American beer sales dropped sharply for Anheuser-Busch InBev (NYSE: BUD) in recent years. Not one to sit crying quietly into its beer over the downturn, the brewing giant aims to pay down its debt and rejuvenate its business by selling its Australian branch to Japan's Asahi Group Holdings (OTC: ASBRF) for a whopping $11.3 billion. But recently, the sale ran afoul of Australian regulators – creating doubt whether the deal will give AB InBev a tasty new froth of profits, or if the attempt will go flat after all.
Some troubles facing AB InBev today aren't unique to the company, resulting instead from changing American beer-drinking habits. The United States provided AB InBev and other big brewing firms with one of their major markets for decades. Today, according to Brewers Association figures, these companies are getting squeezed between two trends. Overall beer consumption is down, dropping by 1% in 2018 alone. Simultaneously, craft beer made by independent microbreweries enjoys exploding popularity, chugging down 24% of the whole US beer market in 2018 – and continuing to grow.
In response, AB InBev launched a flurry of acquisitions around the globe. The spending spree added hundreds of brands and subsidiary companies to its roster, giving it control of approximately 25% of the world beer market. But this achievement racked up approximately $100 billion in debt – leading to a high debt-to-equity ratio fluctuating between 130% and 145% during 2019 (compared to an average around 103% among InBev's rivals). However, the company has managed to keep its return on equity (ROE) at or near the 11% beverage industry average.