This is kind of an interesting turn of events. The Wall Street Journal is reporting that AB InBev, which owns Budweiser, is in talks to purchase Modelo, which brews, among other brands, Corona.
If it happens – and there are still a lot of ifs – it would make the world’s largest brewer even stronger. Not larger, but stronger. Here’s why:
If the deal goes through, regulators may be wary of InBev’s huge market share, which would only grow by adding Modelo. Therefore, in order for a deal to be approved, AB InBev would have to divest itself of some of its current brands, to be replaced by Corona and the like.
If that happens, this proposed deal would streamline AB InBev, which, like many brewers, has far too many brands in an attempt to fight in every beer discipline. This way, the most underperforming ones can be replaced by better performing ones and the brands themselves become even stronger.
The news of this pending deal demonstrates just how dominant InBev is. There are thousands upon thousands of beer brands in this country, and grocery store shelves are stocked with so many variety of beers you’d think beer would be a scattered market.
But it’s not. As Stealing Share noted in a recent study on beers, only a few have mastered the art of beer branding. Now, it seems, one company will own most of them.