AB-InBev plans to enter Vietnam
Not wanting to be left out in the rush to the next Clondyke, AB-InBev’s CEO Carlos Brito told shareholders on 24 April 2013 at AB-InBev’s Annual Shareholders’ Meeting (ASM) that his company plans to join rivals in Vietnam at the end of 2014 with the construction of a brewery.
Vietnam, which has a population of 90 million people, is seen as one of the most attractive markets in the region for brewers. Beer sales are expected to grow by about 10 percent per year on average for 2010 to 2020, it was reported.
Mr Brito said that AB-InBev already has the land licence.
Rivals Carlsberg, Heineken and SABMiller all have operations in Vietnam, either directly or through joint ventures.
According to media, Mr Brito at the ASM also expressed his delight that AB-InBev was nearing the end of its planned USD 20 billion full takeover of Mexico’s Grupo Modelo after settling its dispute with the U.S. Justice Department on 19 April 2013.
The agreement closely tracks a February revision of the transaction to meet U.S. antitrust objections, whereby AB-InBev will be required to sell the Piedras Negras brewery in Mexico that makes Corona and other Modelo brand beers for the U.S. market plus the brand rights in all perpetuity to wine company Constellation Brands.
In addition, Constellation has to expand the brewery so that it can make at least 20 million hl of beer by the end of December 2016.
Finally, through acquiring Modelo’s 50 percent stake in the U.S. distributor, Crown Imports, Constellation will become the number three brewer in the U.S., behind AB-InBev and MillerCoors with its USD 4.75 billion segment of the deal.
Thus, Constellation will become a “formidable” rival to AB-InBev and prevent price increases to consumers, hopes the head of the Justice Department’s Antitrust Division, Bill Baer.
AB-InBev itself plans to realise USD 1 billion of synergy gains over four years from the Modelo transaction. It also sees huge potential for the Corona brand internationally.
Mr Brito reminded shareholders of the success AB-Inbev has had in globalising Budweiser’s sales since InBev bought Anheuser-Busch in 2008. Now available in China, Brazil and Russia, international sales rose 6 percent last year from flat growth in 2008.
The mention of Russia should have made Carlsberg prick up its ears. After all, Carlsberg has held the Corona import licence in this market since 2009. When approached by BRAUWELT International, Carlsberg would not say for how long it holds the contract. But it’s safe to assume it’s no longer than five years and that the sting in the tail will be the performance clause. That could make the contract null and void – and pass the Corona brand back to its owner, AB-InBev.
Mr Brito broadly hinted that they would review all the import licences to see if the brand is best served within their system or with the current distributor or with another distributor.
The Modelo deal is expected to be sealed in June this year.
