Tag Archives: beer

Watering down quality is finally harming AB InBev

BloombergBusinessweek did an excellent exposé on the AB InBev – America’s largest beer-maker at 48% of U.S. market share — on their unquenchable thirst for profits over quality. The Plot to Destroy America’s Beer:

There has never been a beer company like AB InBev. It was created in 2008 when InBev, the Leuven (Belgium)-based owner of Beck’s and Stella Artois, swallowed Anheuser-Busch, the maker of Budweiser, in a $52 billion hostile takeover. Today, AB InBev is the dominant beer company in the U.S., with 48 percent of the market. It controls 69 percent in Brazil; it’s the second-largest brewer in Russia and the third-largest in China. The company owns more than 200 different beers around the world. It would like to buy more.

The man in charge of AB InBev is 52-year-old Carlos Brito. The Brazilian-born chief executive is a millionaire many times over. He speaks English fluently and dresses like the manager of a local hardware store. At the Manhattan headquarters, he wears jeans to work and tucks in his shirts. He keeps his company identification badge clipped to his waist where everybody can see it, even though everyone knows who he is. To the rest of the world, he keeps a low profile. He does not, for example, accept interview requests from Bloomberg Businessweek. That might be his character, and it might be calculated. The Busch family is a legendary American dynasty. Many people in the U.S. aren’t thrilled that a foreign company now owns Budweiser, America’s beer.

This is not to say that Brito lacks American admirers. Many can be found on Wall Street, where investors care less about where beers are brewed than about how profitable they are. This is where Brito shines. After InBev bought Anheuser-Busch, he slashed costs at the combined company by $1.1 billion in a single year. AB InBev’s margins widened substantially, and its share price has nearly quadrupled since the takeover. In 2011, Brito made Fortune magazine’s Fantasy Sports Executive League Dream Team as a designated hitter.

Anthony Bucalo, an analyst for Banco Santander (SAN), speculated in April that Brito’s ultimate plan is to acquire the beverage unit of PepsiCo (PEP). AB InBev already distributes PepsiCo’s soft drinks in Brazil, and it was through a distributor’s arrangement that the company got its claws into Anheuser-Busch. According to Bucalo’s theory, Brito wants to be the king of sparkling beverages in aluminum cans, regardless of their alcohol content or taste.

It seems that desire to cram dividends into shareholders pockets will have an adverse effect on their long term viability:

There’s one hitch. AB InBev’s CEO is a skilled financial engineer, but he has had trouble selling beer. The company’s shipments in the U.S. have declined 8 percent to 98 million barrels from 2008 to 2011, according to Beer Marketer’s Insights. Last year, Coors Light surpassed Budweiser to become America’s No. 2 beer. (Bud Light remains No. 1.) Meanwhile, Brito is alienating lovers of AB InBev’s imports by not importing them. And he’s risking the devotion of American beer lovers by fiddling with the Budweiser recipe in the name of cost-cutting.

Honestly though, did anyone actually think they could somehow make Budweiser worse? Way to go Brazilian scientists!

For a full list of beers that could have their recipes tampered with for short-term gain, see this Wikipedia page on InBev brands. Thankfully my taste for mass-produced domestic beer is limited to Blue Moon (a MillerCoors brand) when I’m not supporting local brewers.

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Obama campaign logo in a beer

Spotted at the Washington Examiner:

Eric Reif, Senior Advertising Manager at Obama for America reposted the photo to his tumblr blog and wrote, “Witnessed this happen. It was magical.”

Beer consumed in massive quantities does make people stupistitious, which is ultimately great branding for Obama/Biden because he’s going to need lots of drunk and stupid people voting against their neighbor’s and own recreational drug interests a second time. The message is loud and clear: Keep drinking, democrats.

I’ll remind the Obama staffers that perhaps if their boss didn’t so rudely discriminate against a cousin of the Hop then their jobs would be so much easier when not posting silly beer photos.

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