Friday, September 18, 2015

1530 Beery Eyed

1530 Beery Eyed

The brewer’s new name will make it sound like a law firm: Anheuser, Busch, Inbev and SABMiller.  

Bud's buying Miller.  Or trying to.  Wait. that's not exactly right. The InBev oligopoly of Belgium owns Anheuser-Busch which makes Budweiser and wants to buy England-based oligopoly SABMiller which makes Miller.

That would make the “King of Beers” and the “Champagne of Beers” into the committee of beers.  Or the Gang of Beers.  Or the People’s Republic of Beers.

That the two largest American beer companies are foreign owned -- both purchased relatively recently -- is like waking up one morning to find that Tata has purchased 100% of Ford and Dongfeng Auto of China owns 100% of GM.

Anheuser Busch is twice the size of SAB.  But both outfits are enormous.

To be fair, a combined company wouldn't be a real monopoly. But close enough.  Also to be fair, Miller doesn't really taste like pony pee.  

The authoritative peer reviewed "Journal of American Horse Excreta" says the two chemical compounds resemble each other closely but aren’t a DNA match that would hold up in court.

But still.

These companies are worldwide.  They have a million brands, including some so-called craft beers.  "So called" because a "craft beer brewer" is someone who makes six million barrels- full a year or fewer.

Craft beer. Six million barrels. A "barrel" is a fixed and formal measure.  It contains 31.5 US gallons.  Six million x 31.5 = 189,000,000 gallons. That's 118,129,000,000 pints. Here is the figure spelled out: 118-billion, 129-million pints.  Remember, craft beer. You make 118- billion slices of white bread a year and call it “craft white,” people would laugh.

AB makes about 130 million barrels a year. Miller makes only about half that. But that's still plenty. Talk about industrial production!

There are those of us who prefer industrial over craft. And the figures show we connoisseurs of the mass-produced have nothing to worry about from the "artisans" who sit cross legged on the brewery floor taste-testing samples from all six million barrels, then instantly fall asleep after the commercial is finished shooting.

Beer is pretty much recession-proof.  When the economy tanks, sales go up, not down. That's because you get a small kick from it, or a good night's sleep or because it's often cheaper than other canned or bottled beverages.  So how good an idea would it be to put 70% of the country's consumption under one corporate roof?

Fortunately, there's something of a poison pill on the Miller side of the equation. Minority owners Miller-Coors has dibs on expanding its stake in the event of a sale.  And make no mistake, this is a proposed takeover, not a merger.

How much would it cost AB to buy Miller?  Hard to say. The estimates range from $62 to $90 dollars a share. So a final figure would be dictated by how many shares are actually available.

AB won’t be able to buy SAB lock, stock and um... barrel.

I’m Wes Richards. My opinions are my own but you’re welcome to them. ®
Please address comments to wesrichards@gmail.com
© WJR 2015

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