MAJOR MOVES IN THE BEER BIZ
It appears that the days of the mega-deal aren’t over yet. Anheuser-Busch InBev, the world’s biggest brewer, will buy the half of Grupo Modelo it does not already own for $2O.1 billion. AB InBev, which owns Budweiser and Stella Artois beers (among many others) has reached an agreement with Modelo’s controlling families giving it a leading position in a growing domestic beer market and the best-selling Mexican beer Corona Extra. Modelo founded in 1925, is Mexico’s biggest brewer with a 5O percent plus market share where it operates in a virtual duopoly with Heineken’s FEMSA Cerveza, while Corona is the biggest imported beer in the United States market. AB InBev is attracted to Modelo by a Mexican beer market growing at around three percent a year and cost savings that the company said would be at least $6OO million per year. Corona will become a flagship brand for the company while Grupo Modelo’s name and headquarters in Mexico City will remain.
In a surprise side transaction, Constellation Brands is poised to control US imports of Modelo beers for at least the next decade. Modelo will sell its 5O percent stake in joint venture Crown Imports to partner Constellation Brands for $1.85 billion. Crown Imports distributes Modelo beers in the US. AB InBev agreed to sell those rights to Constellation to allay antitrust concerns over the Modelo purchase. The twin transactions highlight how AB InBev finds itself boxed in by its size in the US, where the brewer commands nearly 5O% of the market by volume. As yet another brewer finds itself swallowed up by a beer giant, there are fewer and fewer independent companies remaining. What hovers on the horizon is the ultimate mega, super, ultra merge of all brewers into one company. The hunt is on.