After a more than two-year hiatus, global beer juggernaut Anheuser-Busch InBev (BUD -0.05%) is making acquisitions again. The parent of Budweiser, Stella Artois, and dozens of other labels recently bought up two smaller beverage companies, ending a quiet period after its string of craft brewer takeovers a few years ago and its mega-merger with SABMiller at the end of 2016.

The wheeling and dealing hasn't panned out like the company planned. Though A-B InBev's stock has rallied 42% this year, shares are down 26% over the last three years. That's because craft beer has continued to gain in popularity at the expense of "corporate beer," and cost synergies post-SABMiller merger haven't been as good as A-B InBev's management thought they'd be. A halving of the dividend payout last year to help the company manage about $101 billion in long-term debt didn't help investor sentiment either. With the dust settling, though, this brewer's activity on the M&A front might be starting to heat up again.

Various alcoholic beverages sit on top of a table.

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Is A-B InBev buying its way to profitable growth?

Back in June, A-B InBev announced it was taking over the canned-wine maker Babe Wine. Searching for growth a little closer to its bread-and-butter, A-B InBev followed up its niche investment by scooping up Ohio-based regional craft brewer Platform Beer Company. Platform was apparently the fasting-growing craft brewer back in 2017. 

In the two years since A-B InBev last went shopping for a craft subsidiary (it bought Wicked Weed in May 2017, its 10th craft brewer takeover), the picture hasn't brightened any for mega beer. According to the Brewer's Association, an industry group, the overall beer industry has contracted about 1% a year since then, but craft volume continues to grow by mid-single-digits. Craft made up 24% of the total retail dollars spent on beer in the U.S. in 2018.

While that trend toward smaller labels and more unique drink options has undoubtedly helped A-B InBev stabilize sales in North America, it hasn't completely offset losses elsewhere. North American beer volume fell 2.6% in 2018 and fell another 1.9% through the first half of 2019. Global revenue nevertheless increased in the mid-single-digits (up 4.8% in 2018 and 6% so far this year) through a combination of rebounding emerging market sales and price hikes on beer. However, with North American market share in stubborn decline, the current status quo isn't sustainable for the Budweiser parent.

Before buying, some selling needs to happen first

With Platform now part of the family, A-B InBev could be back on the takeover trail. It holds an option to purchase Craft Brew Alliance through August 24, and it sold off its Australian subsidiary Carlton & United Breweries for $11.3 billion to help sweeten a possible minority interest via IPO in Budweiser APAC in Hong Kong. Big picture, the company wants to reduce debt sooner than later.

The recent acquisitions coinciding with this new sale of assets could hint that A-B InBev is about to get serious again about taking advantage of higher growth beverage markets, a shift from its previous plan to squeeze cash out of the corporate merger with SABMiller. While taking over smaller breweries can backfire (being majority-owned by a non-craft brewer knocks a craft outfit outside of the official craft beer definition, and could turn off beer aficionados), being a corporate company doesn't mean A-B InBev is doomed to perpetual decline. Consumers are increasingly favoring innovation and choice, a trend that has worked in favor of fellow beer giant and Corona distributor Constellation Brands as it has invested in higher-growth labels and new drink options. 

However, after the big rally this year, A-B InBev stock doesn't look like a good bet. Shares are a pricey 24 times last year's free cash flow (basic profits after operating and capital expenditures), and overall sales growth is likely to remain sluggish. But if the company can get its liabilities in order and make some real transformative acquisitions that diversify it away from mega beer, maybe the Budweiser family of beverages can turn things around.