Beer makers and DOJ reach deal

Published on NewsOK Modified: April 19, 2013 at 5:29 pm •  Published: April 19, 2013
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Baer said the deal as originally presented was potentially transformative in a bad way for consumers, but this agreement creates an independent owner of Modelo brands in the U.S. that will be positioned to provide consumers with more brands at competitive prices.

Constellation will effectively replace Modelo as a competitor in the U.S. selling its Corona and other brands domestically.

The company, based in Victor, N.Y., expects the deal will double its sales and solidify its place in the U.S. beer market.

The settlement also will benefit AB InBev, based in Belgium, which will still add Modelo brands globally to its already expansive portfolio of beers that includes Budweiser, Stella Artois and others.

The beer industry has always been fiercely competitive, but brewers have come under incredible pressure since the global downturn.

Unemployment hit young men more than other populations and that took a toll on sales, as they represent beer maker's key market.

Domestic beer production, a key indicator of market activity, increased 1 percent in 2012 after falling for three straight years, according to industry group the Beer Institute. Production hit nearly 194 billion barrels in 2012 but that is still down more than 4 percent from 198.4 billion barrels produced in 2007.

Anheuser-Busch earlier this year said profits fell nearly 5 percent in the final quarter of 2012, and it forecast weak first-quarter sales for this year. The company posts results for the current quarter at the end of the month.

Shares of AB InBev rose $1.65, or 1.7 percent, to close at $99.22 Friday. Constellation Brands shares increased $1.18, or 2.5 percent, to close at $48.52.