InBev to buy Modelo
InBev is at it again. This time they are looking to buy Modelo. The deal, which would include Corona, would be worth an estimated 15 billion dollars. InBev already owns a 50.4% stake in Modelo.
Mexico is the world’s sixth biggest beer market and the fourth most profitable and is a virtual duopoly between Modelo and Heineken. Analysts say it would be a good strategic deal for AB InBev.
Modelo has a 50-percent-plus market share of the Mexican beer market, but a relatively low profit margin of around 26 percent which AB InBev would look to push towards the margin of 60-65 percent it earns in Brazil.
The move would increase AB InBev’s focus on North and Latin America which already accounts for over 90 percent of profits with its half share of the U.S. market and 70 percent of Brazil.
So it looks like InBev wants to just buy portfolios instead of developing new beers. Yet another sign of a failing corporate business process. Why be innovative in the market place when you can just buy an existing customer base.