survive, especially if some InBev beers are produced in Anheuser-Busch breweries.

What happens to the little beers?

Will someone think of the children?

Anheuser-Busch owns Busch Entertainment Corporation which runs the Busch Gardens theme parks, SeaWorld, and several water parks. The Busch Entertainment Corporation is one of thirteen A-B subsidiaries. Are the subsidiaries something InBev wants to keep, or will they try to sell these off? Their press release gave no mention to these holdings. I really hope we don’t see these parks close, or worse fall into disarray when purchased by other companies. Will Shamu get sold off to some fast food sushi joint?

What’s more American than Anheuser?

Ok so Anheuser isn’t exactly American, but the Budweiser brand is very American. While the beer tastes like water, like it or not, Budweiser is a part of the American identity, does that hold true if it’s no longer an American company?

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Comments

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Al - Like making apple pie in Tahit

| 128.231.88.xxx | 2008-06-12 08:21:05

I hadn't thought of the subsidiaries like Busch Gardens. Doesn't A-B own a significant part of the St. Louis Cardinals?

And what about the distributor network? I expect InBev definitely wants that. They're already distributing InBev products anyway. But will InBev push for better deals and/or more exclusivity and will the distributors balk?

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DJBrew

| Super Administrator | 2008-06-12 08:37:21

They sold the Cardinals in 1996, but they still own the naming rights to the stadium? Maybe it will become InBev Stadium?

I'm sure the real reason InBev wants Budweiser is the distribution network and better access to the North American continent.

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ChipperDave - You and I were thinking alike

| 192.44.136.xxx | 2008-06-12 13:24:45

I wrote a similar article about the InBev / A-B proposed merger over on Examiner.com. http://tinyurl.com/4x7wre

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DJBrew

| Super Administrator | 2008-06-15 22:53:02

Great minds think alike! Good article!

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Mike	\| 99.137.250.xxx \| 2008-06-12 23:48:30

I work for one of the BEC parks, Sea World, and the fact that the subsidaries are not even mentioned thus far really drives me crazy. I love my job and I don't want to see BEC go down the tubes

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elo - Dr. Tantillo says to watch out

| 208.120.149.xxx | 2008-06-14 09:14:46

Dr. Tantillo ("the marketing doctor"

did a post on your last point--that Bud's American identity may be such an integral part of its brand, that consumers may not be receptive to buying it if its ownership becomes foreign.
Here's a link to the full post: http://blog.marketingdoctor.tv/2008/06/12/tantillos-branding-bite-budweiser.aspx

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mike	\| 99.137.250.xxx \| 2008-06-14 22:34:47

I agree with the above post. AB prides itself on being "American"

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The Blow Leprechaun - Bad Branding

| 209.190.209.xxx | 2008-06-16 11:55:20

Let's be honest, does anyone drink Bud because they think it's the best tasting beer on the market? They drink it because it's American. If it's not American anymore, where do those drinkers turn? Miller is South African and Coors is Canadian, there won't be a dominant "American" brewery left. This is good for beer in general, but bad for A-B.

I don't think that's going to stop anything, though. I imagine InBev is more interested in the distribution than the breweries, and the owners of A-B stock don't need to concern themselves with what happens after the sale.

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