If you are a sports fan, it is likely you have at least once been to a restaurant or bar to watch TV and having a beer. Having a beer and watching sports seems to go together or in many countries around the world they have a wonderful relationship. The biggest sporting event of the globe is the World Cup and billions of people will have watched a game. If you owned a company that was mass market appeal, being a sponsor is a very good thing. For the right to be a sponsor, companies pay money to FIFA and plan their massive promotions and advertising campaign around the event.
In an article by Philip Blenskinsop of Reuters, imagine if you were an executive at Budweiser. The brewer has been a World Cup sponsor since 1968. The rules are a little different in Qatar, the country only allows alcohol in ticketed events surrounding each of the 8 stadiums. Budweiser is owned by AB InBev of Belgium and its Chief Executive Michael Doukeris said the tournament would be a great opportunity to showcase its non-alcoholic brands.
The World Cup is to begin AB InBev has done all the logistics of sending its supplies to Qatar and then the announcement was made to ban the sale of alcohol at all of Qatar’s stadiums. What do you do?
In the article, people have gone back to the contracts to see whether the FIFA-Budweiser contract anticipated the possibility of change or who pays the supplies and logistics of the beer?
Mr. Doukeris said AB InBev focus this World Cup has been on the 70 markets around the world that do allow beer sales and there is a promotion across all AB InBev brands. The decision in Qatar hurts but not too much.
Linking to dividend paying stocks, there are many strategies and processes to follow and having alternatives is one of them. Through your homework you rationally picked the best company for you, life changes something either for you or the company and because you can easily sell, you move to other alternatives. The important aspect is ensuring you have alternatives, it does not mean you have to do an action, but you ensure if the companies you invested in are not performing as well as expected you move to another one. That is easier said than to do, for you picked the company for a reason, you rationalized your decision, you invested some time and energy to know more about the company, it is hard to sell unless there is a very good reason. If you bought for the dividend as long as the dividend is paid and hopefully raised, then you can do nothing – that is a good strategy. If the dividend and profits are threatened, you can do something – but what alternative do you do?
There are more questions than answers, till the next time – to raising questions.