Have you ever wondered, just how much it costs to import the “better quality” beer from around the world like Corona, Modelo or Heineken or where exactly does the beer I drink come from? Most likely you drink a product either made by or distributed by Anheuser-Busch and InBev (ABI) considering they currently have aver 39% of the market share for the American Beer Industry. But just recently ABI has taken actions that will give them a majority of the market share for the American Beer Industry, which includes a 20 billion dollar acquisition of the Groupo Modelo Beer Manufacturing Company of Mexico. This includes expanding the company internationally to Sounth America and adding the brand names of Modelo, Dos Equis and Corona. This merger was so large that the Department of Justice filed a lawsuit against the company in fear of them reaching a stage of monopoly and market leader. The result of this was for ABI to sell a 50% share of Modelo’s share to the Constellation Corporation, who currently owns about 20% market share of the American Beer Market, for only $5.5 billion. DOJ says that this will allow for less consolidation and more competition in price in the markets.
Rob Sands, president of the Constellation Corp. says that this is the most transformational deal in the company’s 86-year history. The results of this merger range in variety and benefit both ABI and Constellation. ABI will now have 46% market share after the acquisition as well as gaining all rights over the Brand Corona and its factories in Mexico. Granted that they Corona accounts for over 20% of beer sales in some regions ABI distributes to, they will being seeing substantial growth in capital output and profits in the coming years. Constellation also stands to see a similar amount of growth in the coming years. They have aquired the brand of Modelo. Constellation makes wines from Robert Mondavi and Clos du Bois, as well as Svedka Vodka. Although they have never brewed beer before Constellation is excited about this endeavor. They will build a new state of the art facility for brewing the Modelo brand on the Texas-Mexico border. This will result in the plants capacity doubling in a matter of a few months. How do you think that these actions will affect other beer manufactures output such as Miller Coor’s? Also how do you think that this acquisition will affect beer prices of domestic, imported and micro brew beer companies?