Global stock markets are surging to fresh record highs, once again led by emerging markets, as was the case last year. But as domestic investors scramble to catch the global market express before the train leaves the station -- they shouldn’t ignore opportunities to invest at home in stocks that offer healthy international diversification too.
Case in point, Anheuser Busch Inc (BUD). This American icon was given up for dead in recent years amid a lack of domestic consumption growth, and shifting consumer tastes toward wine and spirits. But when it comes to investing globally to secure faster growing profits, BUD has made a lot of good moves that are beginning to pay off.
When you think about Anheuser Busch today, it’s not just about Bud and Bud Light, and NASCAR race fans anymore. Anheuser Busch is a company with truly global reach that garners a growing portion of its business from international distribution deals.
To be sure, BUD still generates about two-thirds of its sales volume from the domestic market, but a growing proportion of profits is due to shrewd overseas investments the company has made.
America’s Beer Goes Global
Today, BUD is a distributor of many leading imports including Europe’s Bass Ale, Grolsch, and Becks beer. The company also distributes Japan’s Kirin, Harbin Lager and Singapore’s Tiger, one of the most popular beer beers in Southeast Asia.
BUD’s international reach also includes greater distribution of the old familiar Budweiser brands overseas too. In fact, the company just cut a deal with Heineken to distribute Bud in Central and South America.
More significantly, Anheuser Busch holds significant direct ownership stakes it some of the world’s fastest growing breweries including: a 50% stake in half of Mexico’s Grupo Modelo SA, the maker of Corona -- which has quadrupled in value since the 1990s to $9 billion today -- smart investment.
Anheuser Busch also tripled its holdings in China’s largest brewer: Tsingtao. Combined beer volume from these two overseas investments has soared more than 60% in just the past two-years alone – and now accounts for 20% of BUD’s total sales!
International Investors: This Bud’s For You …
BUD’s drive for international diversification is paying-off in its latest bottom line results. Last year, while domestic consumption of BUD brands inched ahead just 1.2% -- its international volumes surged 9.3%.
Meanwhile, beer volume for the firm’s equity partners – the aforementioned foreign brewers in which BUD holds big ownership stakes – soared nearly 20% in 2006 – mainly due to rapid sales growth from Mexico’s Modelo, and from Tsingtao in China.
The bottom line is that investors who want to go-global should also consider the merits of local companies that are already ahead of the curve when it comes to overseas diversification.
So for all you globetrotting traders out there looking to buy into the next hot Chinese IPO … instead maybe THIS BUD’s FOR YOU!
In the interests of full disclosure, this editor is both a shareholder in Anheuser Busch—and a frequent consumer of many of the firm’s many products! This article should not be considered a recommendation to purchase the stock, but please feel free to enjoy its product-line responsibly.
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