InBev Blames Commodities for Rising Costs

While I can't say that I'm a fan of their most recent acquisition -- distant family ties, not withstanding -- I'd never wish higher commodity costs on any company, especially one like Inbev that brews up one of my favorite beverages. According to this recent story from CNN, InBev is still feeling the impact of higher material costs from earlier in the year and this "despite falling raw material prices in recent months [for] barley, malts and hops … [this] will translate into a contraction of its margin on earnings before interest, taxes, depreciation and amortization margin, the company said." But there is hope for margin control -- or at least predictable margins -- in the future, as InBev plans to take advantage of commodity hedging as well as some less sophisticated sourcing techniques such as "using the companies large size to get lower raw material prices". Translation: it's hammer time. Alas, none of these techniques will make Budweiser taste any better, but then again, it's their own fault. After all, when you substitute corn syrup for malt and hops, what do you expect?

- Jason Busch

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