Anheuser-Busch Faces Increased Beer Competition

Excerpt from today's One Page Annotated Wall Street Journal Summary (which you can get emailed to you every morning by signing up here):

Miller to Buy 'Energy Beer' Brands From McKenzie

• Summary: UK-based SABMiller said it has agreed to acquire two "energy beer" brands, in a move that will almost certainly intensify competition in the beer market. Beer sales overall are stagnant, but sales of caffeine-laced "energy beers" are growing fast. Sales of Sparks, one of two brands SABMiller is purchasing (the other is Steel Reserve), grew at an annual compound rate of 107% between 2003 and 2005. SABMiller already owns a malt energy beer, Mickey's Stinger, with 7% alcohol by volume and "more caffeine than a cup of coffee". SABMiller is buying the two brands for $215 million from privately-held McKenzie River, and will also work with McKenzie River's founder and president to develop new products. US competitor Anheuser-Busch sells two energy beers, Tilt and B(e), and is test marketing a third.
• Comment on related stocks/ETFs: Incrementally negative for Anheuser-Busch (BUD), but not enough to impact the stock. Eddy Elfenbein thinks that BUD's attempt to move into hard liquor is "di-WORSE-ification", and wonders if Anheuser-Busch will gain anything from its recent EU Budweiser trademark victory. The largest potential growth market for beer is China; overview of the Chinese beer market here.

Anheuser-Busch's problems in the beer market were discussed in the WSJ of June 21st:

Anheuser Ponders Liquor Market As Beer Fizzles

• Summary: Responding to flat sales and industry consolidation, Budweiser beer producer Anhouser Busch said that it would consider entering the liquor business. Beer has lost 5 percentage points of market share to liquor since 1995. Per capita liquor sales fell from 1.1 gallons in 1974 to 0.62 gallons in 1998, but have since risen to 0.67 gallons due to succesful marketing. It's not clear how exactly Anhouser Busch will enter the liquor market.
• Comment on related stocks/ETFs: Incrementally negative for Anhouser Busch (BUD), as the article emphasises its stagnant sales growth and declining leverage over its distributors.