Beermakers May Not Be Shopping After Major Buying Spree

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Global brewers, after spending $195 billion on acquisitions in the last decade, may slow the pace of deals in 2012 as beermakers struggle to maintain profit growth amid rising costs and weaker demand in the U.S. and Europe.

The two biggest companies to emerge from the spree, Budweiser owner Anheuser-Busch InBev NV and SABMiller Plc, are best positioned to profit with a presence spread over Africa, Asia and Latin America, while smaller rivals Carlsberg A/S and Heineken NV may suffer from their higher exposure to Europe.

More than $21 billion changed hands for beer assets in 2011, topped by SABMiller’s A$10.5 billion ($11 billion) takeover of Foster’s Group Ltd. That made it the busiest year since 2008, when InBev NV paid $52 billion for Anheuser-Busch Cos. As sales volume growth decelerates and the cost of making beer rises, companies including the integrated AB InBev, Heineken and Carlsberg may focus more on running their own businesses this year than buying others.

Beer volume and revenue growth may be particularly limited in Europe and the U.S. as brewers compete for sales amid economic turmoil and high unemployment. SABMiller, the first brewer to post results for the three months through December, reported declining volumes in both regions, as every other unit grew. Carl Short, an analyst at S&P Capital IQ in London, said “recessionary conditions” may return to Europe this year.

Beermakers may have to rely on internal cost cutting as price increases may be limited. Carlsberg and Heineken may have a “really tough time managing the pricing mechanism,” said Anthony Bucalo, an analyst at Banco Santander.

Good!  I’m happy about this. Too big, too many brands under a few roofs. You know, the largest American brewery right now is Boston Beer (Sam Adams) with a mere 20% of the US market? Miller, Bud, Coors…all owned by non-US conglomerates. I guess that’s the way it goes.

Source: Bloomberg News

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