Here’s an interesting article that discussed how the impact of the Budweizer – Inbev merger might have an effect on the market.
Drink Craft Beer, You’ve Earned It!!!
War Is Brewing: Are Budweiser’s Sports Sponsorships in Jeopardy?
by L. J. Burgess
Belgian beer-brewer InBev and Brazilian beverage-subsidiary AmBev are prepping a $46 billion offer for U.S. brewer Anheuser-Busch.
The InBev take-over, if successful, would create the world’s largest beverage business by joining the world’s No. 2, InBev, with the world’s No. 4, Anheuser-Busch. The InBev offer spreads out to $65 per share.
If this deal goes down, the two beer brewers, combined with AmBev’s South American soft-drink dominance, might permanently checkmate the coming U.S. partnership of SABMiller and Molson Coors, which will control nearly 30 percent of the $97 billion U.S. market. Anheuser-Busch maintains a 51 percent market share stateside.
To stave off InBev’s bid, Anheuser-Busch is seeking to complete a partnership with Mexican brewing giant Grupo Modelo, in which it already has a 50 percent stake, to strengthen their North American No. 1 ranking.
InBev has warned the American beer giant against such a move citing concerns that any deal would lessen Anheuser-Busch’s appeal and damage share-holder confidence.
With the successful incursion of independent craft-beer brewers in the U.S. marketplace, Anheuser-Busch has attempted to stay relevant. They’ve bought into Red Hook Ale and Widmer breweries in the Northwest and have invested millions in developing and expanding their award-winning Michelob line, adding Amberbock, Honey Lager and Oktoberfest Marzen beers to compete with the Molson Coors in-house developed Blue Moon Belgian White Ale brand, the best-selling beer in U.S. grocery stores.
At the same time Anheuser-Busch’s largest distributor in the U.S. has broken the brewer’s exclusive contract so independent craft-beer brewers can be stocked on its shelves. The high profit margins on niche beers justifies this radical move. Obviously, like dominoes falling, this ballsy move will be duplicated by more of Anheuser-Busch’s exclusive distributors across the U.S. hoping to cash in on the niche-brewer market.
But it’s going take a big deal to keep this merger from happening. After the Yahoo vs. Microsoft fiasco, and with a $65-per-share offer on the table, stockholders worldwide may be trigger happy in this beer-slinging shootout.
Warren Buffett and Busch family members are also stepping into the fray, urging a deal with InBev.
This is going to be huge somewhere down the line, regardless of whether InBev’s offer succeeds or not. How would a merger of this magnitude affect sports worldwide? Anywhere in the world you can turn on a TV and see “Budweiser” plastered on anything that doesn’t move…and yes, some that do, thank you Kasey Kahne. We suck that up here in the states.
How many Miller Lite drinkers choked on their foam when Kurt Busch stepped into the No. 2? Did you switch brands? No, you were loyal in the end, despite all of your griping.
Old-world beers are just as prominent in European motorsportsâ€”from the World Rally to Le Mansâ€”and these fans are just as beer loyal as any Natty-Boh drinker in a Dundalk corner bar.
Did you catch sight of any beer cars in the Nationwide race in Mexico City? You better believe Tecate had a hood on the grid.
We’ve already glimpsed some minor beverage skirmishes in NASCAR’s victory lane. Jimmie Johnson blocked the camera’s view of a Coke product so that his Pepsi product could be better seen.
That’s just a soft drink, and it’s already gettin’ ugly.
Will the conglomerates bid so high for event sponsorships that owning a league is cheaper than buying the naming rights? The National Budweiser League? The National Coors Athletic Association? Major Labatt’s Baseball? (Okay, that’s crazy…or is it?) The Kentucky Derby runs Clydesdales? Nah.
With worldwide beer dominance becoming a grudge match, the gloves are off and nothing will be sacred over the next decade, perhaps not even the amateur ranks. Will amateur athletes continue to hide their stipends, or will the cash finally come out of the closet?
When the Olympic Committee meets again it might be to sell out to the Miller Lite Milers, the Heineken Hurdlers, or the Blue Moon Broad Jumpers.
Will resources be so unlimited that, if NASCAR does franchise, Hendrick Motor Sports and Roush-Fenway become the “little guys”? Could they start a flat-out bidding war for NASCAR itself?
Where will it end, or perhaps, more timely, where will it start? Will there be only three beer companies left in the world?
Will we see a Sammy’s Honey Tainted Wheat Harvest Sun Brewed Fall Dry Spell Pale Ale Ford Fusion on the high-banks of Daytona?
My scenarios are far-fetched and certainly not timely as of yet, but one thing is certain: There will be no cutbacks and no quarter given. It’s going to be balls to the walls in a battle for exposure, media bites, and your precious beer dollars…and you get to make the call.
My most urgent concern is, as always…where does Natty-Boh fit in this mess?
What’s your take on this hops-and-barley beat down?