Why It’s Time to Buy BUD
Justin Rohrlich April 13,
2010 12:50 PM|
Analysts say Anheuser-Busch InBev’s outlook is positive, and new fees for its Clydesdales won’t hurt.
InBev (BUD) released its annual report yesterday,
reporting $36.8 billion in net revenues for 2009.
North American economy contributed to a 2% shipment
volume decrease in the United States, and adjusted sales-to-retailers
decreased 1.9%, which the company described as “in line”
with the broader industry. In Canada, volume fell 1.1%.
while those numbers may have dropped slightly, the outlook
for the brewer is good.
an analyst at Belgium’s Petercam Group, tells Minyanville
that InBev carried out a “very good and very fast execution
of the A-B integration” and that it “outpaced [its]
own target for the full year.” He says he has "no
worries on the operational side.”
of Hackett Financial Advisors, a Florida-based firm
with a focus on agricultural commodities, provides a
look at A-B InBev from a different angle, noting that
Budweiser, the company’s flagship brand, is well-positioned
uses primarily rice to brew Budweiser. Rice prices have
fallen pretty substantially, which, obviously is good
for them. Barley prices have also fallen pretty substantially,
which is another good thing. Looking at the market for
rice and barley, it doesn’t appear we’re going to see
a price spike anytime soon. We’ll have to see what kind
of summer weather we get, but right now, the weather
models are looking pretty favorable for at least the
first half of the summer growing season. If the second
half proves to be stable, that’s a win.
Hackett also says that, with unemployment at nearly
10% and people trimming their budgets, beer drinkers
are more apt to choose Budweiser over more expensive
imports like Diageo’s (DEO) Red Stripe
or Tsingtao from Constellation Brands
bolstering the case for A-B, retail-industry watcher
Jeff Macke points out that “Beverages fight on the basis
of shelf space. Budweiser products, like Coca-Cola
(KO) products, have both, more or less, won that war.”
Kippers does say that there are “more costs to be squeezed
out at the A-B level” by InBev, which is known for aggressive
One of those
costs getting “squeezed out”?
No, the horses
aren’t being retired. Though, Anheuser-Busch is no longer
picking up the tab for the beasts’ appearances at events.
merger agreement between Anheuser-Busch and InBev “specifically
requires the combined company to continue to support
the Clydesdales operations,” according to the St. Louis
a hitch team on the road costs $8,000 a day, and A-B
is now asking for “increased participation” -- $2,000
a day -- from event organizers to help defray expenses.
Clydesdale appeared at the Naval Base San Diego hospital
last December to help cheer injured soldiers at a "wounded
warriors" holiday party.
The new fee
will likely make it impossible for small events hosted
by non-profits to afford visits by the Clydesdales in
A-B marketing vice president, says Anheuser-Busch will
still continue to provide Clydesdale teams free of charge
to the baseball All-Star Game and the St. Louis Cardinals
this comment on stltoday.com:
for Major League ball games, but pay up if you are a
20-something disabled veteran. Thanks, INBEV -- keep
your horses and for that matter, keep your beer.”
like Molson Coors (TAP) just picked
up another customer.