Saturday, June 14, 2008

More on Anheuser-Busch and InBev

We reported on the rumors of a takeover bid for A-B a couple weeks ago, and it seems to be coming true, though whether it will go through or not still seems to be in question.

Here are a few developments:
  • The Wall Street Journal is speculating that such a merger could have some significant marketing impacts (sorry, no link to WSJ, since it's subscription only -- here's a short item in Smart Brief). A-B spends very heavily on advertising ($475mil last year) while InBev is more into pricing: "Tom Pirko, president of the beverage industry consultancy Bevmark, said, 'The money InBev will spend will be on discounting and price wars, something that A-B built its empire to avoid.'"
  • There's also a rumor that A-B is interested in buying Mexico's Grupo Modelo (they currently own 50%), which could make them too big for InBev to swallow.
  • The Economist opines that the deal is all about distribution -- InBev's brands have little penetration in the US, while their networks in other countries could speed Budweiser's international expansion. Sounds right to me.

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