A-B deal. How do we feel about THEIR new Belgian Overlords?

[rockout]

The Japanese lost a ton of money on that deal. They sold when real estate in Manhattan was in the tank.

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]

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.

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]

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.

 

[rockout]

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.

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]

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?

 

[mmb]

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]

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 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?

 

[olllllo]

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.

 

[rockout]

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!

 

[Revvy]

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.

In a June 28 blog entry titled "InBev/AB Deal = Brewing Industry Tipping Point?", I pondered the possibility that craft brewing could benefit from the nation's current economic upheaval, high gas prices, and an InBev deal.

I suggested that craft brewers launch a campaign urging Americans to "drink local" and thereby save gas, support local businesses, etc.**

I'm not the only person who is thinking this way. The Alstrom brothers, the energy behind beeradvocate.com and its print counterpart, Beeradvocate magazine, have taken a first step with their "A Buck for Beer Advocacy!" campaign. Members of the beeradvocate.com forum have posted comments seconding the motion and outlining their own variations. My pal Jay Brooks just posted a blog entry along the same lines. If I kept hunting around, I’m sure I'd find more online talk about promoting craft beer as local/green beer.

But a truly professional, nationwide, long-term media campaign requires money and lots of it. Ideally, the Brewers Association would step up; perhaps build a partnership with the Alstrom brothers. Maybe one of the bigger craft brewers could pony up some cash.

Or not. Money’s tight everywhere. The BA, for example, is a small operation; I doubt it’s got a lot of extra money to throw at this kind of campaign. (On the other hand, a “drink local” crusade gets right to the heart of what the BA is all about, right?)

Meanwhile, spread the word. When your friends talk about eating “local” or buying “green,” remind them that beer is food. And that going green begins with grassroots!

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]

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.

 

[Sea]

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?