This Belgian’s for you
Foreign investment in the U.S. has risen sharply this decade, thanks in no small measure to the dollar’s weakness relative to other countries’ currencies. The latest consequence of overseas firms’ growing buying power: The “King of Beers” will soon report to work for a foreign potentate. Belgian brewer InBev is buying Anheuser-Busch Cos. for $52 billion, creating the world’s largest producer of malt beverages. Before you cry in your Bud about the loss of another American icon, however, it’s worth considering what the company and its employees have to gain (and lose) from the deal.
First, some statistics. Foreign spending on U.S. firms skyrocketed during the dot-com bubble years, fell sharply when the bubble burst, then slowly rose again. The total in 2007 was nearly $280 billion, about $100 billion more than the previous year and almost six times as much as in 2002. The bulk of that money was spent on takeovers, not start-ups, yet even the acquisitions represent just the beginning of the flow of capital into the U.S. Citing the most recent annual figures available, the Organization of International Investment said U.S. subsidiaries of foreign firms employed more than 5 million people, paid them more than $330 million annually and spent more than $150 billion on equipment, research and development.
Of course, when control of a company shifts from local owners, the company’s commitment to U.S. workers and communities may fade. InBev said it expects the deal to reduce the combined companies’ operating costs by $1.5 billion a year within three years. That’s a lot of layoffs. Still, Anheuser-Busch had already announced plans to eliminate more than 1,000 jobs. And U.S.-owned companies large and small have not hesitated to move jobs overseas to improve their competitive position.
In recent years, fierce competition in the beverage market has led to global consolidation. Two of America’s largest brewers, Miller Brewing Co. and Adolph Coors Co., were acquired by or merged with foreign firms (Miller was bought by South African Breweries in 2002, and Coors merged with Canada’s Molson Inc. in 2005) before agreeing to combine their U.S. units last year. Although dominant in the U.S., Anheuser-Busch wasn’t as strong globally as the beer conglomerates that were forming around it. Oddly enough, its new owner could wind up selling more Bud -- InBev plans to make it the company’s flagship global brand. Beer snobs around the world might not sing Bud’s praises, and even U.S. drinkers prefer its calorie-conscious sibling, Bud Light. But what Bud may lack in flavor it more than makes up for in image. It is a distinctly American beer, and for InBev, that’s something to build on.
