{"id":5127,"date":"2018-11-06T05:00:31","date_gmt":"2018-11-06T10:00:31","guid":{"rendered":"http:\/\/www.beerbusinessunplugged.com\/?p=5127"},"modified":"2018-11-04T11:37:18","modified_gmt":"2018-11-04T16:37:18","slug":"egotism-is-the-anesthetic-that-dulls-the-pain-of-stupidity","status":"publish","type":"post","link":"https:\/\/www.beerbusinessunplugged.com\/?p=5127","title":{"rendered":"Egotism is the anesthetic that dulls the pain of stupidity."},"content":{"rendered":"

\"\"<\/a><\/p>\n

Recently announced third-quarter results for ABI showed that; once again, the company\u2019s depletions are down -1.5%.\u00a0 \u00a0ABI’s market share also continued to decline this quarter -.5%. This all equates\u00a0to a year-to-date market share loss of -.45%.\u00a0 Even with all the cutting and consolidations that ABI has done in recent years, their debt exceeds $100 billion!<\/p>\n

ABI also announced that they will be cutting their dividends by 50%, thus saving four billion dollars per quarter to pay down the aforementioned debt.\u00a0 The markets\u2019 response to ABI’s announcement was a 40% drop in the beer giant\u2019s stock value.<\/p>\n

Is the clock ticking on Carlos Brito?\u00a0 Regardless of the fact that under Brito’s leadership, AB has lost millions of barrels in volume and market share, it is the financial\u00a0results that have afforded Brito the ability to be the darling of Wall Street and his shareholders.\u00a0 The industry knows all too well that Brito’s cost-cutting measures and aggressively price increases have produced great financial results and returns for the company.\u00a0 The question is, now what?<\/p>\n

Brito has accomplished this position by buying large beer companies and applying ABI’s cost-cutting measures and pricing tactics.\u00a0 In recent years, AB, Modelo, and SAB Miller have all gone down Brito’s path.\u00a0 Perhaps Brito has run out of beer companies to buy and costs to cut.<\/p>\n

Diageo is not going to sell Guinness. And for generations, Carlsberg and Heineken\u00a0have been tied into a family and will not sell.\u00a0 While nothing is certain, it is safe to say that these companies have no interest in selling to ABI.\u00a0 What else is there?\u00a0 There are still some nice breweries out there, including the six million Hectoliter Krombacher, but that, too, is family owned.\u00a0 Unless ABI jumps deeply into China’s breweries, there is nothing with significant volume remaining to be purchased.<\/p>\n

What about Pabst?\u00a0 Since Pabst is a virtual brewery, adding that volume to the declining volume of AB would certainly help with the latter\u2019s excess brewing capacity.\u00a0 Pabst’s portfolio, however, does not fit ABI’s strategy.\u00a0 ABI, not known for effective brand marketing, would up-selling\u00a0Pabst’s products resulting in accelerating ABI’s declining volume even more.\u00a0 In addition, ABI might violate their DOJ agreement regarding the purchase of more U.S. companies.<\/p>\n

How does Brito increase shareholder equity, make his board happy, and reduce ABI\u2019s debt for future expansion?\u00a0 What if Brito sells all or part of AB in the U.S.?\u00a0 Why not?\u00a0 When ABI acquired\u00a0Modelo, brand rights were sold to Constellation Brands in the U.S., similar to the situation in which Miller was sold to MolsonCoors when they bought SAB.\u00a0 By selling the U.S. market, ABI could retire the debt, AB stock would soar, and ABI would be in a much stronger position to buy Coke or Pepsi!<\/p>\n

In the end, Brito is not going to continue doing what he is doing now. His make-up will not let him.\u00a0 He will, however, do something<\/em> to move the needle for his board and selling AB in the U.S. might just be the icing on the cake!\u00a0 Sound crazy, well nobody thought AB would ever sell either!<\/p>\n

Egotism is the anesthetic that dulls the pain of stupidity.<\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

Recently announced third-quarter results for ABI showed that; once again, the company\u2019s depletions are down -1.5%.\u00a0 \u00a0ABI’s market share also continued to decline this quarter -.5%. This all equates\u00a0to a year-to-date market share loss of -.45%.\u00a0 Even with all the cutting and consolidations that ABI has done in recent years, their debt exceeds $100 billion! […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"_s2mail":"yes","jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_newsletter_tier_id":0,"jetpack_publicize_message":"","jetpack_is_tweetstorm":false,"jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false}}},"categories":[1],"tags":[],"jetpack_publicize_connections":[],"aioseo_notices":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p2xRTi-1kH","jetpack_sharing_enabled":true,"jetpack-related-posts":[],"_links":{"self":[{"href":"https:\/\/www.beerbusinessunplugged.com\/index.php?rest_route=\/wp\/v2\/posts\/5127"}],"collection":[{"href":"https:\/\/www.beerbusinessunplugged.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.beerbusinessunplugged.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.beerbusinessunplugged.com\/index.php?rest_route=\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.beerbusinessunplugged.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=5127"}],"version-history":[{"count":6,"href":"https:\/\/www.beerbusinessunplugged.com\/index.php?rest_route=\/wp\/v2\/posts\/5127\/revisions"}],"predecessor-version":[{"id":5134,"href":"https:\/\/www.beerbusinessunplugged.com\/index.php?rest_route=\/wp\/v2\/posts\/5127\/revisions\/5134"}],"wp:attachment":[{"href":"https:\/\/www.beerbusinessunplugged.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=5127"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.beerbusinessunplugged.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=5127"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.beerbusinessunplugged.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=5127"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}