Miller accepts merger deal from The King of Beers
Sussex distributor confident about brewery’s future in Milwaukee

By  Katherine Michalets - Freeman Staff

Oct. 14, 2015

 Budweiser products sit opposite Miller products at Discount Liquor on Tuesday.   
Charles Auer/Freeman Staff

SUSSEX - Waiting to meet with other MillerCoors distributors from across the country Tuesday, Beer Capitol Distributing Co. CEO Aldo Madrigrano said he was confident about the iconic brewer’s future in Milwaukee and  his company’s trucks would never add Budweiser products to their loads.

Early Tuesday, British-based SABMiller announced it accepted in principle a $106 billion takeover offer from Anheuser Busch InBev that would result in the world’s largest beer company. It was the sixth offer that AB InBev had made to SabMiller in recent weeks.

If the merger is approved and then makes its way successfully through regulatory committees, the combined company would control about 31 percent of the beer sales globally. According to a statement Tuesday, AB InBev has agreed to pay $3 billion to SABMiller if the deal fails to close because of failure to get regulatory approval or the clearance of the AB InBec shareholders.

Madrigrano said he spoke with MillerCoors spokesmen Tuesday after the news was announced and he was satisfied concerning the company’s future in Milwaukee. Sussex-based Beer Capitol Distributing Co. is the largest distributor in the state and one of the largest in the country for Miller products.

A main concern that Madrigrano expressed regarding the deal is that the right team is in place to handle the logistics. From a day-to-day operations perspective, Madrigrano said, he doesn’t believe there will be much local impact and that he can’t envision a day when Miller distributors like Beer Capitol would also deliver Bud products and the same is true for Anheuser Busch delivering MillerCoors items.

Beechwood Sales & Services in New Berlin distributes products for AB InBev. That company’s president was not available for comment Tuesday.

While the deal is worked out by the two beer giants, Madrigrano said he will keep an eye on the process. Another recent deal in 2013, during which AB InBev bought 50 percent of Grupo Modelo in Mexico for $20.1 billion, resulted in Modelo having to sell off the Corona brand in the U.S. and other U.S. businesses. After the deal was announced, the U.S. Justice Department had filed an anti-trust suit, according to a news story by CNN.

In comparison, Madrigrano said the pending merger between SAB Miller and AB InBev is much larger.

Going forward, Madrigrano said he is confident in MillerCoors’ commitment to Milwaukee and southeastern Wisconsin, saying the company has committed to invest about $10 million to $12 million in its Milwaukee facility this year.

“That’s a major piece for us. We want to make sure it stays in Milwaukee and we will be confident that they will stay here,” he said.

Madrigrano also hopes that the Milwaukee brewery and its operations continue at their normal pace and the distributors and other companies don’t get “caught up in the stuff going on.”

‘That could be one huge monopoly’     

As a longtime seller of Miller and Budweiser products, Frank Greguska Jr. of Discount Liquor said he questions how products would be distributed if the two companies merge and what that would do to prices. Many Wisconsin and micro-breweries, such as Lakefront Brewery and New Glarus Brewing Company, are distributed by the same companies that distribute Miller and Bud products - something many people aren’t aware of.

“That could be one huge monopoly if you want to call it that,” Greguska said.

Matthew Fixx, whose son owns Fixture Brewing Company in Waukesha, compared the deal to there being only one bank or one car company in America.

“It’s liking having one bank; they can charge whatever they want,” Fixx said.

He thinks Bud and Miller drinkers would stay loyal to their brands, but hopes others would turn to craft brews in light of the giant international company controlling so much.

Nick Reistad, a co-owner of Raised Grain Brewing Company in Waukesha, also hopes more people will find the value in locally produced beer.

“It certainly (creates) an interesting quandary in Wisconsin because Miller is such a strong presence in our community,” he said of the possible merger. “Miller is definitely part of the Wisconsin identity. We hope that everything turns out well for them.”

Reistad said he heard that Miller may be spun off as part of the merger.

“It’s so strange that Miller would combine with Budweiser knowing there has been such a feud between them for so many years,” Reistad said. “For us, it doesn’t really change the direction for what we are doing. We are focused on great beer and a great experience.”

AB InBev has until Oct. 28 to make a formal offer if U.K. regulators grant an extension to the takeover talks. The new, merged company would dwarf the next biggest player, Heineken, which has 9 percent of the market. A combined company would have total annual sales of $73.3 billion.

In addition to Budweiser, brands owned by AB InBev include Stella Artois and Beck’s. SABMiller, which is based in London, makes Miller Genuine Draft, Peroni and Milwaukee’s Best.

By the numbers

$106 billion takeover offer made by Anheuser Busch InBev for SABMiller;

$3 billion to be paid by AB InBev for SABMiller if deal fails;

Oct. 28 is the date on which AB InBev has to formalize the offer;

9 percent is the percentage of the market held by the world’s largest beer maker, Heineken;

31 percent of the market that would be held by a combined AB InBev and SABMiller;

$73.3 billion in annual sales if the companies combine.

Source: The Associated Press

Also contributing: The Associated Press