The next time Rihanna is toasting “cheers to the freaking weekend”, she may well be doing so with a Budweiser. The pop superstar has signed up for an 85 country promotional campaign as part of Anheuser Busch Inbev SA (NYSE:BUD) (EBR:ABI)’s goal to build the world’s first truly global beer with Budweiser. The company is now looking to launch an aggressive campaign to build a truly global presence for Budweiser.
Budweiser to become the true king of beers?
While Budweiser, Heineken N.V. (OTCMKTS:HINKY) (AMS:HEIA), and other major global beer brands can be found in many domestic markets, the beer industry still remains highly fractured with local beers usually dominating local markets. Malaysia has Tiger, Thailand has Singha and Chang, Mexico has Tecate and Modelo, and China has Snow beer (which is the best-selling beer in the world). Numerous other countries have their own regional or national beers that dominate the market.
Anheuser Busch Inbev SA (NYSE:BUD) (EBR:ABI) hopes to change all of that, and if they have their way Budweiser will soon be one of the most popular beers in markets across the world. The company already owns a state of the art brewing facility in Ziyang, China, a rural backwater town. Budweiser has also been moving aggressively into Russia, Brazil, the Ukraine, and other regions. Budweiser is also imported in small numbers to numerous other markets, including Malaysia, Singapore, and Japan.
China is the biggest prize in the world, consuming one quarter of all beer and expected to make up 40% of growth in the coming decade. In 2012 alone, 50 billion beers were consumed in the Middle Kingdom. Still, the market has proven elusive for imports and international beers as local beer companies dominate the market. Snow Beer, for example, owns about 22 percent of the market share, and this chunk of the market has propelled the beer brand to number one spot globally. SABMiller plc (OTCMKTS:SBMRY) (LON:SAB) owns a large chunk of the company, along with the Chinese government.
AB Inbev is already a global empire
Anheuser Busch Inbev SA (NYSE:BUD) (EBR:ABI) is already the world’s largest beer brewing company, however, it has gained this spot primarily through acquisitions of local companies, such as Labatt in Canada, and Presidente Beer in the Dominican Republic. In fact, the rise of AB Inbev is essentially a long string of acquisitions. The company originally started as Interbrew, a company itself that resulted from a merger in 1987 of the Artois brewery and Piedboeuf. Meanwhile, in 1999 Brazilian brewers Brahma and Antarctica merged together to create Brazil’s largest brewery, Ambev. In 2004 Interbrew and Ambev merged. In 2008, Anheuser-Bush, a long-standing American firm with nearly half of the US beer merged with Ambev, creating AB Ambev.
While this long history of mergers has created the world’s largest global beer manufacturer, some question whether the mergers are really adding value. The company has managed to expand market share mostly by buying local companies that already control large segments of the market. In the United States, Anheuser-Bush brand beers are actually losing market share. Abroad, Anheuser Busch Inbev SA (NYSE:BUD) (EBR:ABI) has largely relied on acquisitions to break into new markets and increase global market shares. With the exception of smaller beer brands, such as Stella Artois and Hoegaarden, AB Inbev has had little luck with expanding its so-called “global brands”.
Can “Bud” really conquer world markets?
Some might also question the wisdom of promoting Budweiser as the company’s global beer. Consider that Budweiser receives a rating of 0 out of 100 on the popular beer rating website, ratebeer.com. A taste test by Huffington Post likewise found Budweiser to lag behind its beer-peers, such as Miller Genuine Draft and Coors. With Budweiser having floundered in taste tests and having failed to sell in previous attempts to push the beer internationally, it is fair to wonder if the brand actually has the potential to go global.
Still, Anheuser Busch Inbev SA (NYSE:BUD) (EBR:ABI) knows that it has to change up its game plan. While the company will most likely continue to acquire local beer breweries as it expands across the globe, investors may start to question the value of the company if it cannot build up its global beer brands. The company is now looking for Budweiser, the so-called “King of Beers” to reclaim its throne and as is evident by the new Rihanna deal, the company is not afraid to spend cash in order to do so. Still, other global beer brands, such as SABMiller plc (OTCMKTS:SBMRY) (LON:SAB) and Heineken International, will not be easy to beat out. And regional companies will continue to put up a strong fight to protect their home turf.