FEMSA Follow-up

Hey, remember we were talking about how well Dos Equis is doing for Heineken USA? Keep in mind that Heineken USA is just the importer; the beer is brewed and owned by Mexican brewer/drinks conglomerate FEMSA (Fomento Económico Mexicano, S.A. de C.V.). But I see in the Financial Times today that they are "in talks" to sell off their beer business, to either SABMiller or Heineken, in order to focus on their profitable Coca-Cola business. Here's why I posted, in light of the previous post:

Heineken USA has distributed Femsa's beer in the US since 2005, after Femsa's decision to extract itself from a distribution deal in 2004 with former partner Interbrew. Femsa and Heineken USA, a unit of the Dutch beermaker, signed a deal in April 2007 to extend their relationship for another 10 years.
But the US partnership with Heineken has underperformed, industry insiders say, as Femsa's beers have struggled to compete against fellow Mexican brewer Modelo and its ubiquitous top beer, Corona.
[...]
But the need for consolidation in the Latin American brewing arena has taken on a new level of urgency in the wake of InBev's $52bn deal to buy Anheuser-Busch. As part of that transaction, InBev, the world's largest brewer, gained a 50 per cent stake in family-run Modelo.

In other words...the strong growth FEMSA's Dos Equis and Tecate have shown in the U.S. isn't enough, because they aren't Corona. They have "underperformed." Sounds to me more like FEMSA doesn't have the stomach for the fight.

What it really sounds to me is that the "need for consolidation" is lemming-like, brewers rushing to buy other brewers so they get big enough to fight for market share, when all they're actually doing is fattening themselves for the kill.

And who gets rich? Bankers. Who gets screwed? Brewers, and you, my friends, because huge brewers can and will throw their weight around and have an effect on the entire beer market, including crafts, just like Wal-Mart does in retail.

And what will happen when there are but three or four mega-monster brewers left? I hope someone's standing by Carlos Brito, ready with a videocamera:

When Alexander saw the breadth of his domain, he wept, for there were no more worlds to conquer.

Interesting shifts among the Big Boys

A-B maybe should have held out.

That's overstating things for effect, but A-B is looking very good right now, in its last days as an independent company before the meeting at the end of the month that will seal its acquisition by InBev. I see in a report from Morgan Stanley this morning that A-B kicked macrobrewer ass over Labor Day, up 1.2% in volume. Coors continued to do well, but big declines on the Miller side of the house put MillerCoors down 3.9% overall. Corona continued its slide: volume is down 7.3% (maybe they shouldn't have been so quick to dump long-time importer Gambrinus Company?). This, in the shadow of an overall beer market decline of 1.6%.

What's behind a lot of this? Surprise: Bud Light Lime. The new lime light is doing well, and throttling last year's macrobeer success story, Miller Chill, while apparently sucking share from Corona as well. Pretty strong moves for a beer that just came out in May. BLL will probably fade when the weather cools, like Chill did, but after blowing up this summer like it did, I'm hesitant to count the stuff out.

Oh, and craft beer? The numbers for the first half of 2008 from the Brewers Association (which, remember, don't count sales of Goose Island, Craft Brewers Alliance, Old Dominion, Blue Moon...) show craft beer up 11%. So, guys: are we at 4% of the market yet?