AB InBev Presentation FINAL DRAFT
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Transcript of AB InBev Presentation FINAL DRAFT
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Company History Financial Analysis Industry Analysis
Porter’s Five Forces Analysis Critical Success Factors
External Environment AnalysisPESTEL Analysis
Customer Analysis Marketing AnalysisRecommendations
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1852 – George Schneider opened Bavarian Brewery in St. Louis, IL
1860 – Schneider sold the brewery to William D’Oench & Eberhard Anheuser
Ran brewery under E. Anheuser
D’Oench sold his half to Adolphus Busch
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Eberhard Anheuser & Adolphus Busch
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Innovators in all aspects of businessTransportation, bottling, &brewing
1870s - implemented a new brewing style from the town of Budweis, Czech Republic
1876 – Release of Budwesier
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1879 – Named Anheuser-Busch Brewing Association
1880 – Anheuser passed away, Busch named president
Busch pushed for expansion in every aspect of business
1913 – Busch passed away, son named president
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August Anheuser-Busch Sr. era
1920 - Prohibition hits the United StatesOther opportunities?
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1957 – Named largest brewer in the United States
Family owned and operated until 2008
2008 – InBev purchased Anheuser-Busch for $52 billion
Anheuser-Busch is St. Louis
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2013 revenue of $43 billion, profits of $16.5 billion
Market Share United States – 47%Canada – 40%Mexico – 58%Brazil – 68% beer, 18% soft drinkArgentina – 78% beer, 21% soft drinkBelgium – 56%
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Often imitated but never duplicated
FocusQualityInnovationMarketingAcquisitions
Compliments other business aspects to allow for growth
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• New York Stock Exchange – BUD
• $43.2 billion in revenue
• $142 billion Total Assets
APPENDIX 1 (AB Inbev Segment Revenues)
Market
Revenue
(USD million)
Revenue
(% of Total)
Revenue
(USD million)
Revenue
(% of Total)
Revenue
(USD million)
Revenue
(% of Total)
North America 16,023 37.10% 16,028 40.30% 15,304 39.20%
Mexico 2,769 6.40% — — — —
Latin America North 10,877 25.20% 11,268 28.30% 11,350 29.10%
Latin America South 3,269 7.60% 3,209 8.10% 2,878 7.40%
Western Europe 3,620 8.40% 3,625 9.10% 3,945 10.10%
Central & Eastern Europe 1,445 3.30% 1,668 4.20% 1,755 4.50%
Asia Pacific 3,354 7.80% 2,690 6.80% 2,317 5.90%
Global Export & Holding Companies 1,839 4.20% 1,270 3.20% 1,496 3.80%
Total 43,195 100.00% 39,758 100% 39,046 100%*AB InBev 2013 annual report pg. 34
2013 2012 2011
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• “Stitching”
– 663,074,830 shares, which represented a 41.24% voting interest
• 521 institutions own 58%
• 379 Funds own 2.86%
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BUD vs. SAB.L$110.60 Stock Price $55.61$126.27 1y Target $56.00
$177.65B Market Cap $88.92B782M Float 862M18.28 Forward P/E 11.610.98 BETA N/A1.5 Analyst Recom. 2.8
3.60% Yield 1.97%
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• ROA • 11.6%
• Financed • 1.56 debt to equity
• inventory turnover • 5.96 times per year (61 days)
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Industry Description
• Part of the brewing industry
• Varies in size
• 4 companies = 90% of industry revenue• Highly concentrated
• Increasing popularity ofcraft beer
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Rivalry Within Industry (Medium)
• Plenty of companies; few with significant global market share
• Compete for consumer tastes
• M&A’s to eliminate competition and gain market share
• Growing craft beer market• 10% growth• 7% U.S market share
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Supplier Bargaining Power
• Large companies have more influence on price
• Large volumes purchased
• Market is saturated with suppliers• Easy to change supplier
• Small breweries have less influence on price
• Smaller volumes purchased but,
• May buy locally• Lower shipping costs• Close relationship
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Threat of Substitutes (High)
• Wine, hard-liquor, soft drinks, etc.
• Price ceiling on beer
• Price-performance trade-off
• Willing to pay more for a certain feature
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Buyer Bargaining Power (Medium-High)
• Three-tier distribution system
• Distributors are gateway to end-user
• Have more control over price
• Prevent breweries from over-charging customers
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Threat of New Entrants (Low-Medium)
• Microbreweries entering the market everyday
• Limited shelve space
• Overshadowed
• Easy to enter the market, hard to get established
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• Continue to innovate; adjust to consumer taste
• Line extensions, new liquids, new marketing
• “Open Innovation” concept
• Maintain strong brand image
• Continue building a strong, diverse brand portfolio
• Use strategic M&A’s to gain new customer segments
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National Beer Wholesalers Association
• Founded in 1938
• 3,300 licensed, independent beer distributors across the US
Employment
• 345,000 direct and indirect jobs
• 130,000 full time employees
National total value of production
• $54 billion per year
• $10.3 billion per year in federal, state and local taxes
• $11 billion per year in alcohol, excise and consumption taxes
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Alcohol Regulation
• 21st Amendment - authority to the state to regulate the sale of alcohol.
• The Three Tier System - provides transparency and traceability
Innovation & Technology Committee
• Global Data Synchronization, shared services, green solutions, monitoring technologies and e-commerce.
LICENSED DISTRIBUTOR
LICENSED RETAILERS
Responsible Consumers
of Legal Drinking Age
BREWER OR IMPORTER
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Conservation Actions
• In their facilities, on the roads and in the marketplace.
• Saving money through environmental initiatives
Recycled Point-of-Sale Material
Hybrid, Biodiesel & Compressed Natural Gas Beer Delivery Trucks
Solar Energy Powers Warehouses
Energy efficient bulbs and Motion sensors
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Who are our customers?
What do we know about them?
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women
men
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Hispanic drinking-age adults
2010
2030
2050
0% 5% 10% 15% 20% 25% 30%
Growth Rate
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Geographical Promotions
Michelob Golden Draft/Michelob Golden Draft Light
Midwest
Ziegenbock
Kokanee
Texas
Canada
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How to Identify the Geographic Market Segment
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Variety of Marketing Strategies to Achieve Emotional Connection with Consumers
Long & Prestigious History of Marketing Excellence
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Adolphus Busch was Master of Advertising & Branding
Pioneered Coordinated, Multi-year Ad Campaigns, Point of Sale Advertising & Giveaways
Used Branded Pocket Knives
instead of Calling Cards
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Epic Super Bowl Advertising Campaigns
Biggest Event in Sports & Advertising
$4 Million per 30 Seconds of Ad Time2014 AB InBev spent $28 Million
5 of 16 Best Super Bowl Commercials of all Time Belong to AB InBev Products
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#4 “Respect” Campaign 2002
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Have Appeared in at Least One Super Bowl Commercial Every Year since 1986
2014 “Puppy Love” Campaign
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EXCLUSIVE NFL SPONSORSHIP6 Year Deal Worth $1.6 Billion
2011-2017
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Strategy Based on 3 Socially Responsible Platforms
Responsible Consumption of Alcohol
Preservation of the Environment
Emergency Disaster Response
Invested $1.4 Billion since 1982
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Responsible Consumption of Alcohol
First Campaign Launched in 1982
2013 Blimp Campaign
New Year’s Eve Campaign
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Responsible Consumption of Alcohol
Resources for Parents to Help Them Discuss Underage Drinking with Children
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Preservation of the Environment
Reduced Water Use in Breweries by 40% Last 5 Years
Average Recycling Rate of 99.6% at All Facilities
Utilize Alternative Energy Sources 60% of Fuel at Houston Brewery from Methane
Produced at Nearby Landfill
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Emergency Disaster Response
MAY 2014Joined
American Red Cross’ Annual
Disaster Giving
Program
$500,000 for Food, Shelter, Health Services
$250,000 for Support of Blood Services
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Emergency Disaster Response
72 Million Cans of Drinking Water
Donated to People Impacted
by Natural & Other Disasters
Since 1988
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Social Media Marketing
Justin Timberlake, Creative Director
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Experiential Marketing
Hottest New Trend in Marketing
Creativeguerillamarketing.comExperiential 101: What is Experiential Marketing
“Helping Consumers Experience a Brand by Engaging as Many Human Senses as
Possible to Create Customer Loyalty & Influence Buying Decisions”
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Experiential Marketing
Julia Mize, Vice PresidentExperiential MarketingAnheuser-Busch InBev
Named VP in 2013
Newly Created Position
Revolutionize Experiential Marketing Methods
2014 Award for Best Production of an Event (Consumer) for Bud Light 50/50/1
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Experiential Marketing
Temporary Event Venues
2014 Super BowlCompletely Rebranded
a Cruise Ship
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Mainstay of Experiential Marketing
Daily Brewery Tours5 of 12 Breweries
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Experiential Marketing
March 2014Ballpark Village in Downtown St. Louis
26,000 Ft2 on 3 LevelsRestaurant, 11 Bars
Rooftop Deck21’ Long Tap Wall—
Swipecard for Self-Serve200 Beers on Tap52 High Def TVs
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Marketing Recommendations for Global Expansion
Clydesdales Will Most Likely Not Be as EffectiveSporting Events Such as CricketSocially Responsible Platforms Relevant to Market
Underage Drinking Not as Relevant in Latin America (Legal Drinking Age of 18)
Disaster Response in Foreign MarketsFocus on the Environment in Foreign MarketsOpen Breweries with Tours in Foreign MarketsPromote International Events with Bud Light HotelPartner with Other International Organizations
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The world’s biggest beer consumers
• Asia-Pacific’s brewing industry is worth $258 billion
• The beer market is growing 2 times more than the rest of the world
• There are 57 million new consumers each year.
• Premium segment is growing 2.5 times faster than the overall industry.
Fast emerging economies"Beer has a clearer correlation with strong economic growth”
Nirgunan Tiruchelvam (Consumer Research Analyst)
Globalization
Half of the world’s population(around 3.8 billion people)
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7.2%
6.3%
8.5%
8.7%
Highest potential beer consumption growth for the next five years
Per Capita Consumption
Overall Consumption
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• Since 2011, AB InBev has acquired important breweries in China
• The company’s growth in China is mainly being driven by Budweiser, Harbin and Sedrinbrands
• During 2012, AB InBev's beer sales by volume in Asia Pacific grew by 1.9% and revenues per hectoliter increased by 10.6%
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• Continue actively expanding its production capabilities in regions across China and other countries in Asia-Pacific
Recommendations
• Continue specially focused on leveraging the increasing spending power of consumers in Asia-Pacific by targeting the premium segment
• Consider to expand on other beer brands on this market.
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• Mexico is the world’s 6th-largest beer producer and beer consumer.
• Mexicans drink an average of 62 liters of beer a year
• The beer market in Mexico is growing quickly
• The beer production increased 8% from 7.9 B liters in 2010 to 8.6 in 2012
• The beer market is expected to reach a value of $22.1 billion by 2017
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• Expected increase in beer demand is primarily driven by factors like:
• robust population base in urban areas,
• strong gross domestic product growth, and
• rising middle-income group and consumer spending.
• Last year the company acquired Grupo Modelo, which is the largest brewery in Mexico with 63% of the Mexican beer market
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• Take advantage from the significant growth potential that Modelobrands have all over the world
• Introduce AB InBev brands in Mexico through Modelo’s distribution network
Recommendations
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