Budweiser maker wants global beer domination
Anheuser-Busch InBev is trying to establish the King of Beers in China. Too bad it's already faltering in the US and Europe.
Considering Budweiser isn't faring so well in the local markets it already inhabits, the "King of Beers" might want to study up on the local customs before continuing its global pub crawl.
According to The Wall Street Journal, the big brewer has spent $1.4 billion in the last two years alone refurbishing breweries and beefing up distribution in China, with nine more breweries planned there in coming years. But by pushing ahead with Budweiser instead of a Chinese brand like Harbin, which is also part of its portfolio, Anheuser-Busch InBev may be floating its hopes for world domination on a sinking ship.
In 2011, MolsonCoors' (TAP) flagship product Coors Light replaced Bud as the No. 2 beer in the United States, breaking the grip A-B held on the top two since 1993. While Coors Light sales grew 9% in the five years prior, Bud sales tanked 29%.
Budweiser has lost more than 60% of its sales since its 50 million-barrel peak in 1988, when it accounted for more than 25% of all beer sold in the U.S. For some perspective, Budweiser once held market share close to the 27% now held by both Miller and Coors brands combined.
A-B InBev has tried putting Budweiser in crimped bowtie cans, offering it in various flavors and meddling with its alcohol content, but big-beer competitors, imports and surging small brewers are stifling sales.
In Europe, the situation is even worse. The Budejovicky Budvar brewery in Ceske Budejovice, Czech Republic, wants to keep its Budweiser name associated with its town, its brewery and its darker, more flavorful lager and has won 88 of 124 lawsuits against Anheuser-Busch over the past 11 years. Though A-B InBev has the rights to the Budweiser name in roughly 80 countries, Budvar still has exclusive rights to Budweiser in 68 countries, mostly in Europe, including Russia, France and beer-loving Germany. In those countries, A-B InBev has to put "Bud" on the label instead of Budweiser.
As Ian Shackleton, a London-based analyst with Nomura, told the Journal, Budweiser "is not seen as a real beer by beer aficionados" in Europe.
That hasn't stopped A-B InBev from attempting to expand its flagship light lager's reach. It recently launched a $20.1 billion takeover of Mexico's Grupo Modelo to open up the Latin American market. By pushing Budweiser into China, the brewer is hoping to open a market that consumes a fourth of all beer and is expected to deliver more than 40% of the industry's growth this decade, according to market researcher Plato Logic.
But trying to make one beer fit all markets may be a huge mistake. A-B's biggest competitor, global No. 2 SABMiller (SAB), invests heavily in hundreds of local brands and has only one beer that boasts a 5% share of the world's market: Snow, China's most-popular beer, sold only in China.
"We remain convinced beer is fundamentally a local business,'' Alan Clark, SABMiller's chief executive, told the Journal. "There's an emotional resonance we find consumers have with beer brands which frankly is different. We just see it continuing."
If Bud will move overseas, then they can get money from The Washington Taliban who will borrow it from China to give to Bud. The Taliban will charge it to the American Taxpayers and pay interest to China on money borrowed from them to "aid" Bud if Bud will move overseas.
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