Bud a victim of US corporate tax policy?

By Jim Stergios
July 14th, 2008

In Japan, Bud is hardly known. It was a flash in the pan in the late nineties but never really caught on. Stella Artois and other InBev beverages have a stronger toehold, but really only a toehold. That is especially true outside of Tokyo and Osaka. For the most part, the market is locked up by Suntory and other Japanese manufacturers. (Full disclosure: I have a special dislike for how locked up it is, as the liquor importation laws, now amended, prevented me in 1992 from expanding a small exporting business to Japan. The laws are amended, but this is still Japan.)

I am sure back home the news of the InBev buyout of Bud has lessened sales, as bar hounds realize, as Drudge put it, “This Bud is … for EU.” What I found interesting was the willingness in a down market for InBev to take on so much debt to fund the $52 billion buyout of Anheuser-Busch. Perhaps this nugget from the Wall Street Journal helped convince InBev that it was a good idea:

InBev’s willingness to take on so much debt may be partly explained by Anheuser’s corporate tax rate, which at 40% was more than twice InBev’s last year. The new company may be able to offset some of Anheuser’s taxes with interest payments on the new debt.

So, tonight, raise a pint of InBev products to your federal government.

Sounds so familiar, doesn’t it?