The Brew-Ha-Ha Over Budweiser’s Acquisition

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Back in mid-October, 2015, Anheuser-Busch InBev announced a planned acquisition of SABMiller for just over $100 billion.

Not only does this proposed acquisition involve a large sum, but it involves several countries.  Anheuser-Busch InBev is a Belgium company.  SAB Miller is the parent company of Miller-Coors, which itself was a merger of two national brands.  Coors was also involved with acquisition with Molson Brewing Co.  This deal is financed for Anheuser-Busch InBev by Brazilian investment firm 3G Capital.  The deal is under the jurisdiction of British regulators.  It also involves the Chinese, with one of their brews, Snow, owned by SABMiller.

Not only is the amount big, the companies big, with several countries, but it is estimated that, if completed, the merger would have one company corner around 33% of the total world beer market.

So, what’s the purpose of this all–besides to dominate the market, drive up prices, boost shareholder price and increase executive salaries, not to mention the lawyer and banker fees?  Well…there’s something else.

The want to compete with the tiny craft brewers.

What threat do these small, local breweries pose for the big guy?  Well, these craft breweries is where the growth in the beer market is today.  Now, the breweries by law can sell their product in stores only through distributors.  And guess who has a the most influence on the distributorships in this country?  That’s right–Anheuser-Busch InBev.  This is a reason why you see local breweries opening their own brew pubs-they can stay afloat and legally avoid the distributorship requirements.  If Anheuser-Busch InBev pressures the distributors, the small guy can either sell or limit his/her operation to just the brew pubs, thus eliminating the growth into the take-home market.

This merger should not happen.  In addition, the laws should be changed to allow the small guy to compete with the big guy in the stores, bars, restaurants.  Save the competition in the beer industry.  This also involves not only saving jobs but saving the culture that many small businesses create which makes for a work environment that many people enjoy.

Bob Pease, the President of the Brewers Association had an interesting op-ed piece in the June 2 edition of the New York Times.  Read this to get a better understanding of the distributorship dilemma that could be faced by the craft brewers if this deal goes through.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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