Budweiser, the great Belgian lager?

By Michael Brush

Voulez-vous une Bud?

It simply doesn't sound right. And it probably never will.

That's just one of many reasons beverage sector experts -- and more than a few Bud drinkers -- are rolling their eyes at an audacious play by Belgian brewery giant InBev for Anheuser-Busch (BUD, news, msgs). The St. Louis company makes the iconic Budweiser brand that's as American as hot dogs, baseball and apple pie.

InBev chief Carlos Brito insists his proposed $46 billion takeover of Bud would bring bigger profits in part by helping his company sell Budweiser in French bistros, German beer gardens, Chinese nightclubs and similar spots around the globe. "We have operations in 130 countries ... and that would be a great platform to develop that brand," Brito says in a video interview you can find at his company's Web site.

He got an important endorsement last week when the legendary Warren Buffett – whose Berkshire Hathaway (BRK.A, news, msgs) owns 5% of the company -- came out in support of the offer. (Wednesday, though, the Wall Street Journal reported that Anheuser-Busch was ready to reject the bid; neither company commented for the record.)

But analysts are wondering whether Brito might have downed one too many Stella Artois, the premium InBev brew that Brito says he prefers at home in Belgium. "Europeans have no interest in drinking watery American beer. Asians generally do not want our beer. It is completely different product," says Victory Capital Management beverage sector analyst David Kolpak. "Beer is not like soda. With a few exceptions like Corona and Heineken, beer does not cross borders very well."

If Europeans and Asians don't like Budweiser or Bud Light, so be it, say Bud aficionados who have a clear message for Brito: Don't ruin America's most popular beer by turning Anheuser-Busch into a Belgian company.

"Given the rich American history behind Anheuser-Busch, selling to a foreign company would take away from the all-American image that they portray," says one of the organizers of the Web site Save Budweiser.com, where more than 46,000 people have signed an online petition against the deal. MSN Money readers posted many similar opinions on our message boards: "Seriously, do you want to see everything used in America have a label that says it was made somewhere else?" asks one poster. "There are few things that we have left to call our own."

Of course, with several big cross-border takeovers under his belt and more than 200 brands, InBev chief Brito knows how to confront these kinds of concerns. "The whole heritage around the brand and (the) St. Louis ties, we intend to keep that going because that is important for the business and for us," Brito says in the video.

• Talk back: Should Anheuser-Bush be sold to foreign owners?

But a merger wouldn't be a merger without big changes at the company that gets taken over. Here's a look at what might change -- and the siege of the King of Beers.

Taste the same?

On the Web site, Brito says Anheuser-Busch headquarters will remain in St. Louis. And most importantly for Bud fans: Belgian brewmeisters won't be allowed to mess with Bud. "Budweiser the beer will continue to be brewed in the same breweries by the same people according to the same recipe," says Brito. "We understand that is so key to the business, the brands and the consumer, and therefore to us."

But at least one analyst doesn't buy it. "I would say the odds are high that they would change the recipe to reduce costs," says Mariann Montagne, a consumer staples analyst with Thrivent Financial for Lutherans. "Every new owner I have ever seen in the industry has changed the recipe."

Cost savings

InBev, which owns some 200 beer brands, is known for aggressively stripping out costs after a takeover. Press reports say InBev hopes to wring $1.4 billion in annual costs out of Anheuser-Busch by 2011.

But it's not clear where that money would come from, says Kolpak. There's little geographical overlap between the two companies, leaving little room for savings from consolidation. And while Anheuser-Busch pumps a ton of money into marketing and advertising -- $475 million last year by one estimate -- it actually spends less per barrel of beer than competitors, says Kolpak. This suggests there's not much room to cut there, either. "If InBev comes in and slashes Bud's marketing budget, Anheuser-Busch will immediately begin to lose market share because of how intense the competition is," says Kolpak.

It's not just the prospect of laying off those famed Clydesdales. One reason for the strength of Anheuser-Busch's network is that distributors agree to work exclusively with the beer giant. Slashing marketing might alienate distributors.

InBev also claims a bigger company would be able to pressure suppliers to reduce prices. But in an age of sky-high (and rising) commodity prices, Deutsche Bank (DB, news, msgs) analyst Marc Greenberg isn't sure this is believable: "A bigger combined enterprise may need to do better than say, 'Now we're really big -- give us a break.'"

Continued: Hornet's nest

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