Exactly what is InBev trying to do?

There's a big difference between small businesses (let's not forget that small business in America means 500 or less employees, and also includes franchises I believe) and a large multinational.

 

Yes, if you actually follow the posts I was replying to, people were claiming that all businesses are motivated only by profit, which is trivially false. I'm not even sure that all giant multinational conglomerates are driven solely by profit, though certainly most are mostly so driven.

 

Make profit

 

My thoughts are that in order to know exactly what InBev is trying to do, I would need to be really high up in the company. I think I would have to be a board member or something, or someone that has first hand knowledge of the company's plans for the future.

 

Ever play the board game "Monopoly?"

 

I think everyone who says "Make profits" thinks they are picking the cynical, realistic option, but I don't think that's strictly true. Many large companies are more concerned with revenue growth than with profits, and InBev's actions over the last couple years certainly speak to that.

Public companies should be trying to maximize shareholder value, but most executives have bonuses that are largely based around growth, and growth is much more likely to make a business a "sexy" stock choice than consistent profits are. Thus many businesses continue to acquire everything in sight, even if it doesn't help the bottom line at all.

To me it looks like InBev has a management that is obsessed with growth above all else. They've swallowed nearly every direct competitor already. As they run out of places to grow in that area they don't have much choice but to branch out to other places. Craft beer is one. There's also talk of them expanding more into soda and other bottled beverages.

So short version: They're trying to grow, no matter what.

 

While I completely agree that the strategy here is revenue growth instead of greater profitability in the immediate term, it is ultimately with a focus on greater profitability in the longer term. A company as well established as InBev has ironed out the kinks in it's operating expenses to the extent that it can't make significant dents in costs to improve profit ratios. Additionally, that particular segment of the market (mass produced adjunct lagers) is highly competitive and saturated and the only way to sway brand loyalty is generally through expensive marketing campaigns, and those usually only have an impact at the margins. So while they are highly profitable on their "bread and butter", they've hit something of a ceiling there whereby adding new consumers, if it even can, comes at a cost that has a diminishing marginal return.

Noting the growth and popularity of craft options, they are seeking to buy established businesses with some brand loyalty within that market. Even if the financials of those specific companies would be a net decrease on their overall profitability in the immediate term, they are a fairly successful large brewer, can likely command more favorable supply pricing where it concerns malts due to economies of scale, and can turn a narrow profit revenue stream into a higher profit revenue stream over the long term.

So shorter version: when your existing operation has maxed out its profitability, buy a new revenue stream that can be made more profitable over the long term, even if it discounts your short term profits.

 

Yeah!!! Corporations have no obligation to their shareholders at all... Now lets all hold hands and color.

 

Most breweries are not publicly traded corporations. They are small to medium businesses with a limited number of controlling owners (sometimes just one). That means they have an obligation to do whatever the fuck they want.

 

Not to mention not all businesses are even corporations.

 

When you're a big conglomerate like In-Bev, you treat businesses under your umbrella like stocks. If you have a large sum of money to invest, you don't dump it on a single stock, you invest in a diverse portfolio of stocks across an array of different industries. This insures that changing trends across a single industry won't have a huge impact on your finances, essentially eliminating risk.

Long story short, if In-Bev has their hand in EVERY aspect of the beer industry, they don't have to worry about trends. Whatever happens to the beer industry, they will always be there to make money.

 

Key words in thread and post- "Inbev", "Corporation" "shareholders". This equals ONE obligation. Any other non-publicly traded company can do what they wish, but most want to keep brewing and feed their families, which in the long run means increasing profit.

 

The post you responded to was not describing Inbev. Read the whole thread.

And you can feed your family perfectly well without running your business like the second coming of Gordon Gekko. The world actually works pretty well when people just take what they need. Sorry, is that too close to holding hands and coloring for your taste?

 

I had a great article about InBev gutting Bud that I posted here, but the thread was deleted.

The CEO of InBev is gutting their product line to maximize profits. They sold off Busch Gardens/SeaWorld, they moved to thinner glass, smaller labels and thinner cardboard to cut costs. Saved tens of millions in packaging and even more by dumping other interests. Then they started tweaking the product, lowering the ABV (since taxes in UK are based on ABV, this saves $$$), using less desireable hops etc... Becks is now brewed in the US for US distro, but the quality is tanking, people know it tastes different and sales are down 15%. Overall Bud is down 8%.

GI's beers (not all) are no longer produced in IL, but in NY and elsewhere. Quality is slipping.

They can only gut the product so much before people move away, but they're all about making $$$. Any publically traded craft brewery better watch out for a hostile takeover, which is how InBev aquired Bud.

Stella also saw a hit to quality.

 

Stakeholder theory...

 

I'm pretty confident that there's very little reading comprehension going on in this thread. The number of facepalms is staggering.

 

I don't think that's true at all. I've had GI beers made in NY and can say that they tasted as good as the ones made here.

 

I would say that EVERY business owner runs the business to maximize return on investment. But that return may not be measured solely in dollars.

 

Fair enough. You could count time, mental & physical health, political agenda, power. All are certainly legitimate motivators.