Markets
BUD

AB InBev (BUD) to Add Golden Road to Craft Beer Portfolio

A generic image of a monitor with Market Analysis displayed
Credit: Shutterstock photo

Anheuser-Busch InBev SA/NVBUD is firing on all cylinders to achieve growth via acquisitions. Sources revealed that the company recently announced plans to buy Golden Road Brewing in an attempt to strengthen its craft beer portfolio. Terms of the deal, which is anticipated to close by this year end, remained under wraps.

Headquartered in Los Angeles, Golden Road is the largest craft brewery in the County, and is expected to sell roughly 45,000 beer barrels in 2015. This brewer, founded about four years ago, attracted AB InBev due to its impressive in-house beer culture coupled with its focus on producing superior quality beer.

The craft beer industry itself is an attraction for growth-seeking brewers. Per the Brewers Association, the $19.6 billion craft beer industry witnessed an 18% jump in barrel volumes in 2014. Also, it currently contributes to nearly 11% of the beer market as a result of consumer preference for this category of beer.

The popularity of the craft beer industry is evident from a recent series of acquisitions that were made with the aim to expand therein. In early Sep, Heineken NV HEINY purchased a stake in Lagunitas Brewing Co. Also, Firestone Walker Brewing Co announced its intention to merge with Duvel Moortgat, earlier this year.

As for AB InBev, Golden Road will be the company's fifth acquisition in the craft beer space. The company had forayed into this industry about five years back with the buyout of Goose Island Beer Co, after which it also added Blue Point Brewing, 10 Barrel Brewing and Elysian Brewing to its craft beer kitty.

We believe that, with renowned brands like India pale ales, Golden Road Hefeweizen, Point the Way IPA and Wolf Among Weeds IPA to its credit, Golden Road is likely to be an asset for AB InBev, enabling the company to fortify its footprint in the craft beer industry.

As mentioned above, AB InBev is leaving no stone unturned to expand via acquisitions. Last week, this Belgium-based brewer expressed an interest in buying rival SABMiller Plc SBMRY , which would combine the world's two biggest brewers into a single entity, with an approximate net revenue of $69 billion and a stock market value of more than $276 billion.

The beer industry is undergoing significant changes of late; consumers are gravitating toward more craft beer and wine selections, and moving away from Anheuser-Busch and Miller staples like Budweiser, Corona, and Miller Genuine Draft. This potential transaction could help both companies witness increased growth and expand their consumer base.

Zacks Rank

Currently, AB InBev carries a Zacks Rank #5 (Strong Sell). A better-ranked brewer is Compania Cervecerias Unidas S.A. CCU , with a Zacks Rank #1 (Strong Buy).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free report >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

ANHEUSER-BU ADR (BUD): Free Stock Analysis Report

SABMILLER PLC (SBMRY): Free Stock Analysis Report

HEINEKEN NV (HEINY): Free Stock Analysis Report

CERV UNIDAS-ADR (CCU): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

BUD CCU HEINY

Other Topics

Stocks

Latest Markets Videos

    Zacks

    Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at www.zacks.com.

    Learn More