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Global Growth Key to Beer Wars

By Brian Gorman – Updated Nov 16, 2016 at 4:24PM

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Anheuser-Busch teams up with Vietnam's largest brewer, laying the groundwork for future growth in the region.

Anheuser-Busch (NYSE:BUD) recently made another move in the ongoing global chess match among the major beer companies. The latest action suggests the beer giant is leaving no stone unturned in its search for growth and that it is willing to be patient in achieving its goals.

The St. Louis-based firm has reached an alliance with Saigon Beer, Alcohol and Beverages Group, or Sabeco, under which the two companies will share ideas and information on management, marketing, technology, and distribution, the Associated Press reports. The pact leaves open the possibility of further cooperation in the future.

The deal clearly is not going to have any significant near-term impact on Anheuser-Busch. No Budweiser will be brewed in Vietnam for now, although the company suggested it might go that route in the future. By teaming up with Vietnam's largest brewer, however, the U.S. giant has gained a presence in a less mature market with growth potential. And growth is a much sought-after commodity in the beer industry these days.

The problem is that the U.S. beer market is saturated. Anheuser-Busch is taking a stab at offering an alternative product (a mixture of beer, caffeine, guarana, and ginseng it calls B-to-the-E) to get around this problem. A more popular path to growth, though, has been consolidation. As Fool contributor Chris Mallon has written, this past year has seen a spate of deal making, including Anheuser-Busch's acquisition of China's Harbin, SAB's purchase of Miller Brewing from Altria (NYSE:MO), and Adolph Coors' (NYSE:RKY) offer to buy Canada's Molson.

In the race to be top dog in the brewing world, China may be the promised land, but it appears Anheuser-Busch believes every market counts. The company may not be rewarded with huge returns any time soon for its new relationship with Sabeco, but its patient approach seems like a good formula for the long term.

Fool contributor Brian Gorman is a freelance writer living in Chicago. He does not own shares of any companies mentioned here.

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Stocks Mentioned

Altria Group, Inc. Stock Quote
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BUD
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