ab inbev presentation final draft

Company History Financial Analysis Industry Analysis

Porter’s Five Forces Analysis Critical Success Factors

External Environment AnalysisPESTEL Analysis

Customer Analysis Marketing AnalysisRecommendations

1852 – George Schneider opened Bavarian Brewery in St. Louis, IL

1860 – Schneider sold the brewery to William D’Oench & Eberhard Anheuser

Ran brewery under E. Anheuser

D’Oench sold his half to Adolphus Busch

Eberhard Anheuser & Adolphus Busch

Innovators in all aspects of businessTransportation, bottling, &brewing

1870s - implemented a new brewing style from the town of Budweis, Czech Republic

1876 – Release of Budwesier

1879 – Named Anheuser-Busch Brewing Association

1880 – Anheuser passed away, Busch named president

Busch pushed for expansion in every aspect of business

1913 – Busch passed away, son named president

August Anheuser-Busch Sr. era

1920 - Prohibition hits the United StatesOther opportunities?

1957 – Named largest brewer in the United States

Family owned and operated until 2008

2008 – InBev purchased Anheuser-Busch for $52 billion

Anheuser-Busch is St. Louis

2013 revenue of $43 billion, profits of $16.5 billion

Market Share United States – 47%Canada – 40%Mexico – 58%Brazil – 68% beer, 18% soft drinkArgentina – 78% beer, 21% soft drinkBelgium – 56%

Often imitated but never duplicated

FocusQualityInnovationMarketingAcquisitions

Compliments other business aspects to allow for growth

• New York Stock Exchange – BUD

• $43.2 billion in revenue

• $142 billion Total Assets

APPENDIX 1 (AB Inbev Segment Revenues)

Market

Revenue

(USD million)

Revenue

(% of Total)

Revenue

(USD million)

Revenue

(% of Total)

Revenue

(USD million)

Revenue

(% of Total)

North America 16,023 37.10% 16,028 40.30% 15,304 39.20%

Mexico 2,769 6.40% — — — —

Latin America North 10,877 25.20% 11,268 28.30% 11,350 29.10%

Latin America South 3,269 7.60% 3,209 8.10% 2,878 7.40%

Western Europe 3,620 8.40% 3,625 9.10% 3,945 10.10%

Central & Eastern Europe 1,445 3.30% 1,668 4.20% 1,755 4.50%

Asia Pacific 3,354 7.80% 2,690 6.80% 2,317 5.90%

Global Export & Holding Companies 1,839 4.20% 1,270 3.20% 1,496 3.80%

Total 43,195 100.00% 39,758 100% 39,046 100%*AB InBev 2013 annual report pg. 34

2013 2012 2011

• “Stitching”

– 663,074,830 shares, which represented a 41.24% voting interest

• 521 institutions own 58%

• 379 Funds own 2.86%

BUD vs. SAB.L$110.60 Stock Price $55.61$126.27 1y Target $56.00

$177.65B Market Cap $88.92B782M Float 862M18.28 Forward P/E 11.610.98 BETA N/A1.5 Analyst Recom. 2.8

3.60% Yield 1.97%

• ROA • 11.6%

• Financed • 1.56 debt to equity

• inventory turnover • 5.96 times per year (61 days)

Industry Description

• Part of the brewing industry

• Varies in size

• 4 companies = 90% of industry revenue• Highly concentrated

• Increasing popularity ofcraft beer

Rivalry Within Industry (Medium)

• Plenty of companies; few with significant global market share

• Compete for consumer tastes

• M&A’s to eliminate competition and gain market share

• Growing craft beer market• 10% growth• 7% U.S market share

Supplier Bargaining Power

• Large companies have more influence on price

• Large volumes purchased

• Market is saturated with suppliers• Easy to change supplier

• Small breweries have less influence on price

• Smaller volumes purchased but,

• May buy locally• Lower shipping costs• Close relationship

Threat of Substitutes (High)

• Wine, hard-liquor, soft drinks, etc.

• Price ceiling on beer

• Price-performance trade-off

• Willing to pay more for a certain feature

Buyer Bargaining Power (Medium-High)

• Three-tier distribution system

• Distributors are gateway to end-user

• Have more control over price

• Prevent breweries from over-charging customers

Threat of New Entrants (Low-Medium)

• Microbreweries entering the market everyday

• Limited shelve space

• Overshadowed

• Easy to enter the market, hard to get established

• Continue to innovate; adjust to consumer taste

• Line extensions, new liquids, new marketing

• “Open Innovation” concept

• Maintain strong brand image

• Continue building a strong, diverse brand portfolio

• Use strategic M&A’s to gain new customer segments

National Beer Wholesalers Association

• Founded in 1938

• 3,300 licensed, independent beer distributors across the US

Employment

• 345,000 direct and indirect jobs

• 130,000 full time employees

National total value of production

• $54 billion per year

• $10.3 billion per year in federal, state and local taxes

• $11 billion per year in alcohol, excise and consumption taxes

Alcohol Regulation

• 21st Amendment - authority to the state to regulate the sale of alcohol.

• The Three Tier System - provides transparency and traceability

Innovation & Technology Committee

• Global Data Synchronization, shared services, green solutions, monitoring technologies and e-commerce.

LICENSED DISTRIBUTOR

LICENSED RETAILERS

Responsible Consumers

of Legal Drinking Age

BREWER OR IMPORTER

Conservation Actions

• In their facilities, on the roads and in the marketplace.

• Saving money through environmental initiatives

Recycled Point-of-Sale Material

Hybrid, Biodiesel & Compressed Natural Gas Beer Delivery Trucks

Solar Energy Powers Warehouses

Energy efficient bulbs and Motion sensors

Who are our customers?

What do we know about them?

women

men

Hispanic drinking-age adults

2010

2030

2050

0% 5% 10% 15% 20% 25% 30%

Growth Rate

Geographical Promotions

Michelob Golden Draft/Michelob Golden Draft Light

Midwest

Ziegenbock

Kokanee

Texas

Canada

How to Identify the Geographic Market Segment

Variety of Marketing Strategies to Achieve Emotional Connection with Consumers

Long & Prestigious History of Marketing Excellence

Adolphus Busch was Master of Advertising & Branding

Pioneered Coordinated, Multi-year Ad Campaigns, Point of Sale Advertising & Giveaways

Used Branded Pocket Knives

instead of Calling Cards

Epic Super Bowl Advertising Campaigns

Biggest Event in Sports & Advertising

$4 Million per 30 Seconds of Ad Time2014 AB InBev spent $28 Million

5 of 16 Best Super Bowl Commercials of all Time Belong to AB InBev Products

#4 “Respect” Campaign 2002

Have Appeared in at Least One Super Bowl Commercial Every Year since 1986

2014 “Puppy Love” Campaign

EXCLUSIVE NFL SPONSORSHIP6 Year Deal Worth $1.6 Billion

2011-2017

Strategy Based on 3 Socially Responsible Platforms

Responsible Consumption of Alcohol

Preservation of the Environment

Emergency Disaster Response

Invested $1.4 Billion since 1982

Responsible Consumption of Alcohol

First Campaign Launched in 1982

2013 Blimp Campaign

New Year’s Eve Campaign

Responsible Consumption of Alcohol

Resources for Parents to Help Them Discuss Underage Drinking with Children

Preservation of the Environment

Reduced Water Use in Breweries by 40% Last 5 Years

Average Recycling Rate of 99.6% at All Facilities

Utilize Alternative Energy Sources 60% of Fuel at Houston Brewery from Methane

Produced at Nearby Landfill

Emergency Disaster Response

MAY 2014Joined

American Red Cross’ Annual

Disaster Giving

Program

$500,000 for Food, Shelter, Health Services

$250,000 for Support of Blood Services

Emergency Disaster Response

72 Million Cans of Drinking Water

Donated to People Impacted

by Natural & Other Disasters

Since 1988

Social Media Marketing

Justin Timberlake, Creative Director

Experiential Marketing

Hottest New Trend in Marketing

Creativeguerillamarketing.comExperiential 101: What is Experiential Marketing

“Helping Consumers Experience a Brand by Engaging as Many Human Senses as

Possible to Create Customer Loyalty & Influence Buying Decisions”

Experiential Marketing

Julia Mize, Vice PresidentExperiential MarketingAnheuser-Busch InBev

Named VP in 2013

Newly Created Position

Revolutionize Experiential Marketing Methods

2014 Award for Best Production of an Event (Consumer) for Bud Light 50/50/1

Experiential Marketing

Temporary Event Venues

2014 Super BowlCompletely Rebranded

a Cruise Ship

Mainstay of Experiential Marketing

Daily Brewery Tours5 of 12 Breweries

Experiential Marketing

March 2014Ballpark Village in Downtown St. Louis

26,000 Ft2 on 3 LevelsRestaurant, 11 Bars

Rooftop Deck21’ Long Tap Wall—

Swipecard for Self-Serve200 Beers on Tap52 High Def TVs

Marketing Recommendations for Global Expansion

Clydesdales Will Most Likely Not Be as EffectiveSporting Events Such as CricketSocially Responsible Platforms Relevant to Market

Underage Drinking Not as Relevant in Latin America (Legal Drinking Age of 18)

Disaster Response in Foreign MarketsFocus on the Environment in Foreign MarketsOpen Breweries with Tours in Foreign MarketsPromote International Events with Bud Light HotelPartner with Other International Organizations

The world’s biggest beer consumers

• Asia-Pacific’s brewing industry is worth $258 billion

• The beer market is growing 2 times more than the rest of the world

• There are 57 million new consumers each year.

• Premium segment is growing 2.5 times faster than the overall industry.

Fast emerging economies"Beer has a clearer correlation with strong economic growth”

Nirgunan Tiruchelvam (Consumer Research Analyst)

Globalization

Half of the world’s population(around 3.8 billion people)

7.2%

6.3%

8.5%

8.7%

Highest potential beer consumption growth for the next five years

Per Capita Consumption

Overall Consumption

• Since 2011, AB InBev has acquired important breweries in China

• The company’s growth in China is mainly being driven by Budweiser, Harbin and Sedrinbrands

• During 2012, AB InBev's beer sales by volume in Asia Pacific grew by 1.9% and revenues per hectoliter increased by 10.6%

• Continue actively expanding its production capabilities in regions across China and other countries in Asia-Pacific

Recommendations

• Continue specially focused on leveraging the increasing spending power of consumers in Asia-Pacific by targeting the premium segment

• Consider to expand on other beer brands on this market.

• Mexico is the world’s 6th-largest beer producer and beer consumer.

• Mexicans drink an average of 62 liters of beer a year

• The beer market in Mexico is growing quickly

• The beer production increased 8% from 7.9 B liters in 2010 to 8.6 in 2012

• The beer market is expected to reach a value of $22.1 billion by 2017

• Expected increase in beer demand is primarily driven by factors like:

• robust population base in urban areas,

• strong gross domestic product growth, and

• rising middle-income group and consumer spending.

• Last year the company acquired Grupo Modelo, which is the largest brewery in Mexico with 63% of the Mexican beer market

• Take advantage from the significant growth potential that Modelobrands have all over the world

• Introduce AB InBev brands in Mexico through Modelo’s distribution network

Recommendations