Brewers at AB InBev needs to rethink its strategy

SNOOTY ALE connoisseurs mock Budweiser’s usurped title of “King of Beers”. No one, however, quibbles that Bud’s purveyor, Anheuser-Busch InBev (ABI), reigns over global brewing. The all-conquering firm now sells almost three Olympic-sized swimming pools of beer an hour—more than its three nearest rivals combined. Yet even as profits have frothed, weariness has descended upon the head that wears the crown. ABI’s prospects, once as golden as its Corona lager, have assumed the cloudier quality of a Belgian witbier.

ABI, which is nominally based in the Flemish city of Leuven but run out of New York, is not just much bigger than its rivals, selling one in four beers worldwide. It also generates around half the industry’s global profits. Its gross operating margins were 40% in 2018, more than double the average for other listed brewers—and stellar by the standards of firms that peddle any kind of consumer goods. It has devoted managers, nearly all recruited out of university. The looming presence of ABI’s boss, Carlos Brito, in the company’s corridors, can feel almost eerie. Employees’ fealty to “Brito”, as the methodical Brazilian is universally known, is reminiscent of General Electric under Jack Welch.

Investors’ similar devotion to the company as a whole is increasingly being tested. The first set...

via Business Feeds

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