Budweiser Buyout?
One of our readers, Hancock, has submitted an original piece on his views of the Bud buyout and we feel that it is worthy of display for all our readers…Thank you Hancock and if any readers have questions or comments, feel free to leave them. All will be addressed. Without further ado…
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After a year of denying InBev, Anheuser-Bucsh Chief Executive August Busch IV conceded to a “friendly business agreement”. Aside from Mr. Bucsh’s euphemism to restore confidence in his shareholders, there are pros and cons to consider before investing in this company.
First of all, stockholders (and “Made in America” drinkers) shouldn’t be scared of what the global economy has to offer. No changes to Budweiser’s formula or label are expected to occur. Miller Brewing Co. has been owned by a South African Company since 2002. The Canadian Molson brewing company acquired Coors in 2005. Not many drinkers have objected to the taste. When Coca-Cola changed their formula to compete with the marketing crazy Pepsi, not only did sales drop, but they had to face a public outcry. No established beverage company would even toy with this idea since this happened. The 2nd and 3rd largest breweries announced the launch of MillerCoors on 6/30/08. For the first time ever, there are two main conglomerates of beer squaring off for almost the entire American market.
The now largest beer business in the world agrees to maintain Mr. Bucsh’s Blue Ocean plan including a cut of 1,000 jobs. The main difference now lies on InBev’s management abilities. With a drop of $149.9 million in this year’s first quarter, many speculate whether InBev’s fiscally tight Chief Executive Carlos Brito will sell Six Flags even though there aren’t many enthused potential buyers for big business tourist destinations (mainly due to the cost of gas). Anheuser-Bucsh also owns Sea World.
The main factor that will sustain Budweiser’s constant upward slope will lie in Brito’s marketing formula. Budweiser and other American beers have been famous for their silly commercials and advertising. Although InBev’s cost cutting strategies serve as an admirable approach to profits, the company can not let its guard down from the new Miller Coors. According to Jsonline.com, MillerCoors will occupy 29% of the US market while Anheuser-Busch currently owns about 48%. CNN reported on 7/16 that MillerCoors sold about half the US market. Although this sounds like exaggeration on the reporter’s part, Coors and Miller products sure seem like the kings of certain area of the US.
If Carlos Brito finds a happy medium between his style of downsizing companies and the American’s style of commercial happy creativity, the InBev takeover could very well be the greatest thing since Coca-Cola.
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For your continued interest, we would like to include a humorous video by Stephen Colbert, of the Colbert Report. Any views presented are not ours necessarily but amusing none the less.
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Imagine a hot summer day…you sit down to watch America’s pastime, baseball, as played by the Japanese Seattle Mariners. As you watch you enjoy an ice cold foreign Budweiser. Ahhh….capitalism!
Not complaining here, just an interesting observation.