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Anheuser-Busch to look outside beer

Published:  23 July, 2008

America's largest brewer is moving closer to greater involvement in the wine and spirit sectors.

Anheuser-Busch, the brewer of Budweiser and Michelob, has seen its market share of the drinks market fall by five per cent over the past decade and August Busch, the president of its beer operations, startled a conference of state licensing officials last week by declaring: If this trend continues, we at Anheuser-Busch will have to broaden our business model in terms of expanding beyond beer and broadening our position within the total alcohol industry.'

As Harpers reported last November, Anheuser-Busch has formed a subsidiary, Long Tail Libations, which is test marketing Jekyll & Hyde, a liquorice and wild berry-flavoured drink. It has also entered into a joint venture with Bacardi to produce malternatives'. Mr Busch's comments, however, have convinced analysts that the group wants to become a serious contender in the wine and spirit market.

Certainly it has the financial firepower to make significant takeovers of existing producers, but as the market consolidates, that becomes increasingly difficult as the number of suitable targets diminishes and potential bidders or merger candidates are willing to pay up to land a deal.

Analysts are persuaded that because Mr Busch chose to make his comments to key licensing officials, a move may not be long in coming. One immediate speculation was that because Anheuser-Busch has an unrivalled distribution network in the US, this could make a significant impact on partner brands. In this respect, Brown-Forman is being mentioned as a potential joint venture candidate.