Anhuser-busch buys rolling rock brands - Research Paper Example

In the history of its brewing operations, Rolling Rock had only two acquirers thus far. Anheuser-Busch, the largest brewer in North America, was the first company to purchase the brand in 2006 from original owners InBev, the company formed after the merger of Belgian-based brewing corporation Interbrew and South-America’s largest brewing company AmBev. The deal was closed at $82 million (Boselovic). Two years later, in July 2008, InBev bought Anheuser-Busch for $52 billion and reacquired ownership of Rolling Rock.

The merged company was also renamed Anheuser-Busch InBev (Anheuser-Busch InBev). However, although the company’s net profit sales have increased, the volume of beer has lowered and the Rolling Rock brand is among the least performing in the beer market. This weak performance triggered AB InBev to consider the sale of Rolling Rock. Reports only give hints that the most likely acquirer would be North American Breweries Inc. (NAB), owned by KPS Capital Partners, a private equity firm headquartered in New York.

In March 2009, Labatt USA, the private U.S. importer of Labatt beer, was bought by KPS from AB InBev (Brooks). Besides KPS, another potential acquirer is C2 Imports, a California beer importer of specialty beers around the world. The company had earlier entertained bids to purchase Rolling Rock with the help of Lazard investment bank, but was displeased with the offers. Rolling Rock among many assets AB InBev needs to “divest in order to repay debt” incurred from the $52 billion merger (“Anheuser mulls”).

Estimated asking price for Rolling Rock, although not specifically stated by AB InBev, may probably be along the lines of $70-$75 million. This is due to the fact that the value of the product has gone down over the years since its sale to Anheuser-Busch, then later when company merged with InBev. The asking price is also likely to go up, depending on the amount the highest bidder is willing to pay for. Sales for Rolling Rock recently declined to 13% from 2007 to 7.4 million cases in 2008. The Wall Street Journal reported that in 2004 Rolling Rock sold around 11 million cases (Cohen).

States in America sell the brand for different prices. The current estimated price range per case of Rolling Rock lager beer is $16-$22 (which is already rounded off, including all innovations under the brand) (“Price List”). Since the product’s decline, pertinent information about it is limited, incomplete and outdated. However, if on the average, the price sold per case is $19 then multiplied by 7.4 million cases, the assumption is that the company generated around $140.6 million in net annual sales in 2008.

Supposing there was still a decline in sales, the 2009 annual sales would be around $130-$140 million. Compared to C2 Imports, North American Breweries has a greater likelihood of acquiring Rolling Rocks. This “national platform for investments and growth in the beer and malt beverages industries” improved the image and profitability of Labatt in America, since its acquisition of the beer importer Labatt USA early in 2009 (North American Breweries). Labatt is currently the leading domestic beer in Canada, garnering 43% of market share.

NAB’s net sales in 2009 was $280 million (Lozyniak). If Rolling Rock is repackaged and marketed under NAB and KPS, the brand’s potential cash flow during the first year can increase to $150-$160 million. AB InBev’s brewery for Rolling Rock, which was transferred to New Jersey from Latrobe in Pennsylvania, has already received much criticism from consumers, saying that the taste of the lager has definitely altered for the worse (“Beer Review”). AB InBev has a large array of beer products to the point that it has neglected some of its old trusted brands like Rolling Rock.

Furthermore, should NAB take over brewing operations, consumers will be intrigued by its newly enhanced taste and given the few but top beers under its name, the company can surely focus on developing the image and profitability of the Rolling Rock brand.Works CitedAnheuser-Busch InBev. Anheuser-Busch InBev, 2010. Web. 18 June 2010. .“Anheuser mulls Rolling Rock Sale – Report.” CNNMoney.com. Cable News Network, 12 Apr. 2009. Web. 18 June 2010. .“Beer Review – Rolling Rock.” The Brew Club.

The Brew Club, 22 May 2009. Web. 18 June 2010. .Boselovic, Len. “Anheuser-Busch Buys Rolling Rock Brands: Fate of Latrobe Brewings Plant, Workers in Doubt.’ Post-Gazette.com. Pittsburgh Post-Gazette, 20 May 2006. Web. 18 June 2010. .Brooks, Jay. “InBev To Sell Rolling Rock … Again.” Brookston Beer Bulletin. Brookston Beer Bulletin, 13 Apr. 2009. Web. 18 June 2010. .Cohen, Jim. “Anheuser-Busch InBev - Implications of Asset Sale.” Beer Universe. Beer Universe, 13 Apr. 2009. Web. 18 June 2010. .Lozyniak, Richard.

“Labatt USA’s Parent Aims to Really Pour It On.” Buffalo News Business Today. Buffalo News Business Today, 4 Apr. 2010. Web. 18 June 2010. .North American Breweries. North American Breweries, 2010. Web. 21 June 2010. .“Price List: Beer-American.” Cape Cod Package Store. Cape Cod Package, 20 June 2010. Web. 18 June 2010. .