E-Malt.com News article: USA: Crown Imports gets more operation ‘latitude’ following AB InBev-Modelo deal

Anheuser-Busch InBev's deal to swallow the half of Grupo Modelo it doesn't already own for $20.1 billion means a change in the ownership structure at Chicago-based Crown Imports, Chicago Tribune reported on June, 30.

As part of the deal involving AB InBev, which owns Budweiser and Stella Artois, and Modelo, which owns best-selling Mexican beer Corona Extra, Modelo will sell its 50 percent stake in Crown Imports to Victor, N.Y.-based Constellation Brands for $1.85 billion. Constellation was Modelo's partner in the joint venture to import Modelo brands to the U.S. That deal with Crown was set to expire in 2016 but now will be extended.

Crown President Bill Hackett said the transaction gives Crown more "latitude" to operate, at least in part because it's simpler to answer to one owner instead of two. Additionally, there were issues related to AB InBev's continued involvement because of its size in the U.S.

AB InBev has "really got to be at arms' length and not controlling any of the business here" because of antitrust concerns, Hackett said. If the world's largest brewer had attempted to control Modelo brands in the U.S., its total market share would have risen above 50 percent.

"We're the brand owner for the U.S., which gives us far more flexibility and opportunity to grow organically by expanding with other brands from Grupo in Mexico and beyond," Hackett said, citing the opportunities to make acquisitions or forge new partnerships. Crown also imports Chinese beer Tsingtao.

Hackett said the new agreement also grants the import business additional "clarity," because AB InBev's deal with Constellation begins a perpetual importation agreement, with automatic 10-year renewals.

"This takes all of that lack of clarity and clearly defines the business, the ownership, the relationship with the brands that we have and provides real clarity on what we can look to in the future," he said.

Modelo, founded in 1925, is Mexico's biggest brewer, with a market share over 50 percent and a virtual duopoly with Heineken's FEMSA Cerveza in the world's fourth-most-profitable beer market. Corona is the biggest imported beer in the lucrative U.S. market.

AB InBev is attracted to Modelo by a Mexican beer market growing at about 3 percent and cost savings that the company said would be at least $600 million a year.


04 July, 2012