Do the Chinese drink beer? Hell, yeah! And Anheuser-Busch (BUD)’s “remarkable strength” in China impresses Credit Suisse:
A-B has been patiently building a position in China since 1993 and we believe the company’s efforts are now bearing fruit. We believe China is wrongly overlooked as an A-B growth driver in what will be over time the world’s most important beer market.
Unfortunately for the Busch family, this means InBev can create even more synergy with BUD:
It was clear on our visits to China that InBev is executing an inferior model to both SABMiller and A-B and this has implications for all parties in light of recent speculation….
The thesis of our report is that the Chinese market is in need of greater consolidation and hungry for the improved marketing and distribution execution that only a strong national market leader with A-B’s brand and marketing skills can provide.
Any combination of the assets of A-B, InBev and SAB would be welcome in a market in need of consolidation. Thus, from a purely objective perspective, a lock up of InBev and A-B would be positive. When considering InBev’s challenges in the market, we believe InBev management is more than cognisant of the potential contained within this equation.