Is the proposed takeover of Banks Holdings Limited a threat to Barbados’ treasured Banks beer brand?
Barbadian companies, especially the largest, would be well aware that they are operating in a world where sometimes the big fish eat the little fish. It has happened over the years to a number of local enterprises, with conglomerate Barbados Shipping & Trading (BS&T (now Massy Barbados) arguably the main example of this. In recent memory, however, the acquisitions have been by other playes from close to home, namely Trinidad and Tobago.
Banks Holdings Limited (BHL) is nowhere as large as the former BS&T, but it remains one of Barbados’ valued enterprises, and owns and produces a range of brands, including Banks Beer, Frutee, and Pine Hill Dairy milk and juices, that Barbadians are proud to call their own.
BHL is now the subject of a takeover offer, but this time the shareholders’ suitor is based in Brazil.
Having now acquired 40 per cent of BHL, the last 20 per cent through the recent purchase of Massy Holding’s stake in what is Barbados’ largest drinks compny, the Brazilian entity Ambev has given 60 per cent of BHL shareholders until the end of this month to accept its $4 per share offer.
BHL produces Banks Beer, and Ambev produces Presidente beer, but that is largely where the similarities end. This is because Ambev is not just any beer or beverage company. On its own it is the biggest brewer in Latin America and the fifth largest in the world. More than that, however, it is owned by the world’s largest brewer, Anheuser-Busch InBev (AB InBev), which controls a quarter of the market for beer globally.
Things become even more complicated when one considers that InBev is now trying to take over main competitor SABMiller, a British entity.
So that BHL now finds itself on the verge of being swallowed by the beer world’s heavyweights. Ambev officials have been refuting suggestions that there are ulterior motives for its plan to buy BHL, saying it plans to expand the operations here, push Banks Beer, and use Barbados as an export hub. This was emphasised repeatedly last week by Eduardo Lacerda, Ambev’s vice president for Central America and the Caribbean.
But there remains doubt about really what would be in store for BHL, something based largely on what Ambev and AB InBev have been doing in recent times, including in the United States. Internationally, many people would consider Banks a craft beer when compared to the mass-produced competitiors produced globally for massive markets.
A report published by BloombergBusiness four months ago summed up the concerns of American craft beer producers. Headlined Can Craft Beer Survive AB InBev, the report said nobody was investing in craft breweries as aggressively as AB InBev and that some craft brewers “say the company wants to flood the market with its own quirky beers and confuse consumers who are looking for alternatives to Budweiser”. Others said the company wanted to “drive its craft rivals out of business”.
In response, AB InBev’s chief exective officer of craft beer for the company’s Anheuser-Busch division, said the old taboos about AB InBev were changing since people in the industry saw that it wanted to build the craft beer sector rather than tear it down.
“I mean there’s really no hidden agenda,” he said. Time will tell which side of the fence AB InBev subsidiary AmBev falls. The outcome could be make or break for Banks Beer.