AB InBev to invest $2 billion into US business

AB InBev will invest $2 billion into its US business over the next three years in a bid to break out from Budweiser and build its strength in other categories, including craft beer and non-alcoholic beverages.

According to Reuters, the company plans to invest close to $500 million this year and a total of $2 billion through 2020, making it one of the largest capital investment programmes in US history, and will go toward elevating its biggest beer brands, building its presence in craft beer and pushing into new categories, including low-alcohol beverages and other drinks. Last year the brewer acquired SpikedSeltzer, an alcoholic sparkling water, and has also formed a partnership with Starbucks Corp. to brew, bottle and sell ready-to-drink Teavana teas.

While craft beer has been steadily growing, ‘big beer’ lagers have been losing market share, with sales of Budweiser declining over the past three years. This has led to a rush by big breweries to buy up craft brewers in a bid to get a grip on this growing market.

Since 2011, AB In Bev has acquired numerous craft breweries, first taking over Chicago’s Goose Island in 2011, followed by Blue Point, Elysian and Golden Road. Last year it bought Houston-based Karbach Brewing Company and Virginia-based Devils Backbone, with North Carolina’s Wicked Weed its most recent acquisition.

Outside of the US, AB InBev recently acquired Camden Town Brewery, which has just opened a £30m brewery with its backing.

In 2016, US craft brewers produced 24.6 million barrels, and saw a 6% increase in volume, adding 1.4 million barrels to its production, according to The Brewers Association (BA). By value, the US craft beer sector achieved a 10% rise, with its value estimated at $23.5 billion, representing 21.9% of the US beer market.

Beer as a category has also been losing market share to spirits for seven consecutive years, according to the Distilled Spirits Council, a trade organisation, while spirits rose to 36% from 35%.

Of the $2 billion earmarked to be invested in the US market over the coming years, AB InBev has said that more than $200m will go toward its 21 US breweries, which will allow them to make different beers and expand production of aluminium bottles.

Some of that money will also be spent on distribution projects to improve national supply chains, with plans to build distribution facilities in both Los Angeles and Columbus.

The investment follows AB InBev’s  acquisition of SAB Miller for $79 billion last year. AB Miller and AB InBev agreed the multi billion merger in November 2015, which completed in October 2016. The new company will is officially called Anheuser-Busch InBev SA/NV, (AB InBev), effectively bringing an end to the SAB Miller name.