Anheuser-Bush InBev product line has expanded over the last seven years, but the company’s sales to distributors have dropped by 6 percent, and that percentage equals more than $1 billion in net sales.
The United States is AB InBev’s largest market. The U.S. accounts for 30 percent of the company’s revenue, so the AB marketing approach is still focused on the Budweiser and Bud Light brands, but the company is also adding imported craft brands to stimulate sales. Beer sales in Brazil, China, and Mexico, have improved, but a new distributor incentive plan could present more issues than solutions, according to BMG Bank President Ricardo Guimarães.
Ricardo Guimarães is not only a Brazilian banker, but he is also a Brazilian entrepreneur that sponsors soccer clubs. His family has extensive holdings in coffee, cattle, mining and other commodities and beer is one of them. Guimarães pays close attention to any changes in the United States that might impact his Brazilian businesses, and a recent AB InBev incentive plan perked his interest. According to Guimarães, Anheuser-Bush rolled out a distributor reimbursement plan that will give AB the upper hand in the craft beer market. Distributors would have to push AB InBev craft brands. Distributors could recoup half of their marketing and retail display costs if they join the plan.
The Anheuser-Bush incentive plan was introduced at the beginning of 2016 after acquiring an Oregon-based brewery that produces the kind of beer the millennium market drinks. At first glance, the plan seems to make sense to Guimarães and other people in the beer business, but when several craft breweries complained to the Department of Justice, the plan became a high-profile case of a giant brewery trying to force small breweries out of business.
AB InBev says that’s not the case, but if distributors only push Anheuser-Bush brands, the smaller breweries will have a tougher time getting retail space. And to make matters worse, the raw materials used to make their crafted beer will be harder to find. Mr. Guimarães thinks the plan could be shot down by the Department of Justice once the investigation is completed.
If distributors give their allegiance to one brewery, new beer consumers will have a tough time finding the beer that appeals to them. There is a difference between a big conglomerate’s expanded product focus and an independent brewery that focuses on making one brand.