News U.S. Challenges AB-InBev's Purchase of Grupo Modelo

Discussion in 'Beer News & Releases' started by jesskidden, Jan 31, 2013.

Thread Status:
Not open for further replies.
  1. BeerBuddy2122

    BeerBuddy2122 Initiate (0) Dec 15, 2012 Pennsylvania

    I think I finally realized who all the Hopslam haters are...BMC people trying to manipulate a way to get us back to the dark side.

    But seriously, the only way in hell they could get me start buying their product again would be by convincing me that beers from Bells, RR, Sierra, Cantillion, etc. taste like crap.

    F InBev, they can say whatever they want, it doesn't make a difference.
    BedetheVenerable likes this.
  2. willbm3

    willbm3 Initiate (0) Feb 19, 2010 Massachusetts

    I definitely agree with this, but from a business standpoint you can't say that Sierra Nevada, for example, wouldn't be better off if they were the only (or one of very few) craft brewers.
    TheBeerAlmanac likes this.
  3. mark14580

    mark14580 Initiate (0) Jan 15, 2011 New York

    Pretty funny when people post that they believe something isn't news, as if their opinion on that is somehow more newsworthy than the original article.
  4. gwdavis

    gwdavis Initiate (0) Feb 8, 2012 Georgia

    Yeah, I suppose you're right. I only meant that it appears to me that in this department the favoritism is much more blatant. Not saying it's the first time it has happened by any means.
  5. rlcoffey

    rlcoffey Initiate (0) Apr 20, 2004 Kentucky

    Plenty of industries work together to grow the entire industry. Business isnt zero sum, its possible (if unlikely) for everyone to grow.

    The craft brewers mostly work well together to grow the entire industry, they actually are hoping their competitors succeed.
    TheBeerAlmanac likes this.
  6. Hanzo

    Hanzo Initiate (0) Feb 27, 2012 Virginia

    Craft Breweries work together to grow the industry because it is in their best interest to do so and they have a common "enemy".
    creepinjeeper likes this.
  7. TheBeerAlmanac

    TheBeerAlmanac Savant (967) Mar 3, 2011 Kentucky
    Beer Trader

    You are absolutely, 100% correct.

    Although, from an admittedly subjective standpoint, working in tandem with would-be competitors to deliver a variation of a similar product that has real, noticeable market value could encourage the same standards across the spectrum of comparable products. It's a situation of how ABI got where they are today (swallowing a huge piece of the pie and leaving crumbs for its competitors) vs. how craft beer has been emerging lately (accepting a reasonable share of the pie in relation to its competition, but increasing the size of the pie itself through collaboration and community). I've worked in a myriad of industries (finance, real estate, food/beverage, and currently with firearms) and I've NEVER seen an industry work together like craft beer does. I'm not embarrassed to say it boggles my mind and I have no clue how it got that way, but it's f'ing ingenious and takes true courage, accountability and selflessness to do it. THIS is the reason it's not just "beer" anymore. There's "beer," and there's "craft beer;" it has become a subcategory that is rapidly disassociating itself from its parent category and I think AB understands that. AB has spent so much time focusing on how to devour the pie and not the quality of pie itself, that craft beer went behind its back 20 something years ago and baked a much more delicious pie and not only is it growing, but it's causing BMC's bland, flavorless pie to shrink because people realize they can get delicious pie instead of "just" pie. I don't think BMC is afraid craft beer is going to take over their market share, I think they're afraid craft beer is redefining the market.

    So maybe SN would be in a better financial position were they the only or one of the only craft brewers in the game, but maybe, just maybe, that would put them in a vulnerable position to be bumped out of the game by BMC. Or maybe, just maybe, they would have lacked the growth afforded to them by proliferation of craft community THROUGH the craft community and never grown to where they are even now. Or maybe I'm just full of shit

    TL;DR: Pie is good, but delicious pie is delicious.
    JediMatt, fields336, Coirm and 3 others like this.
  8. KevinGordon

    KevinGordon Initiate (0) Dec 16, 2012 North Carolina

    the industry already has changed. All AB can do now is be a shelf hog in grocery stores.
    Bottom line is more people want to drink good beer day by day. More and more people are being turned on by quality beer, but there will always be the market for swill, its just shrinking ,slightly
    BedetheVenerable likes this.
  9. BeastLU

    BeastLU Disciple (326) Dec 20, 2012 Virginia

    Not shrinking even. Just not growing at the same rate. The bmc distributors here haven't shown a negative number for there "domestic" portfolios in a while.
  10. jesskidden

    jesskidden Meyvn (1,258) Aug 10, 2005 New Jersey

    Both Anheuser Busch and MillerCoors have been down every year since the big "merger" years of 2007-8 when InBev bought AB and SABMiller and MolsonCoors merged their US divisions into MC.


    Not all of the loss can be attributed to a move to craft brewers' beers, obviously.

    beergurujr likes this.
  11. BeastLU

    BeastLU Disciple (326) Dec 20, 2012 Virginia

    The bud house I work for hasn't been down in ABI products as a whole since I started working there.
  12. rlcoffey

    rlcoffey Initiate (0) Apr 20, 2004 Kentucky

    I think there is something to this.

    If Sierra Nevada was the only or one of the only craft brewers, then craft beer bars wouldnt exist. And laws wouldnt have changed in many states, and etc and etc. Sierra Nevada is where they are because the industry, as a whole, grew around them. And they are a big part of it. If they had ruthlessly crushed the rest of the west coast craft industry as it got started, they would be a tiny fraction of what they are today.

    Or maybe both of us are full of shit.
    TheBeerAlmanac likes this.
  13. rlcoffey

    rlcoffey Initiate (0) Apr 20, 2004 Kentucky

    I was going to ask you what Crown bought in 2007, but after reading further, the question changed to What did Gambrinus sell to Crown in 2007?
  14. jesskidden

    jesskidden Meyvn (1,258) Aug 10, 2005 New Jersey

    Not quite sure what your point is - I didn't, nor would I, claim that every one of A-B's 500-odd US wholesalers is also down but the link I provided, from Beer Marketers Insights - a recognized industry source, notes that A-B's total shipments in the US have gone from 107 million bbl. the year InBev bought them, to 98.5m bbl. in 2011. Going from 49% of the market, to a share of 46.8%.
    teal likes this.
  15. jesskidden

    jesskidden Meyvn (1,258) Aug 10, 2005 New Jersey

    Gambrinus lost (or, actually, IIRC Modelo took away) the right to import Corona and the other Modelo brands for the eastern half of the US (before then, what evolved into Crown was known as Barton, as noted in the link).
  16. BeastLU

    BeastLU Disciple (326) Dec 20, 2012 Virginia

    I did say "around here" in my first post. But in any case it will be ok. I have the ability to read and understand numbers.
  17. rlcoffey

    rlcoffey Initiate (0) Apr 20, 2004 Kentucky

    Yep, that would do it. I knew it had to be something big. That was a nearly 6MM barrel swing each way.
  18. cavedave

    cavedave Poo-Bah (2,412) Mar 12, 2009 New York
    Beer Trader

    While it may seem like the expression a rising tide raises all ships is the same thing as thinking industries wish their direct competitors well, it is quite different. Industries may hope their customer base, and their competitors', as a whole increases, but when it comes to deciding if their profits are more important than those of the competitor that is directly and adversely affecting those profits, trust me, their own profits are all that matter in that equation. There are some brewers for whom this isn't true. They are called home brewers.
    CORKSCREWFISH likes this.
  19. jesskidden

    jesskidden Meyvn (1,258) Aug 10, 2005 New Jersey

    Yeah, I don't like the way BMI retroactively changes some stats - the most obvious is combining Miller's and Coors' barrelage for the year BEFORE they merged. Ditto for the InBev brands that got added to AB's totals when they took over importation (most of which had been credited to Labatt and/or Beck's, since they were the importers) or the way Molson's total stop and were added to Coors' after than merger.
  20. rlcoffey

    rlcoffey Initiate (0) Apr 20, 2004 Kentucky

    Of course. However, working together to increase the profits of both is also commonly done, which you seemed to be denying in your earlier post.
  21. AlTrombley

    AlTrombley Initiate (0) Dec 25, 2012 Connecticut

    This article is kinda correct. InBev/AB is trying to read the tea leafs 10 years into the future. In 15 years bud will be where pabts blue ribbon is( that cool beer your grandfather drank), and bud light will be where bud is right now ( declining in sales). They have to find ways to sell high end beer to custermers. Goose classic line ( honkers, 312, ipa, seasonal) is brewed in AB breweries ( Sam Adams was brewed by strohs brewer for all of the 90s). They do not touch any of the vintage or bourbon. This may be what several of the bigger and better craft brewers may have to do in the future to get nation wide coverage and still be able to make the special series brews. I read a article from the founder of Bells brewery( wish we had it in ct I have read a ton about it) he said it is something he may have to do at some point. It is not just InBev/AB it is also Miller/Coors, South Afican brewery, Guinness/Deargeo, and Heineken all of these brewers know what is coming 10-15years down the road. The brewer in this story that thinks his beer will not get on trucks is WRONG on a distributor level the sales guys just want to make money if the beer is in the bottle and the brewer works with the distributor( ride with the sales guys, dollar incentive) they WILL get the on the truck.
  22. Bluecane

    Bluecane Initiate (0) Dec 30, 2011 New York

    I've seen plenty of commercials for that apple ale shit!
  23. rlcoffey

    rlcoffey Initiate (0) Apr 20, 2004 Kentucky

    That is a Miller product.
  24. jesskidden

    jesskidden Meyvn (1,258) Aug 10, 2005 New Jersey

    Stroh did do some of the contract brewing for BBC's Samuel Adams line in the 1990's, along with Pittsburgh, Matt, Heileman (Blitz-Weinhard), Genesee, Hudepohl-Schoenling, etc. But that was because until they bought the Hudepohl-Schoenling brewery in Cincinnati in 1997, BBC had no production brewery and was almost exclusively a contract brewery company. Quite a bit different than some of the GI standard line-up brands being brewed in parent company AB's breweries.
  25. Popeyi

    Popeyi Initiate (109) Dec 3, 2012 Ohio

    Goose Island, that once small but respected Chicago brewery: G.I. Signature 312 (for the area code) Imperial Pale Ale, brewed in Baldwinsville, N.Y, area code 315. IPA? Portsmouth, N.H. Harvest Ale? upstate New York; Belgian-style if from Chicago. (read Devin Leonard, Businessweek...eyeopener
    Devin Leonard October 25, 2012
  26. Bluecane

    Bluecane Initiate (0) Dec 30, 2011 New York

    Haha oops.
  27. cavedave

    cavedave Poo-Bah (2,412) Mar 12, 2009 New York
    Beer Trader

    My larger point is that businesses do what is in their best interests. Craft brewers that join organizations to promote craftbrewing, and the large breweries that compete on a scale and with a size and ability to do as ABInBev does. Neither does differently than the other, objectively speaking.
  28. SFACRKnight

    SFACRKnight Meyvn (1,139) Jan 20, 2012 Colorado
    Beer Trader

    Yeah, in-bev sucks. I don't drink corporate beer. Up the punx and what not! Now pass me that BCBS...
    AlTrombley and TheBeerAlmanac like this.
  29. bozodogbreath

    bozodogbreath Disciple (390) Oct 19, 2006 Indiana
    Beer Trader

    The enemy of my enemy is my friend, until they become the enemy. It's a dog eat dog world, even amongst the craft brewers.
  30. JulianB

    JulianB Initiate (0) Feb 1, 2012 South Carolina

    Thank you for this, I haven't laughed this hard in a while.
  31. jesskidden

    jesskidden Meyvn (1,258) Aug 10, 2005 New Jersey

    Looks like AB-InBev has decided to sell the new Modelo brewery just over the Rio Grande from Eagle Pass, TX in hopes to satisfy the US DoJ Anti-Trust Division's objections to the deal.

    Something most industry sources said they'd never do, since the new brewery was seen as one of most attractive aspects of the deal. The brewery's current capacity is 8.5 million barrels/year, supposedly with potential expansion capabilities of going up to 25m bbl.- which would make it the largest in the world.

  32. jesskidden

    jesskidden Meyvn (1,258) Aug 10, 2005 New Jersey

    Was just thinking, if the DoJ accepts the deal above, the two major brewing companies (AB and MC) in the US will still be foreign-owned, of course --- and Constellation (the #3 beer marketer currently) will then become the largest US owned "brewing company" but with no US-based breweries (a title previously held by Pabst :wink: ).
  33. Crusader

    Crusader Aspirant (211) Feb 4, 2011 Sweden

    It's quite the set up I have to say. One thing I don't understand though is if any of the income from sales of Modelo brands in the US would make it back to ABInbev under this agreement, or if all the money from sales in the US will be going to Constellation Brands. As of now ABInbev makes money off of Corona and other Modelo brand sales in the US through their partial ownership of Grupo Modelo, would this income stream be severed under the revised agreement?
  34. jesskidden

    jesskidden Meyvn (1,258) Aug 10, 2005 New Jersey

    That is certainly part of the proposal as AB-InBev is portraying it - "Complete Divestiture of U.S. Business of Grupo Modelo".

    In some respects it's modeled after the Labatt deal the Feds agreed to when AB and InBev merged. The US rights to the brand was sold to North American Breweries and NAB had to find another brewer for the beer eventually - surprisingly, they went with Molson- rather than Sleeman or their own Genesee brewery. Since then, NAB does brew some US-only Labatt-branded beers in Rochester, but the flagships- Labatt Blue and Labatt Light - still proclaim "Imported" on the labels.

    This deal goes further, selling that new modern brewery (which went against most of the industry/Wall St. analysts' suppositions) AND selling the rights to ALL the Modelo brands, not just the Corona flagship (their Modelo Especial is a very HOT brand currently here). In the US, ABI has imported some of their other Labatt/Canadian beers into the US to replace the Labatt brand (Konkaee) and also brewing some Alexander Keith-branded beer in the US.
    Crusader likes this.
  35. Crusader

    Crusader Aspirant (211) Feb 4, 2011 Sweden

    I see, well that's pretty remarkable. I suppose one has to look at it from a global perspective, ABInbev is prepared to sacrifice the profits from American sales of Modelo brands if it means that they can prevent SABMiller (or Heineken or, perhaps less likely, Carlsberg) from making a move on Grupo Modelo down the line since it would be one of the few remaining, major, brewing assets available worldwide.

    I wonder if they are pinning their hopes on Constellation pushing a pricing strategy more similar to that of ABInbev, as has been alleged in the lawsuit and elsewhere. With a major brewery to run and debt to pay down Constellation might need to increase their margins a bit, and thus work towards easing the competition in pricing.
  36. Crusader

    Crusader Aspirant (211) Feb 4, 2011 Sweden

    I guess it's not very likely, or even possible, that another brewing conglomerate would snatch up Grupo Modelo since ABInbev already owns half of it :stuck_out_tongue: .
  37. jesskidden

    jesskidden Meyvn (1,258) Aug 10, 2005 New Jersey

    I'd guess that the 50% of Modelo that AB-InBev inherited from AB would prevent any other brewer moving in (and since Heineken already owns the only other big Mexican brewer, FEMSA, it would seem Mexico would raise an eyebrow over such a monopoly- something like 98% IIRC). I think AB-InBev is serious when they claim their main interest in the growing Mexican market and are willing to loss the Corona/Modelo share of the "mature" (shrinking) US market. Plus, Corona is big in Canada and in Europe.

    It does make one wonder about the move that AB supposedly considered to prevent InBev's takeover- it was suggested that if AB merged with Grupo Modelo then, it would have been too big/expensive to be swallowed by InBev. So, would the DoJ have allowed it then? AB alone had a bigger market share in '08 than ABI has today. But it would have "saved" AB as an American-owned company (even one with a significant Mexican ownership).

    It will be interesting. I can't think of a similar deal where a company enters the brewing industry without any previous experience AND the old brewery management doesn't remaining intact. One interesting aspect of the deal for the new brewery is that "The approximately 600 employees at the Piedras Negras facility will continue to be employed at the brewery by their current employer.(page 3)" So, the employees at the brewery that Constellation will own will still be paid by AB-InBev-Modelo - it will be an almost reverse contract brewing deal- Constellation owns the brewery but "leases" the employees? (It might just be done that way for labor/employee law reasons in Mexico?)
  38. dennis3951

    dennis3951 Champion (825) Mar 6, 2008 New Jersey
    Beer Trader

    What beers are marketed by Constellation now?
  39. jesskidden

    jesskidden Meyvn (1,258) Aug 10, 2005 New Jersey

    Currently, Constellation owns half of Crown Imports (with Grupo Modelo owning the other half, until this deal is done). Crown's line-up - after they recently lost St. Pauli Girl to AB-InBev:

  40. dennis3951

    dennis3951 Champion (825) Mar 6, 2008 New Jersey
    Beer Trader

    Thanks. I guess it was just a matter of time befor a big wine company got involved with beer. Are there any others? I know that years ago Rainier Brewing was a partner of Robert Mondavi. That ended in 1976.
Thread Status:
Not open for further replies.