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Bud barley OK for now -- InBev: No immediate plans to change barley contracts

Barley associations and councils say they have been receiving a lot of calls from their producers about the pending $52 billion takeover of Anheuser-Busch Inc. by Belgian-owned InBev.

Barley associations and councils say they have been receiving a lot of calls from their producers about the pending $52 billion takeover of Anheuser-Busch Inc. by Belgian-owned InBev.

Kim Falcon, executive vice president of the Montana Wheat and Barley Committee, has been answering many of those calls.

"I think they're just questioning at this point, as we all are, how this is going to affect the barley that is under contract and the open market," she says. "We've continued to be cautiously optimistic that this is a good beer company and that they will understand the quality of Montana barley."

North Dakota, the country's top barley producer, is no different.

"The growers hope that the solid business relationships will continue in the future," says Steven Edwardson, executive administrator of the North Dakota Barley Council. "But it is simply too early to speculate on the current status and future direction of the acquisition."

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The merger, now awaiting shareholder and regulatory approval, would create the largest brewer conglomerate in the world. Industry sources expect that, because of the limited overlap between the Anheuser-Busch and InBev markets, their blending should not encounter any significant regulatory issues and is expected be complete by the end of this year.

This is just one of several recent consolidating moves in the beer brewing industry. In 2007, Molson Coors and SABMiller teamed up to form MillerCoors. The year before that, International Malting Co., one of the world's largest suppliers of malt, became a wholly owned subsidiary of Archer Daniels Midland Co.

Official word

The official word from InBev is that bigger is better for everyone, including barley growers. Spokeswoman Nina

Devlin, a partner at the Brunswick Group, a public relations firm retained by InBev, explains:

"Overall, we think that this combination is going to create a stronger, more competitive, sustainable global company which will benefit all stakeholders, including barley growers," she says.

Maintaining the status-quo seems to be the plan for now.

"The success of Anheuser-Busch Inc.'s brands starts with the quality of recipes, and we have full intention of maintaining those recipes and won't make any changes," Devlin says.

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Anheuser-Busch maintains that current contracts will be honored, but stops short of disclosing pricing information.

"The transaction is not yet completed and until the deal closes, Anheuser-Busch and InBev are operating as independent companies," says Andy Zenor, Anheuser-Busch's senior director of barley and malt purchasing. "Barley contracts that are in place now will remain in place when the merger is completed. While we cannot disclose details of pricing, we feel it is important to offer competitive prices to growers for their crops."

Falcon's own experience would appear to bear this out:

"I was at the Anheuser-Busch Inc. field day yesterday, looking at the variety field trials that they have," she says. "All the Anheuser-Busch Inc. employees that were there are moving forward with business as usual and looking forward to new varieties that will be coming out in the next few years."

Speaking directly to the current barley contracts, the word from InBev is encouraging, though not quite air tight.

"We have no immediate plans to change any existing contracts with vendors or suppliers -- so that goes for barley growers -- and we'll review those contracts as part of the normal course of business once the (merger) transaction has closed," Devlin says.

The new company will be called Anheuser-Busch InBev.

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