OP
OP
Disrtibution, Distribution, Distribution!
A-B deal. How do we feel about THEIR new Belgian Overlords?
- Thread starter olllllo
- Start date
Help Support Homebrew Talk - Beer, Wine, Mead, & Cider Brewing Discussion Forum:
MikeFlynn74
Well-Known Member
I hate to see American money going overseas.....
OP
OP
To be a little more clear when I say distribution....
I fully expect AB-InBev to put the pull court press on retailers to carry all of the fine Bud-InBev products. This is really going have the potential to hurt craft beer.
I fully expect AB-InBev to put the pull court press on retailers to carry all of the fine Bud-InBev products. This is really going have the potential to hurt craft beer.
sterling214
Well-Known Member
I live 15 min. away from getting a good growler of beer from at least 2 excellent micros. Also there is my own beer, which should be getting nothing but better. I don't drink in bars much at all anymore because of the whole Drunk Driving thing, so I could care less.
rockout
Well-Known Member
Then you should be ecstatic right now, because a whole navy-load of money from Europe just came into the US, via the $70/share buy.
It's meaningless to even say something like "American money going overseas" in a case like this anyway. It's a very Archie-Bunker-like 70's kind of sentiment. That attitude didn't do much for our economy back then and it sure as hell makes even less sense now.
I cant help but think of amf and harley during the seventies. In-Bev is messing with an American icon(although not my icon).
ollllllo are you saying that there wont be shelve space for craftbrew due to mandatory stocking of other In-Bev product?
ollllllo are you saying that there wont be shelve space for craftbrew due to mandatory stocking of other In-Bev product?
MikeFlynn74
Well-Known Member
Actually only about 28 of that is profit for the share holders. But thats a one time offering. Now all profits will be sent to the EU.
Bud was trading at around 45-55 dollars prior to the talks of being bought.
rockout
Well-Known Member
A completely meaningless number. If you really want to look at it objectively, how many billions of dollars does that 28% over previous price represent? And how many years will it take InBev to recoup those billions? If they ever do? Just because A-B is profitable now is no guarantee that they'll be profitable 10, 5, or even 2 years from now.
The bottom line is, it doesn't matter to an average American's wallet one bit whether A-B is owned by InBev or not.
MikeFlynn74
Well-Known Member
Im sure they are well worth over paying in the short term- Investing billions takes multiple banks and lots of people to say we will make the money back fast.
So once InBev takes the reins all profit now goes to Belgium. Not American investors. It might not matter to my wallet. But it will impact the American Economy eventually
But I guess it shouldnt matter. We should not own a single thing in America or have any pride in American products, right?
carnevoodoo
Well-Known Member
We're in a new era. Globalization is changing everything and with teh dollar as weak as it is, everything American is dirt cheap (relatively) to the rest of the world.
If you think about what a barrel of oil costs right now (145 a barrel!) that is mucch more like 75 dollars a barrel to a lot of the world. We're feeling it because of the current economic climate of our country.
If America wants to be #1, they have to take a serious look at how to do that and not just assume we're always going to be there. Too many Americans are WAY too proud to admit we have issues, but we do and solving them will make us the global leader again. In the meantime, people will still fly here and buy up everything we make.
Take pride in American products. We are still a great nation and unparalleled in many ways. Just stop assuming that we're invincible. And really, InBev has done us all a favor. Drinking American now means drinking higher quality beer.
MikeFlynn74
Well-Known Member
I do fear for the Jobs that will be lost, reading about InBev slash and burn policies for profit policies.
I dont see how selling large corportations (and dont fool yourself, InBev is going to make money hand over fist with this deal) overseas accomplishes what you are suggesting. AB pumped a lot of money into our economy. AB-InBev will also pump a lot of money into our country, but a large percentage of the overall money is going to go overseas. The American economy was better off before this deal happened.
OP
OP
carnevoodoo
Well-Known Member
All 12 AB breweries will still operate in America. The salaries of those workers will still get their paychecks. They will still buy ads, and their beer will still be taxed at the state and federal level. America will still see a ton of money. The only shift is where the rich people get richer and it isn't like America benefits from the huge stockpiles of cash of the rich. Additionally, There are still shareholders, it is just that the majority will be owned by another country.
What was I suggesting? I am saying this will continue to happen until our country figures out a new economic model, we get ourselves out of debt, and we stop being so arrogant. Economies are not national anymore. We need to accept the global economy and at the same time figure out how to continue to be prosperous.
rockout
Well-Known Member
As a comparison, many Americans wept and lamented when a Japanese company bought Rockefeller Center in its entirety in 1989, another time when our dollar was weak. Then in 2000, when our dollar was strong again, guess what happened? Some American billionaires bought it back. Big deal.
Stubbornly sticking to the opinion that "This is bad fer 'mericans!" is laughable. Everyone is certainly entitled to their opinion, of course, but protectionism is without a doubt bad for the American economy, and that's been proven before. The InBev deal is not bad or good on any measurable scale; it's just a reflection of where the dollar is at the moment.
Stubbornly sticking to the opinion that "This is bad fer 'mericans!" is laughable. Everyone is certainly entitled to their opinion, of course, but protectionism is without a doubt bad for the American economy, and that's been proven before. The InBev deal is not bad or good on any measurable scale; it's just a reflection of where the dollar is at the moment.
Orpheus
Well-Known Member
I have a hard time feeling bad for A-B. Aren't they just now becoming victims of what they've been doing to other breweries for decades?
Glibbidy
Well-Known Member
Just curious, what is the source of your information? Last I knew it was mostly the same recipe and has changed very little over the past one hundred years.
FWIW, I do not consume any AB products, but I certainly do respect their business model.
BTW...little known fact, or perhaps widely known...Adolphus Busch never really cared for beer, especially his own. He in fact was a wine drinker. Hard to believe, but true.
Desert Monkey
Well-Known Member
I agree on the pieces here in which distribution is mentioned as a negative impact to the current US Craft Beer market. It's also an interesting impact to the market of AB drinkers that now hear they have a new overlord at the switch.
In my experiences with AB drinking types, they seem to have a "you can have my X when you pry it from my cold dead hands" mentality when foreign companies impact a product they see as "American". Outside the job discussion, maybe some of these hard core American Beer drinkers will balk at the takeover, and say "if that's the way it's to be, give me a Real American Beer - Sam Adams will do".
Just saying, maybe some of them move into the American craft beers out of spite to the overseas image this news presents.
In my experiences with AB drinking types, they seem to have a "you can have my X when you pry it from my cold dead hands" mentality when foreign companies impact a product they see as "American". Outside the job discussion, maybe some of these hard core American Beer drinkers will balk at the takeover, and say "if that's the way it's to be, give me a Real American Beer - Sam Adams will do".
Just saying, maybe some of them move into the American craft beers out of spite to the overseas image this news presents.
Dr Vorlauf
Well-Known Member
Typical ratio for many European based companies.
Dr Vorlauf
Well-Known Member
The Japanese lost a ton of money on that deal. They sold when real estate in Manhattan was in the tank.
rockout
Well-Known Member
You're sort of supporting my point that it doesn't matter if InBev buys Budweiser. In the case of Rockefeller Center, the cash came to mostly American owners for the original purchase, and then Rockefeller Center was in bankruptcy when the Mitsubishi Group handed back the keys. (new owners were a consortium of corporations and billionaires from several nationalities, including American, by the way). Mitsubishi even sunk in $500 million during the time they owned it; that on top of the 1.8 billion they paid.
It just illustrates that no one knows if this is a good deal for InBev or if they overpaid. Someone earlier said "well A-B will be profitable for many years and that money will be going to ferreners!!! grrrrr....." This misses the point entirely. It's irrelevant that A-B will be profitable for years; the question is, will it be profitable ENOUGH to justify the rather large purchase price? There are no guarantees that it will be.
InBev believes the answer is yes but they don't know for sure.
A-B's board believes they got the better deal but they don't know for sure.
And the anti-InBev-buying-A-B crowd in this forum may know tons about brewing beer, but they know f**k-all about macroeconomics.
MikeFlynn74
Well-Known Member
I know its all theory and its a waste of 3 credit hours. Markets are much more dynamic than people care to assume. InBev will make their money back. I bet within 3-5 years. Especially if Oil goes back down. If not they might have a uphill battle.
For now- I dont like AB being owned by the EU. Sorry thats my opinion. When you start posting "ferreners!" you sound like a bush bashing ****** posting from his apple iphone in traffic driving his vw bettle on the way to the sierra club meeting.
EvilTOJ
Well-Known Member
Mike, lets try to keep it civil, alright? Things were going so well....
Personally, the only thing I'm worried about is AB and InBev trying to muscle in on distribution. In Oregon there's no way to sell beer in bottles or kegs unless you go through the distribution cartel. It's very expensive to do that way, and that's why we ended up getting a ton of brewpubs; it's cheaper to sell beer on premises to market your product. Imagine if InBev wrote notes on green paper to the distributors that they'd gladly pay twice as much in distribution fees if it would help muscle out some of the smaller competition.
Personally, the only thing I'm worried about is AB and InBev trying to muscle in on distribution. In Oregon there's no way to sell beer in bottles or kegs unless you go through the distribution cartel. It's very expensive to do that way, and that's why we ended up getting a ton of brewpubs; it's cheaper to sell beer on premises to market your product. Imagine if InBev wrote notes on green paper to the distributors that they'd gladly pay twice as much in distribution fees if it would help muscle out some of the smaller competition.
rockout
Well-Known Member
You should realize that Republicans are probably in favor of the takeover, being that they're into free markets, less economic borders, no interference in trade by local governments.... so which is it? Am I a Republican when it comes to economics, or am I a Bush basher?
Please do a little thinking about what you're saying before you waste time typing ad hominem attacks from your gut. I also think the discussion was fairly civil and reasoned before your post.
rockout
Well-Known Member
Speaking of research, just wanted to add some actual facts that might be useful in this debate: InBev paid $52 billion for A-B. In the last few years, A-B profits have been in the range of $214 million per quarter to around $518 million in first quarter 2007. They actually took a small dip in the first quarter of this year. Assuming the profits stay at the high end and don't actually drop further because of a slightly weaker economy, that puts profits at a healthy $2 billion or so per year.
I'd like to take you up on your offered bet that InBev will make their money back in 3-5 years. How much would you like to wager?
I'd like to take you up on your offered bet that InBev will make their money back in 3-5 years. How much would you like to wager?
InBev is also known for selling off smaller brands and breweries to make money.
They also want to use the distribution pipeline that A-B has to sell *MORE* of the beer they already own.
It's pretty easy to see this conversation happening in the future at your corner bar.
"Take that *insert SABMiller / MolsonCoors band here* and pickup this special beer from *insert InBev beer brand* and we'll see about some heavy promotional free items at the same time. Maybe a few kegs for "samples?"
Pretty good argument for increased income on existing InBev stock.
rockout
Well-Known Member
Increased income is one thing. But in case you missed the math - at rate of current profits ($2B a year) it would take 26 years to make back their purchase price. If anyone thinks they're going to quintuple their profits immediately and sustain that for 5 years, they should sell their house and buy as big a piece of InBev as they possibly can.
Just illustrating that this was a BUSINESS deal - both sides obviously think they came out ahead or the deal wouldn't have gotten done. A-B already had 48% of the market, which was actually downconfused slightly from years past. (I couldn't believe that when I read it, had no idea it was that high). As for selling off smaller brands and breweries to make money, sure, but then THAT part of the $2B a year profit goes away, doesn't it? In fact, they're already talking about selling off the theme parks.
Anheuser-Busch theme parks face possible sale
Analysts see InBev spinning off assets that aren't part of core business
It's just business. A-B and SABMiller are already doing everything they can to increase current marketshare in the US, they've been battling each other forever using every tactic they can think of. Even InBev doesn't think they can suddenly capture a 60% or 75% marketshare overnight. Are they going to try to increase? You betcha. But don't tell me they're going to suddenly go from $2B a year profit to $10B+ a year - they're looking at this long-term, and no one knows for sure if profits will even be up NEXT year. If we did, we'd be a billionaires ourselves from correctly playing the stock market, wouldn't we?
Just illustrating that this was a BUSINESS deal - both sides obviously think they came out ahead or the deal wouldn't have gotten done. A-B already had 48% of the market, which was actually down
confused slightly from years past. (I couldn't believe that when I read it, had no idea it was that high). As for selling off smaller brands and breweries to make money, sure, but then THAT part of the $2B a year profit goes away, doesn't it? In fact, they're already talking about selling off the theme parks.Anheuser-Busch theme parks face possible sale
Analysts see InBev spinning off assets that aren't part of core business
It's just business. A-B and SABMiller are already doing everything they can to increase current marketshare in the US, they've been battling each other forever using every tactic they can think of. Even InBev doesn't think they can suddenly capture a 60% or 75% marketshare overnight. Are they going to try to increase? You betcha. But don't tell me they're going to suddenly go from $2B a year profit to $10B+ a year - they're looking at this long-term, and no one knows for sure if profits will even be up NEXT year. If we did, we'd be a billionaires ourselves from correctly playing the stock market, wouldn't we?
OP
OP
The so called anti-InBev crowd also recognizes the impact this deal has on distribution and it's potential effect on the growth of craft beer.
We need not even dealve into macroeconomics and the ROI aspects of this deal to have concerns about it's impact so there's no need to beat anyone over the head with John Kenneth Galbraith.
We need not even dealve into macroeconomics and the ROI aspects of this deal to have concerns about it's impact so there's no need to beat anyone over the head with John Kenneth Galbraith.
rockout
Well-Known Member
I wasn't, I was only responding to the "I don't like foreigners owning A-B" crowd, and maybe attempting to gently point out that it isn't what we should be concerned about, for more than one reason.
I do agree that this may have a negative effect on the growth of craft beer but I stress the MAY. There's certainly a possibility that drinkers of A-B will turn to American brands, and at this point, the BMC are all pretty much part of a multi-national; Coors less so, but still involved heavily with SABMiller.
Do I think, in reality, former Budweiser drinkers will reject Budweiser and start drinking better beer? No, unfortunately, I think they'll forget InBev owns their precious Bud in about a week and go right back to drinking it, if they ever even stopped in the first place. After all, it's cheap and has the most marketing $$$ behind it, and that ain't going to change.
But we can hope! If I was a craft beer brewer and had an advertising budget, I'd be stressing the "Made in America" angle on my beer heavily, and immediately, to maybe make a few new customers out of those dolts. It's so crazy it might just work!
I do agree that this may have a negative effect on the growth of craft beer but I stress the MAY. There's certainly a possibility that drinkers of A-B will turn to American brands, and at this point, the BMC are all pretty much part of a multi-national; Coors less so, but still involved heavily with SABMiller.
Do I think, in reality, former Budweiser drinkers will reject Budweiser and start drinking better beer? No, unfortunately, I think they'll forget InBev owns their precious Bud in about a week and go right back to drinking it, if they ever even stopped in the first place. After all, it's cheap and has the most marketing $$$ behind it, and that ain't going to change.
But we can hope! If I was a craft beer brewer and had an advertising budget, I'd be stressing the "Made in America" angle on my beer heavily, and immediately, to maybe make a few new customers out of those dolts. It's so crazy it might just work!
This thread needs some levity...
[youtube]ObaYpoAnupU[/youtube]
"Waffle Humpers."
I don't know if you have heard, but in what is a case of either perfect or terrible timing, tomorrow night (July 17), CNBC will air a one-hour documentary about Anheuser-Busch. The program is part of its ongoing series called "American Originals."
Should be interesting.
Also I've been following Maureen Ogle's, the Author of Ambitious Brew, blog on the Inbev aquisition and it's impact on the craft beer industry...she has some great insight. This is from a couple days ago.
You should check out the 5 part article she wrote on the future of brewing. She posits in the last part that Dick Yuengling may be the one to best capitalize on this takeover. Here's that blog http://www.maureenogle.com/blog/2008/07/looking_back_at_the_future_of_4.html
And her blogsite...http://maureenogle.com/blog/
Her take is that of a historian with an intense knowlege of the brewing industry, so it is a slightly different take...
[youtube]ObaYpoAnupU[/youtube]
"Waffle Humpers."
I don't know if you have heard, but in what is a case of either perfect or terrible timing, tomorrow night (July 17), CNBC will air a one-hour documentary about Anheuser-Busch. The program is part of its ongoing series called "American Originals."
Should be interesting.
Also I've been following Maureen Ogle's, the Author of Ambitious Brew, blog on the Inbev aquisition and it's impact on the craft beer industry...she has some great insight. This is from a couple days ago.
You should check out the 5 part article she wrote on the future of brewing. She posits in the last part that Dick Yuengling may be the one to best capitalize on this takeover. Here's that blog http://www.maureenogle.com/blog/2008/07/looking_back_at_the_future_of_4.html
And her blogsite...http://maureenogle.com/blog/
Her take is that of a historian with an intense knowlege of the brewing industry, so it is a slightly different take...
irunxcjm
Well-Known Member
On another light hearted note, Boulevard now is claiming to be the "largest Missouri-based brewery." They always used to say (proudly, I might add) that they were the second largest brewery in Missouri. It didn't take long for smaller companies to take advantage of the marketing aspect.
Adolphus Busch, the founder of AB was European. Budweiser is named after the European town of Budweis, where Adolphus stole/garnered his recipes.
Sure AB was started here, but with the founder, name of several of it's biggest sellers, and recipes all of European heritage, isn't this really more of a homecoming?
Sure AB was started here, but with the founder, name of several of it's biggest sellers, and recipes all of European heritage, isn't this really more of a homecoming?
Similar threads
