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U.S. brewers look to global market: Anheuser-Busch plans to buy stake in Modelo.

Within days of announcing its venture agreement with Japan's Kirin Brewery Co., Anheuser-Busch said it plans to purchase an 18 percent stake in Mexico's Grupo Modelo, maker of Corona Beer and that country's largest brewer.

Anheuser-Busch said it had agreed to an initial cash investment of about $477 million in the Mexican brewery and its subsidiaries. The proposed transaction, pending regulatory approval is expected to be completed in the second quarter of this year.

In a statement, Antonino Fernandez, chairman and president of Modelo, said the deal is a strategic move, given the rapid globalization of markets and opportunities under the proposed North American Free Trade Agreement. He added that the alliance will help the two brewers to better serve consumers in Mexico and elsewhere in Latin American and other areas of the world.

Corona is the top selling beer in Mexico and accounts for some 55 percent of the country's total beer exports. Under the agreement, all of Modelo's brands will continue to be brewed exclusively in its seven existing Mexican breweries and a new brewery in North central Mexico, scheduled to begin production in 1996.

U.S. distribution rights are not involved in the proposed alliance. Corona and other Modelo brands will continue to be imported into this country by Barton Brands and Gambinus Importing Co.

Anheuser-Busch will get three seats on privately held Modelo's board of directors, while a Modelo representative will be appointed to A-B's board.

Globalization

Industry analysts say that A-B is pinning hopes for growth outside the U.S. market, which has grown by only .5 percent since the early 1980s.

"We're looking at acquiring other brewers and other brands outside of Mexico," an Anheuser-Busch official said.

A-B's alliances with Mexican and Japanese companies are apparently only the beginning of a new era of globalization of the beer business. Indeed, the Anheuser-Busch deal comes in the wake of a similar transaction between Miller Brewing Co. and Molson Breweries of Canada.

Miller also owns a stake in Mexican brewer FEMSA, and analysts speculate that Miller may attempt to increase that stake in light of the A-B deal. FEMSA had said earlier that they were seeking foreign participation, up to 49 percent, in its brewing and bottling operations.

Foreign beers have only a .5 percent share of the Mexican market, "but that's obviously going to change in the post-NAFTA environment," said Baring Securities analyst Lavinia Agnew.

FEMSA and Modelo "have the choice either to join up with the giants or suffer from increasing competition in years to come," Agnew said.
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Title Annotation:Anheuser-Busch Companies Inc.; Grupo Modelo
Publication:Modern Brewery Age
Date:Mar 29, 1993
Words:424
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