Heineken buys FEMSA's beer business

Heineken announced today that they have agreed to purchase FEMSA's beer business in the Americas. FEMSA ("Fomento Económico Mexicano, S.A.B. de C.V.") was founded in 1890, and is Mexico's #2 brewer after Corona-maker Grupo Modelo (the two are pretty much the only brewers in the country, other than a handful of microbrewers).  FEMSA as such is largely unknown among American beer drinkers, but is the brewer of beers like Dos Equis and Tecate, and Heineken USA has been their importer lately.

The purchase was an all-stock deal worth $5.5 billion, and leaves FEMSA owning 20% of Heineken. The only other serious bidder was SABMiller, and their stockholders are breathing a sigh of relief that there wasn't a bidding war. It appears to be a much better fit for Heineken anyway, getting them into the Americas in a big way.

What's this mean for you? Mostly nothing. I think it will have a net negative effect on consumers; prices will go up to pay for these purchases, and the closer we move to an oligopoly of beer -- mainstream beer, of course -- the easier it is to bump up prices. The more mainstream prices go up, the more room there is for craft prices to go up. However, SABMiller head Graham Mackay says it's a net positive, because consumers have more choice (a point I still don't get; more choice because more global brands that taste almost exactly alike have come to their country and are busily crushing the regional brewer?) and better quality (okay, that I can go along with in a strict sense). I'll freely admit that Mackay has much more experience in the biz (HA! Yeah, just a bit...) and is, by all evidence, head and shoulders smarter than I am, so he may have something there...but I suspect it's largely a matter of perspective.

Anyway...again, what's this mean for you? Almost nothing, especially in America. Heineken USA was importing the beers, they'll still be importing them; it's just that they'll also be exporting them at the same time. And, of course, the number of big brewers at the top grows smaller. Which is why I predicted in Ale Street News that within ten years ABIB would be spinning off and breaking up. I wasn't wholly serious about that, but to some extent I am. I don't think these behemoths are going to survive. Government anti-trust units should be poking at them (how much of the U.S. market is controlled by ABIB and MillerCoors?), special brewing units should spin off to run on their own in this new market, and eventually the bankers involved at the top will start acquiring other stuff because there are no more breweries to buy, and the company's identity will be lost -- like Bass -- and they'll start thinking about selling off the beer -- like Bass -- to focus on other operations. At least, that's what I think may happen.

In any case...Heineken USA is now in the import-export business.