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As an endeavor to strengthen its position in the fast-growing craft beer segment, the world’s largest beer maker, Anheuser-Busch InBev SA/NV (BUD - Snapshot Report), also known as AB InBev, entered into an agreement to acquire the New York-based Blue Point Brewing Co. The company projects to close the transaction at the beginning of second-quarter 2014. However, the financial terms of the deal were not disclosed.

The acquisition will facilitate AB InBev to widen its craft beer offering on the East Coast. Having a portfolio of over 40 beers in the market, Blue Point Brewing is the 36th largest craft beer brewer in the United States and had sold about 60,000 barrels in 2013.

Though craft beer constitutes merely about 6.5% of the United States’ overall beer sales, it has been booming over the past few years with 15% year-over-year volume growth in 2012 compared with 0.9% rise in overall beer sales in the country (as confirmed by The Brewers Association). Thus, we believe the acquisition of Blue Point will boost AB InBev’s top-line growth.

AB InBev, which competes with Diageo plc (DEO - Analyst Report), is aggressively enhancing its brand portfolio as well as global footprint. Last month, in an effort to strengthen its position in the Asia-Pacific region, AB InBev, entered into an agreement with KKR and Affinity Equity Partners to reacquire its South Korean asset – Oriental Brewery – for $5.8 billion.

The deal marks the second big alcohol transaction of 2014 after Japan-based Suntory Holdings Ltd. agreed to buy Beam Inc. (BEAM - Snapshot Report) on Jan 13 for approximately $16.0 billion, including debt. In the past few years, the Asia Pacific has seen major consolidation in the alcoholic beverage industry with companies such as Carlsberg, Heineken NV and SABMiller plc signing deals in the region.

According to a BBC article, the Asia Pacific is the world’s largest beer-drinking continent due to its rapidly growing population and sharp rise in the younger generation of the population. It is believed that Asia’s brewing industry is worth $258.0 billion and the market is growing two times more than the rest of the world. The huge growth potential in the market is an outcome of the fast emerging economies as well as globalization.

Currently, AB InBev carries a Zacks Rank #4 (Sell). A better-ranked brewer is Constellation Brands, Inc. (STZ - Analyst Report) with a Zacks Rank #1 (Strong Buy).

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