Watchlist Investing: Deep Dive Analysis of AB InBev and Heineken ($BUD, $HEINY)

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The worldwide market for beer consists of a tangled web of brands, cross-ownership,
production/distribution arrangements, and regional strongholds. Sorted out, BUD and HEINY remain as the largest and most dominant corporate parents in a market that seems to be near the
end of a decades-long process of consolidation.

In terms of global dominance, BUD has no peer. It commands twice the total volume of #2
HEINY and double the operating margin of its smaller peers. BUD also has a significant amount
of debt and is controlled by two wealthy Belgian families together with the serial-acquiring force
of 3G Capital. HEINY’s history includes its share of acquisitions. However, its management is
directly connected to the company’s founder and flagship product, a protective force that helps
the company remain long-term focused despite outside pressures.

Both BUD and HEINY are very good businesses possessing strong moats. Depending on one’s
comfort level with balance sheet risk and valuation, either or both companies could be a
worthwhile addition to a portfolio. Both are worthy additions to the Watchlist.

Looking to find great businesses to add to your watchlist? Check out http://www.watchlistinvesting.com

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#alcoholicbeverages #beerindustry #valueinvesting

0:00 Introduction
3:18 Worldwide beer industry overview
6:20 Major worldwide beer players
15:38 Largest beer markets
19:18 Business model of beer
22:30 Key variables
30:58 Financial statement analysis
46:54 Capital allocation
51:57 Ownership structure
53:40 Valuation
59:32 Risks
101:58 Summary/Conclusion