Anheuser-Busch InBev SA – AB InBev

Anheuser Busch InBev SA
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Anheuser-Busch InBev SA / NV, popularly known as AB InBev, is an international brewing and beverage company based in Leuven, Belgium. AB InBev has a global functional management office in New York and regional headquarters in Sao Paulo, London, St. Petersburg, Louis, Mexico, Bremen, Johannesburg, and others. The range includes around 630 types of beer in 150 countries around the world.

About AB InBev

AB InBev (JSE: ANH) was founded after the Belgian and Brazilian breweries InBev took over the American brewery Anheuser-Busch through the merger of AmBev and Interbrew.

Interbrew was founded in 1987 from the merger of two of the largest Belgian breweries: Artois and Piedboeuf. The Artois Brewery, formerly known as Den Hoorn, was founded in 1366. The Piedboeuf Brewery was founded in 1812.

In 1995, Interbrew expanded with the acquisition of Labatt Brewing Company, Canada’s largest brewery (founded in 1847). In 2002, the world’s best brewery, Beck’s was acquired (founded in 1873).

AmBev was founded in 1999 by the merger of two of the largest breweries in Brazil: Antarctica (founded in 1880) and Brahma (founded in 1886).

Anheuser-Busch was founded in Louis, Missouri, USA, in 1852 as Anheuser & Co.

In 2004, Interbrew and AmBev merged to form AB InBev, the world’s largest brewery. The value of the deal was $11.5 billion. The third-largest (Interbrew), and the fifth-largest (Ambev) breweries of the world merged to form the world’s leading beer market. The best brands from Belgium, Canada, Germany, and Brazil participated in the agreement.

Anheuser Busch InBev SA

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AB InBev IPO

Anheuser-Busch InBev SA / NV is a registered company with the main listing on Euronext in Brussels. Secondary listings of the company are on the Mexico, Johannesburg, and New York stock exchanges.

The merger (the acquisition of SABMiller by AB InBev) was completed in October 2016. The new company is known as Anheuser-Busch InBev SA / NV (AB InBev) and is based in Leuven, Belgium. It is listed on Euronext (Euronext: ABI) and has secondary listings in Mexico (MEXBOL: ABI) and South Africa (JSE: ANH) as well as on the US GDR on the New York Stock Exchange (NYSE: BUD). [42]

SABMiller has ceased trading in the global stock markets and has transferred its stake in the brewery to MillerCoors Molson Coors.

The new company AB InBev is the largest brewery in the world. The estimated annual turnover is $55 billion. According to Euromonitor International, the company has a global market share of 28%.

AB InBev Investments

The company is keen on making huge investment decisions that ultimately benefit the company.

Diversification

Some drinks considered to be healthier than traditional beer, are the most popular alcoholic trend in the United States. In-store sales for those drinks have roughly doubled per annum since 2016. During the COVID-19 lockdown, the sales further boosted as people stopped going to bars and stopped drinking at home.

Anheuser-Busch brewery, the maker of Budweiser got late in the game but it still plans to overtake market leaders White Claw and Boston Beer Company over time and expand the production and marketing of beverages like Bud Light Seltzer.

Acquisitions

With AB InBev continuing to dominate existing markets and expand into new markets, the outlook for the brewery and its investors is good. The company has a long history of takeovers and mergers. The company is always desperately looking to acquire smaller groups in the market which ultimately helps in raising the market share of AB InBev.

AB InBev Business Strategies

Now, let’s take a look at some core business strategies of the company.

Absorption and Rationalization

AB InBev has developed the integration principles that its executives have used for over two decades: efficiency and optimization cost reduction and redundancy by adopting a meritocratic culture based on performance and sales to maximize shareholder value. The nature of AB InBev’s M&A integration model reflects in part the nature of the company’s shareholders. The beer giant is partially controlled by the private equity fund 3G Capital, which is run by Brazilian stakeholders who follow the codes of private equity writing. These guidelines support the systematic implementation of consolidation acquisitions.

One Company One Culture

AB InBev’s discipline is underpinned by a strong corporate culture based on certain principles. These uniform principles include zero satisfaction, ownership society, strict cost control, honesty, and meritocracy. This culture is imposed on all companies controlled by InBev.

Uncompromising Implementation

Often, post-acquisition integration is not just an art but a science due to the many compromises required. These include the balance between cost reduction and revenue retention, management of brand rationalization while maintaining local micro-brands, management of individual business results, and community sustainability. InBev’s post-merger integration has become a science that will undoubtedly be realized regardless of the consequences: eliminating local brands, mass layoffs (especially the layoff of Anheuser Bucho just before Christmas), and the rationalization of suppliers through the development of the local ecosystem.

AB InBev Stock Analysis

AB InBev (JSE: ANH) has been moving near the 52-week high. The stock has a very high P/E ratio of 96 while the dividend yield is at 0.82%. These figures are quite not supportive for the investors that look to buy the stock for dividends.

However, the recent history of stock price shows that AB InBev’s stock price has risen steadily, while the stock has fallen only once in the past few months. The has gained 0.96% YTD while the 1-year gain is around 25%. Looking at the three years and five years view, we see that th stock price shows a negative gain of -11% for three years and -47% for five years.

It clearly indicates that the company had seen a massive sell-off in the last five years but it has been able to gain back the buying momentum over a year. The stock is valuable for investors who count on capital gains.

The technical view of AB InBev (JSE: ANH) shows that the price is hovering in a tight range in the month of May, especially after the ex-date of dividends. The price is consolidating around the 20-day simple moving average while the volume is also lying around the 20-day average. The market awaits a catalyst to find further directional bias.

Bottom line

AB InBev is a corporate giant of the beer market that owns 28% of global market share of the beer market. The company has a history of several acquisitions and mergers. It implements business strategies across all the countries where it operates with complete uniformity. The stock price of AB InBev (JSE: ANH) looks promising for long-term investors.

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