World: AB InBev focused on growing the company rather than making another major acquisition

The head of AB InBev's North American operations said the world's biggest beer maker is focusing on growing the company and integrating its recent deals rather than making another major acquisition, Food Dive reported on April 30.

Michel Doukeris, who began overseeing AB InBev's Anheuser-Busch division in January, told Food Dive the company continues to mine synergies from its biggest purchase — a $100 billion blockbuster merger in 2016 with SABMiller that brought Carling Black Label, Budweiser and Michelob Ultra under one roof.

“We are very happy with our footprint today, so the company is really focusing always on growth, and the most important lever for growth is and always is going to be organic growth,” he said in an interview on the sidelines of the Beverage Forum last week.

Still, Doukeris said the company wouldn't dismiss a deal "when the opportunities arise" and said the beer giant is "always analyzing the opportunities" in the market. "But given the size of the last acquisition, and given everything that we still need to do on the footprint we have today, our focus is 100% on organic,” he said.

The global beer market has rapidly consolidated in recent years as changing consumer tastes, craft beer growth and a surge in the popularity of wine and spirits have siphoned off drinkers, prompting companies to merge to squeeze out cost savings and give them a larger footprint in parts of the world where consumption is expanding.

Since 2009, the combined U.S. market share controlled by two biggest beer makers, AB InBev and MillerCoors, has fallen from 80% to 66.5% in 2017. Sales of namesake beers such as Budweiser, Coors Light, Miller Lite and the most popular American brand, Bud Light, all dropped.

Jim Koch, the founder of the Boston Beer Company and Sam Adams, told Food Dive last year that the U.S. government needs to adopt a tougher stance on takeovers of craft breweries by the two biggest companies — or risk further reducing consumer choice and irreparably hurting a popular segment of America's beer industry responsible for about 7%-10% of the market.

In the last three years, AB InBev has purchased Wicked Weed, Devils Backbone and Karbach Brewing in the craft space, while Constellation Brands, better known for its Modelo Especial and Corona Mexican beers, has acquired Ballast Point and Funky Buddha. MillerCoors also has been active, snapping up Revolver Brewing and Hop Valley Brewing, among others.

"The Department of Justice needs to look very closely at the ability of the big brewers to buy up competition,” Koch said. “The [government] should view its job as encouraging the long-term competitiveness of the U.S. beer industry.”

Analysts attending the Beverage Forum said the high level of debt AB InBev has from the SABMiller purchase could deter the brewer from making another large deal in the near term.

In addition to other beer companies, Coca-Cola and PepsiCo have long been rumored as possible takeover targets for AB InBev.

"I think there is a decent chance in my view for ABI, but I think it's going to be a couple years based on the debt," Bonnie Herzog, an analyst with Wells Fargo Securities, said at the conference.

Mark Swartzberg, managing director at Stifel, Nicolaus & Co. said with a 29% share of the global beer market, AB InBev has plenty of room left if it decides to expand.

"There are a lot of assets left to buy" in beer, he said.

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