InBev vs AB - Who Wins?

Submitted by Hugh on July 9, 2008 - 9:44am
Anybody paying attention to business in the last few weeks - beer business or no - has certainly seen a lot of attention focused on InBev's offer for Anheuser-Busch.  It is symptomatic of today's global economy that the big keep getting bigger - whether it makes economic sense or not.  At the end of the day, I think the consumer pays a high price.

 

Let me clarify.  I do not know whether the AB/InBev deal makes sense for either AB or InBev.  There are the standard arguments of economy of scale, global market share, improved efficiencies, etc.  There are probably some benefits, but are they enough to deliver a return on investment for InBev's proposed 56 billion dollar cost of acquisition?  I don't know - they didn't consult me.

I wonder if Bud is suddenly not American owned will it weaken the brand, possibly creating opportunities for smaller American brewers? Or does it just strengthen the newly joint ventured MillerCoors?

 

I do know that, after a certain difficult to define point, as entities get larger the variety and choice available to the consumer gets smaller.  Large entities weed out "non-performing" products that may have a following in one market but do not fit the "global" strategy.  It makes business sense but the consumer takes a hit.

Large entities - and this proposed InBev/AB one would be huge - can also almost control certain supply sources: in this case barley/malt, hops and potentially some packaging materials.  This can seriously affect pricing and availability, potentially making it challenging for smaller breweries to source some of what they need.

 

Time will tell if the deal goes thru, and if it does, what effect it will have.  Regardless, it makes for interesting times and I will be curious to see the landscape after the dust settles.

 

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Hugh Sisson

General Partner for Clipper City Brewing Co, LP

Co-host of Cellar Notes on WYPR 88.1 FM