While Hank the Clydesdale eventually got the chance to join the Budweiser team in yesterday's popular Super Bowl XLII ad, it's still not certain that Anheuser-Busch
Rumors sprang up last week that the maker of the King of Beers and the brewer of Stella Artois and Bass were in negotiations to merge operations. Such a distillation would create a megabrewer that would be able to fend off inroads from the world's No. 2 brewer, SABMiller. InBev produces 8.1 billion gallons a year which, when combined with the 5.6 billion made by AB, would make a brewer nearly twice the size of Miller.
Yet it doesn't make much sense for Anheuser to make such a move, at least not yet. While Bud's earnings report showed that international volume for the year grew 5.8% -- a bright spot in a year that saw U.S. beer volume growing just 2% -- the brewer already does business with InBev, importing some 20 European brands.
The merger would give it a large European presence that it currently doesn't have, but Europe's been feeling the pinch of higher commodity costs as well. AB was seeing growth in China, Mexico, and Canada; the U.K. experienced lower volume. That's another reason a tie-up between the two is unlikely any time soon. AB owns half of Grupo Modelo, the maker of Corona, and may have a chance to buy more in the future. Such beers, along with craft brews, have been proving more popular than Anheuser-Busch's domestic beers.
Commodity costs like grains, energy, and metals have all been raising Anheuser-Busch's expenses. Even craft brewers like Boston Beer
While there's a lot to be said for an InBev-Anheuser Busch merger, there's at least as much to argue against it. Hank was undoubtedly saved from the glue factory through perseverance (and help from a plucky Dalmation). Anheuser-Busch, without InBev, should be just as able to pull the cart to higher profits.
Toast to these Foolish articles:
Anheuser-Busch is a recommendation of Motley Fool Inside Value. Drink in 30 days of free stock picks with a trial subscription today.