AB InBev downs SAB Miller – are they just screwing with our heads?

Anheuser-Busch InBev (AB InBev)

Only the world’s biggest brewer, and now set to become even bigger with the agreed acquisition of SAB Miller, the world’s second biggest brewer.  Together they’ll earn over half of the international beer industry profits and sell one of every three beers consumed worldwide. The US$106Bn. takeover is the equivalent of approximately twice the combined GDP of Caricom! Yes, twice the economic output of every nation between Jamaica and Guyana, including energy rich Trinidad & Tobago. In beer!

So, it’s a thirsty world. Just how thirsty, and for what, is the gamble on the future that AB InBev is taking in this gargantuan acquisition.*

Amongst the approx. 200 beer brands owned by AB InBev around the world are several well-known international brands, such as Budweiser, Corona and Stella Artois, as well as Bass, Becks, Boddingtons, Hoegaarden, Labatts and Leffe. Get the picture? But the problem for them has been that while beer consumption in their major markets has been as flat as old beer, there’s been an 18% growth in craft beer sales in the same markets! Solution? A marriage proposal with the world’s No. 2 brewing group, SAB Miller, amongst whose 190 beer brands you’ll find the likes of Coors, Fosters, Grolsh, Miller and Peroni. They also own Bulmers, the U.K.’s biggest cider maker. But the really big attraction here for AB InBev is the SAB Miller business geography – they are the dominant brewery group in Africa, Asia and much of South America, where AB InBev has limited presence, and where the conglomerate’s strategy sages predict the biggest growth in beer consumption is most likely to happen in the decade ahead. Hence the (now agreed to) marriage.

While we may all know some, or even all of these brews, it wouldn’t be obtuse to ask what the heck it has to do with us in the Caribbean. After all, we have to import these beers anyway, so what does it matter? Well, there’s a Caribbean twist to this story as well. SAB Miller’s subsidiary, Brazil based AmBev, recently increased its stake in Banks Brewery of Barbados, triggering a takeover battle with T&T’s Ansa McAl Group, owners of Carib Brewery. Meanwhile, Heineken, world’s third largest brewer (pre-takeover), now a very distant second, is casting around for acquisitions, like other middleweights Carlsberg and Molson Coors, to help it bulk up in the face of the burgeoning behemoth. In fact, they have put in a bid to acquire all of Jamaica’s Desnoes & Geddes, brewers of Red Stripe lager and Dragon Stout, after buying the 58% stake previously owned by distillery group Diageo.  Watch this space!

Ale

Just a little three-letter word, but it’s what’s finally triggered the third biggest takeover bid in history, and the biggest ever in the brewing industry, and the consequent seismic shift of ownership and ultimately market control it will unleash in the global beer industry. How? For the last decade and more, beer drinkers in the developed markets have been voting with their bottle openers, and gradually moving away from the mass produced, flavourless beer-popsicles that have come to dominate the global markets, towards not only more traditional and historic styles of beer, but also new and innovative styles, which in turn has triggered an explosive growth in The Craft Beer industry. More on this in my next blogpost!

Hop by next week for another post from our A-to-Z of foamy facts, fiction, fables, fantasy and most important of all, fun!

*http://www.economist.com/news/business/21665074-ab-inbev-may-combine-sabmiller-flat-market-big-beer-brands-beer-monster

*http://www.economist.com/  news/business/21674381-sabmiller-ab-inbevs-toughest-takeover-yet-it-may-not-be-its-last-beerhemoth?zid=293&ah=e50f636873b42369614615ba3c16df4a).

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