Why They're Slinging Mud over Bud
Hot dogs, apple pie, and Route 66 rank high as emblems of American culture. Some might say that brands associated with them—Oscar Mayer, Sara Lee, and Chevrolet—are no less representative of America's national identity. So what happens when a beloved U.S. brand is acquired by a foreign company?
That's the situation bubbling up right now in the hotly contested $46 billion hostile takeover bid by Belgian brewing giant InBev for Anheuser-Busch, the St. Louis maker of Budweiser. A militia of petition-wielding cyberactivists has come to the defense of Anheuser-Busch (BUD), intent on impeding the attack by InBev (INTB.BR). The volunteer league of supporters highlights the economic patriotism that such controversial acquisitions conjure up.
Rather than focusing on how a stronger corporate parent might help lift Budweiser, online bloggers and activists have instead drafted petitions and enlisted politicians to fight what they see as foreign encroachment. "More Americans are realizing that we can't remain an independent country if we are under foreign control," says Roger Simmermaker, author of How Americans Can Buy American: The Power of Consumer Patriotism. "The Anheuser-Busch brand has a lot to do with American culture and American life."
Loss of Jobs and Tax Revenues
Simmermaker, who says he became a brand activist in 1994 when he realized how hard it was to shop for American-made and American-owned products, is one of several people to create an online petition to block the InBev deal. He's concerned that the deal could cost jobs in St. Louis and siphon corporate profits and taxes from America to Belgium.
So far, the threat posed to Anheuser-Busch hasn't created the near-hysteria that arose in 2006 when Dubai Ports World, based in the United Arab Emirates, bought a half-dozen U.S. port operations. (The company finally bowed to political pressure and sold its U.S. assets to American International Group (AIG), embarrassing the Bush Administration, which had vigorously supported the initial deal.)
Nor has the xenophobic rhetoric over InBev reached the level seen after France refused to participate in the invasion of Iraq. Weeks of boycotting ensued, during which people poured bottles of Bordeaux down sewer drains and restaurant menus began sporting references to "Freedom Fries" and "Freedom Toast."
The wave of French-bashing even prompted the maker of a popular condiment to issue a defensive-sounding press statement: "For the record, French's would like to say, there is nothing more American than French's Mustard." Oddly enough, that product—as well as numerous other famous "American" brands such as Lysol, Woolite, and Air Wick—is owned by Anglo-Dutch consumer products company Reckitt Benckiser (RB.L).
The fact that French's is an American staple owned by Europeans points to the slippery nature of brands in the era of globalization. It's now common for foreign companies to acquire U.S. brands—just as U.S. companies have been doing abroad for decades—and usually the deals occur with little publicity or opposition. But when resistance does occur, often fanned by the increasingly influential online crowd, the battle can get ugly.
The reason some takeovers spur such reaction may come down to the notion of "nation brands," says Iain Ellwood, head of consulting at New York's Interbrand. "Every nation brand is supported by a catalog of corporate brands," he says. Coca-Cola (KO), McDonald's (MCD), and Ford (F), Ellwood says, are indelibly associated with America's image and status on the global stage, much as Sony (SNE), Toyota (TM), and Nissan (NSANY) help define Japan. And though Anheuser-Busch as a company has little influence in the daily lives of Americans, Ellwood adds, its flagship brands, Budweiser and Bud Light, are closely linked to American rituals such as barbecues and baseball.
Maureen Ogle, author of Ambitious Brew: The Story of American Beer, sums up that idea in a recent op-ed article for The Washington Post. "A glass of Bud contains an American epic," she writes. "That's why I love Anheuser-Busch and Bud. I am they, and they are me: a mixture of old world and new; hard work, tenacity and ambition."
Interbrand's Ellwood says that people are more sensitive about foreign takeovers when they fear they're losing their nation brand. "It's a very patriotic defense," he says. Still, he argues, the value of an unimpeded free market outweighs the sometimes emotionally difficult loss of a national icon to a foreign buyer.
Bud Will Still Be Bud
Murray Weidenbaum, a professor in the economics department at Washington University in St. Louis, where the 30,000-employee Anheuser-Busch is headquartered, agrees. "I've noticed that the sales of domestic beer in recent years have been, I am sorry to say, flat," he says. Weidenbaum views the InBev bid in purely economic terms and argues that consumers usually benefit from increased competition, whether foreign or domestic.
Besides, he notes, economic patriotism cuts both ways. "If it's so sinful for a foreign company to take over an American brand," he asks, "what does that mean for American companies trying to buy foreign brands? That's one of the things that worries me." There's ample evidence already of such barriers. In 2005, for instance, PepsiCo (PEP) made an abortive effort to buy French food giant Danone (DANO.PA), but the deal was squashed by a protectionist government.
If InBev is successful in its bid, Ellwood says, Budweiser drinkers needn't worry about their suds. The Bud in stores tomorrow, he says, will be the same as today's. "InBev wouldn't be stupid enough to tinker with something they had just paid $46 billion for," he says.
For a look at other famous American brands that already belong to non-U.S. owners, check out BusinessWeek.com's slide show.