Will Bud Become Belgian?

America\'s Bud, No MoreInBev tries to get in bed with Anheuser-Busch
Rumors started earlier this week that InBev, already one of the world’s largest brewing concerns, was thirsty for a mega-merger with Anheuser-Busch, makers of the world’s best known industrial light lager, or what most of us quaintly call “Bud.”

Then yesterday the rumor became real. InBev offered to acquire A-B for $46.3 billion, proposing what would be the third largest foreign takeover of an American company – ever.

What’s wrong with this deal?

It is a sign of desperation.
It has been my position for years that mergers such as these are desperate acts by global brand owners who have nowhere to grow but out (I wrote about this in my book Fermenting Revolution). The market is saturated with industrial beer, so the companies selling it can only grow by acquisitions and mergers rather than market-lead growth that results from people actually wanting a company’s product. According to the logic of capitalism, the end goal of this process is a global monopoly on commodity beer (Read this AP wire article about how the Governor of Missouri agrees with me on this point).

It is likely to be hostile.
The family members that maintain whatever might be left of a heart of the already-global, publicly-traded, Anheuser-Busch corporation don’t want to relinquish the little control they still have over the direction of the company.

It will effectively end American brewing.
In actual and symbolic terms, the vast majority of beer sold in America will be foreign. Putting aside its many flaws (marketing that bolsters male chauvinism and stupidity, it tastes like fizzy water, etc.), Bud is nonetheless regarded as the quintessential “American” beer. A-B sells one out of every two beers in America (and has a stranglehold on the beer distribution system, which serves as a convenient excuse for gobbling up lots of small craft brewers (like Redhook, Goose Island, and Old Dominion) who just want fair access to the market – but, although it’s related, that’s really another story). A-B’s main domestic rival is – this name is not a joke – SABMiller Molson Coors. In other words, America’s second and third largest brewers, Miller and Coors, are actually foreign-owned already. Combine the existing sales of import brands (about 15% of the market) with SABMiller Molson Coors, and a theoretically InBev-owned A-B and what do you get? Foreign control of about 95% of the beers sold in America. So much for having a quintessential “American” beer – or any American beer for that matter, save the 5% or so produced by small, local craft brewers.

It’s just crude and low down.
Pardon my language, but InBev really wants to screw American beer drinkers. I mean it, just listen to the language they are using. In reference to the proposed hostile takeover, an InBev company official tried smooth talking his way into getting in bed with A-B, saying they’d “like to engage in a dialogue with the goal of consummating a friendly combination.”

Signs suggest that this deal is, in fact, likely to be ‘consummated’, as it were. That would mean that roughly half of the world’s commercial beer would be produced by just two giant conglomerates.

For my own part, I’ll be sticking to the beers produced by the thousands of small brewers around the world. And I’ll keep making my own beer in the kitchen.


18 Responses to Will Bud Become Belgian?

  1. […] Beer Happy Hour The big news today was the proposed hostile takeover of Anheuser Busch by rival InBev. But the Washington Post ran a second, more reassuring piece on beer today that […]

  2. MplsKid says:

    I have to say its hard for me to get too worked up about this. To take each of your points in turn:

    “It is a sign of desperation.” OK. So what? Surely you’re not concerned about the viability of InBev’s business model.

    ” . . . the end goal of this process is a global monopoly on commodity beer.” InBev would definitely have a whole ton of market share. But the deal will only go through after clearing US and EU anti-trust regulators – so a monopoly or anything like it is pretty dang unlikely.

    “It will end American brewing.” Now you’re just being dramatic. I’m sure you will agree that craft brewers and homebrewers are the beating heart of American brewing – and this deal wouldn’t affect them at all. Does it really matter if the other 95% of the market consists of domestic companies producing mass market swill – or foreign-owned companies producing mass market swill?

    You seem, like most homebrewers, pretty ambivalent about A-B anyway. As you point out, the company barely deserves to be called “family owned.” And they’ve done very well in the past by using their clout with distributors to keep microbreweries down, and by taking over smaller competitors – sometimes in hostile bids. Well, you know, what they say: what goes around comes around.

    I, too, will be sticking to my local microbrews and beers of my very own creation. They’re better than anything A-B makes, and they’ll be better than anything InBev makes, too.

  3. beeractivist says:

    Hi MplsKid,

    Thanks for all the comments.

    1. Actually, I am quite concerned about the viability of this business model. I think it is unsustainable in every sense of the word. Especially given the likely cultural and economic impacts of this merger, this scale of corporate consolidation is the sign of a very sick economy – that’s bad for everyone.

    2. Every article I’ve read so far says this deal is very likely to go through. I haven’t seen anything (tell me if you’ve seen something else) suggesting that anti-trust legislation will come into play at all. Besides, I didn’t say that this deal would create a monopoly, but that the logical extension of this model is a monopoly. And in any event, a market need not be controlled by a single seller to exhibit many of the characteristics of a monopoly. For example, A-B already sells one in two beers in the US and this has created conditions similar to a monopoly, especially on distribution. Small brewers have a very tough time getting attention from distributors when A-B products account for all of their income. So, as I mentioned above, this has lead many of them to, in essence, sell their independence in order to achieve better distribution through ownership or ‘partnership’ deals with A-B.

    3. Okay, perhaps slightly overdramatic, but seriously, don’t you think that when 95% of the beer sold in American is foreign owned that American beer is more or less dead? I did include the caveat “save for the 5% of craft beers.” I’m obviously an advocate of craft beer, and having the ‘heart’ still beating in the craft sector is hopeful, but geez, we’re talking about really small potatoes – a meager 5% of the market, and that’s after 25 some years of building this movement. Mega mergers like this make me think we’re taking one small step forward with craft beer, and three giant leaps backward with corporate homogenization.

    But hell, it’s Friday. Enough of this depressing talk. Time for a beer.

  4. Brendan says:

    It’s been a challenging day beer-wise, starting with a Coors Light that I had while cleaning my truck today – this crap really has about no taste at all – then on to the Lancaster Milk Stout that put me back onto the straight and narrow, though now I need to figure out why it’s made in Wilkes-Barre, a Keystone heresy if ever there was, and finally the ideologically pure Yuengling Premium, perfect for a hot day spent slaying some at-risk vacation hours.

    That, perhaps, aside, or perhaps exactly the point, I think that I like this proposed merger.

    Yes, this deal stinks of the customary globalized-conglomerate, Wal-Martesque approach to sacred fermentation as merely one more outsourced textile, and all of that is naturally Very Evil indeed.

    However, I think that the karmic sense of this totally rocks – the bullying of the bully, the acquisition of the acquirer. I can hear 33 chuckles from Latrobe.

    More to the point, if one can be found, is that A-B’s mythology is that of the bold and expansive and powerful American Beer – the giant Clydedales, the burly warehouse workers tossing kegs about, the vestigial industrial force of the bottling line, the patriotic symbols of national might.

    Bought by InBev, where does that leave A-B? It’s a foreign beer. Who is left holding the keys to apple pie and the Liberty Bell? The small, independent entrepreneurs of craft brewing.

    At time which finally allows for mainstream awareness of the cost and environmental advantages of local products, the overseas ownership of A-B will be publically tainted, even if the actual production does not change at all.

  5. beeractivist says:


    I’m with you in spirit. Still, I’d rather look for a way to fix something what is broken than celebrate when the broken gets completely stomped to pieces. So putting the karmic justice of A-B getting its comeupins aside, global corporate consolidation is bad.

    This response, and my response to MplsKid above, probably make me sound like I’m not radical enough, but just to show how darn purist and lefty I really am, I thought I’d point out to you that Yuengling recently busted their union and the Yuengling family contributes signficantly to the Republican party.

    All the same, cleaning your truck and drinking a beer sounds like a perfect vacation day.


  6. Stonch says:

    I think the world’s best known lager is probably Heineken, not American Bud. If you exclude their respective domestic markets, the Dutch beer is a bigger seller internationally.

  7. beeractivist says:

    Stonch – you are, perhaps, correct. But given the importance of both relative to the rest of the market, this seems like splitting hairs.

  8. Brendan says:

    Thanks, Chris.

    My sense of this merger is that it’s unstable and cannot work. The law of diminishing returns applies here.

    Budweiser, in particular, is so stalwartly an American emblem that “foreign-owned Bud” implodes on the market and creates more space for the hometown brands.

    I also think that the global issues of fuel cost and environmental concerns make InBev-AB into a giant balloon heading toward an inevitable pop.

  9. beeractivist says:

    MplsKid –
    Here’s an AP article (http://www.siouxcityjournal.com/blogs/brew/?p=605) about how the Governor of MI thinks that this deal could create a ‘near monopoly’ on beer in the U.S.:

    Missouri governor wants feds to review InBev offer
    Date: 06/16/2008 01:21 PM

    ST. LOUIS (AP) – Missouri Governor Matt Blunt is asking the Federal Trade Commission to review the proposed sale of Anheuser-Busch Cos. Inc. to Belgian brewer InBev.

    Blunt sent a letter Monday to the federal commission asking for the review.

    He says he is concerned the sale could create a near monopoly in the U.S. beer market by combining the two large brewers. He also says the sale could damage the St. Louis and Missouri economies.

    InBev is offering to buy Anheuser-Busch for roughly $46 billion. Anheuser-Busch’s board has not said if it would support the deal.

    Copyright 2008 The Associated Press.

    Brendan –
    I think you’re probably right that foreign ownership of A-B will harm them – but I think it will only a minor hurt, which will easily be outweighed by the incredible profit potential of this proposed merger. Fuel and other environmental costs are only likely to be reduced by this deal. With the combined global brewing network of these two giants, production will take place closer to markets, not further away. InBev brands will be brewed at A-B facilities in the U.S., for example, and A-B brands will be produced at InBev facilities in places where there is currently no A-B production.

    I do think this model is undesirable but that its shortfalls will only be felt in a longer timeframe when the movement for local products (including local ownership) gains more influence than it has now. Personally, I look forward to that day and am actively working to bring it on.

    Cheers and all the best,

  10. Jos Bosmans says:


    I’d like to comment on the fact that a lot of posts about this news are labelling InBev as “Belgian”. If you’re a bit informed about anything in the beer world, you should know that it’s in fact (after a merger a few years ago) Brazilian.

    You’re just experiencing the same thing we have already been part of… having one of your brewers getting bought by outsiders. Wake up in the real world.

    A Belgian beer drinker.

  11. beeractivist says:


    I don’t know why you are saying to “wake up in the real world.” Our second biggest American brewery was bought by a foreign company years ago when SAB bought Miller. But ignoring the rudeness of that comment, I’ll respond to your other comment by explaining that my understanding is the InterBrew bought AmBev, not the other way around. Thus the Belgian reference to the new entity, “InBev.” In many ways, it doesn’t really matter since the important impact from mega-mergers like these is that they create global corporations that transcend any sense of local identity or local economic benefit. In a real sense, they are local to nowhere. They are owned by a small group of wealthy stakeholders who might live anywhere in the world and the products are produced all over the globe.


  12. Bart Verstraten says:

    I’am also belgian and i do agree with Jos.

    Belgium is known for his good beers. (I never have drinking budwieser so I wont give an opignion about the quality). It’s sad for us to see how ‘heineken’, the worlds beer leader is such a succes while belgians and people of the netherlands know belgian beers tasts mutch better then heineken.

    The dutch are just very good marketiers. They know how to sell a product.
    Its frustrating for us too to see how the dutch beer is dominating the world while belgian beer has a higher quality. But that’s just marketing..

    Also a lot of local belgian beers are taken by inbev or other big company’s. And its sad. Bud hey, after al you still can buy your beer, it will tast the same, and everyone will link the beer to its original hometown.

    Except for in the beer trade, the US is one of the proponents in open market economics. Lot of belgian company’s have been taken over by americans due to this. Its not fun, but we dont make a total big deal of it like the budweisser-hype nowerdays..

    For once americans are confronted with their own open marked idealism, they suddenly think its unexaptable.

  13. Tommy says:

    CNBC is doing a whole show about this and Budweiser. On July 17th.

  14. elo says:

    Now that this deal is actually going through – I wonder if it smooths things over at all to know (or at least to be assured at present..) that the headquarters will be in St. Louis?

    Dr. Tantillo (‘the marketing doctor’) did a post on this topic a while ago, speculating on what the implications would be for the Budweiser brand, and how essential its Bud’s continued American ownership is to its success: http://blog.marketingdoctor.tv/2008/06/12/tantillos-branding-bite-budweiser.aspx

  15. nixforsix says:

    So does anyone have a guess at what will now become the top selling American owned beer? Sam Adams? Everything else that’s national seems to now be under the A-B or Miller umbrella.

  16. shea says:

    Can you compile a list of companies, beer, that are still American Owned.

  17. Budlight Calories…

    […]Will Bud Become Belgian? « Beer Activist[…]…

  18. You’re so awesome! I don’t think I have read anything like
    this before. So good to discover somebody with genuine thoughts on this
    subject. Really.. thanks for starting this up. This web site is something that’s
    needed on the web, someone with some originality!

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: