23 August 2014
Introduction Anheuser-Busch started out as a small brewery in St. Louis, Missouri in the mid-1800s. Today, they are perhaps the most well-known brewer in the world with 13 locations throughout the United States with more than 500 independently owned wholesalers (Anheuser-Busch, 2014). Their distinctive packaging and Clydesdale horses are only rivaled by their signature recipes. The flagship Budweiser brand beer has won multiple awards all over the world, and new brands are proving to be winners as well (Anheuser-Busch, 2013). In addition to the Budweiser family of beers, Anheuser-Busch markets Corona, Stella-Artois, and Michelob, among many others. Currently, Anheuser-Busch has a net income of 9.1 billion dollars with 44.6 billion dollars in annual sales and a market cap of 180.8 billion (NYSE, 2014).
The beer industry is full of competing breweries that produce quality products such as the Heineken, Miller and Carlsberg brewers. Together, these four breweries produce over half of the world’s total beer market with more than five hundred different brands of beer among them (Reuters, 2010). Anheuser-Busch currently markets its product to over 80 countries in the world and is constantly looking to add more to that list. Anheuser-Busch partners with smaller, localized breweries in an attempt to not only gain a foothold in new markets, but also to allow these smaller breweries to expand their market base into foreign territories. These partnerships are a vital component in maintaining Anheuser-Busch's dominance in the beer market.
Domestically, smaller microbreweries are on the rise and while not a major threat to Anheuser-Busch’s global dominance, they are causing the company to expand its thinking from mass marketing of beer, to a smaller and more refined customer pallet. These “microbreweries” have been gaining an increasing foothold in the craft beer market and as their market share increases, large brewers see a decrease in their market share (Wilmore, 2012). Anheuser-Busch has broken into this emerging market by producing a line of specialty beers to compete with the growing list of popular microbrewers.
Industry Analysis Anheuser-Busch InBev is a Belgium based brewer which produces over 200 distinct products worldwide (Anheuser-Busch, 2014). The beer industry is oligopolistic in that although there are many brewers in the industry, only a few actually control the market. As of 2013, these dominant players include Anheuser-Busch InBev, SABMiller, Heineken NV, and Molson Coors (Yahoo Finance, 2014). Together, these four brewers have a combined market cap of $310.54 billion (Yahoo Finance, 2014). Budweiser accounts for 4.4% of the total beer market in the world, with Bud Light accounting for 1.5% of the market share (Purdie, et al., 2008, p. 2). SABMiller, which brews the Miller family of beers, holds a global market share of 9.7% of the global beer market (Boesler, 2014). Heineken NV holds a global market share of 9.2% (Boesler, 2014). Molson Coors holds a global market share of 3.2% (Boesler, 2014). Anheuser-Busch InBev is currently the leader in the global beer market with a total global share of 20.6% (Boesler, 2014). These four breweries make up almost 50% of the world’s total beer market. These global market shares have seen an increase over the last decade due, in part, to mergers and/or acquisitions of such companies as AmBev, and subsequently Anheuser-Busch by Interbrew. These mergers and acquisitions positioned these companies such that emerging markets could be entered and dominated. The brewery industry has substantial entry barriers in place for would-be brewers. In the U.S., Anheuser-Busch, SABMiller, and Molson Coors control roughly 80% of the total beer market (Rosenbaum, et al., 2009). This market dominance presents challenges to newcomers in the brewing industry as they