Anheuser-Busch InBev: Musings on the new world order
Lager Heads is a model of self-restraint, so we didn’t put ALL the good stuff in our Sunday story on Budweiser. (You can read the Post-Dispatch piece here). We posed the crucial question — what happens to Budweiser now that InBev has taken over Anheuser-Busch? – to a variety of experts. With a few notable exceptions, they predicted that InBev will be cautious in dealing with Budweiser, the flagship brand of “Anheuser-Busch InBev.”
Here’s a sampling of what we found.
Jeffrey Krug, associate professor of strategic management at Virginia Commonwealth University, has studied management turnover at more than 1,000 newly-aquired companies. He predicts that, if Anheuser-Busch is like other companies, you can expect to see 25 percent to 30 percent of A-B’s management team leave the company within a year.
Krug leaves InBev with a word of caution: “There is a tendency for an acquirer to come into an acquisiton and think they know a lot more than they really do.” Witness Daimler buying Chrysler and PepsiCo buying Kentucky Fried Chicken, he said.
“The real question,” Krug said, “is will InBev recognize that Anheuser-Busch has capabilities that they need to support and promote, and essentially minimize the interference” in A-B’s marketing and distribution machine. In fact, Anheuser-Busch’s well-honed marketing operation might be key to developing InBev’s big brands, such as Beck’s, he said.
If InBev is smart, said Krug, it will “leave (Anheuser-Busch) alone to some degree.”
We’ll see if that happens. Count longtime beer consultant Tom Pirko among the skeptics. He told Lager Heads that the outlook for the beer industry next year is not good. InBev’s ability to service the billions of dollars in debt that it took on to pay for Anheuser-Busch has changed dramatically since the summer, he said. InBev is going to be scrounging for cash to pay off its debt, placing Anheuser-Busch’s brands in jeopardy, he said.
Pirko asked: Where is InBev CEO Carlos Brito ”going to find the money? … At some point, he’s going to have to start burning some furniture.”
(5 votes, average: 3.4 out of 5)
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Jeremiah McWilliams is a native Virginian who came to the Post-Dispatch in early 2007 to cover beer and other consumer products. He previously covered manufacturing for the Virginian-Pilot newspaper in Norfolk, Va. He is a graduate of Washington and Lee University. 
Start burning the furniture, it’s already started. Projects already in the works that would have saved millions per year at each plant have already been scrapped because of capitol outlay needed up front. Pinching penny’s now is going to cost many Euros down the road. I’m really glad this was a cash deal and not a stock swap.