For many beverage companies, setting up a distribution network can be time consuming and difficult, which is why many distribution deals lead to joint ventures or mergers, according to Alan Thomas, a senior manager at Deloitte Consulting LLP. The recently rumored $46 billion to $
50 billion InBev NV and Anheuser-Busch Inc. deal adds to the growing trend, explains Thomas. InBev and Anheuser-Busch have been distribution partners, with InBev dependent on Anheuser as a distribution partner in the U.S. and
Anheuser-Busch using InBev's distribution system in Canada.
"This is a trend in response to global trends that are affecting the industry. The stock keeping units and the introduction of new products are costly and drive a certain amount of inefficiency," Thomas said.
The SABMiller plc and Molson Coors Brewing Co. joint venture formed out of that trend. Now there is consolidation of smaller companies, particularly in the craft beer and wine area. Thomas predicts more consolidation in the industry as consumers seek healthier alternative beverages.
If there is a merger, it will be the largest yet, but contrary to what many
other analysts are saying, Thomas doesn't believe integrating Anheuser-Busch would be too difficult. "Both companies have their own operating style and take different approaches to unions, but InBev could theoretically make Anheuser a more efficient company, and it would be a good idea from a distribution and profit margin perspective. Anheuser could leverage InBev's brands and visa-versa," he said.
- Maria Woehr
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