Manila Bulletin

2 big­gest global beer mak­ers pur­sue $275-bil­lion merger

- By DAN­ICA KIRKA Business · Alcoholic Drinks · Investing · Beer · London · Anheuser-Busch InBev · Anheuser-Busch · InBev · SABMiller · Heineken · Corona · Stella · United States of America · Americas · Mintel · Carlos · South African Breweries · Nelson Mandela · South Africa · Africa · Guinness · School of American Ballet · Berlin · Berlin Wall · Mozambique · Australia · Zambia · Colombia · Czech Republic · InBev Belgium · Miller Genuine Draft · Miller · Forsyth, IL · Nelson · Foster · Plzensky Prazdroj, a. s.

LON­DON (AP) – The mak­ers of Bud­weiser aren’t sat­is­fied with be­ing the kings of beer. They want an em­pire.

An­heuser-Busch InBev, the world’s big­gest brew­ing com­pany and the owner of Bud­weiser, an­nounced Wed­nes­day it wants to buy SABMiller, the sec­ond-largest brewer – and the maker of long-time ri­val brand Miller Gen­uine Draft.

The deal would cre­ate a multi­na­tional be­he­moth val­ued at around $275 bil­lion with an­nual sales of $73.3 bil­lion, more than three times its clos­est ri­val, Heineken.

AB InBev al­ready claims six of the world’s most valu­able beer brands, which be­sides Bud­weiser in­clude Corona, Stella Ar­tois and Beck’s. Tak­ing over Miller in the US would likely draw ob­jec­tions from reg­u­la­tors wor­ried the deal might sti­fle com­pe­ti­tion and lead to higher prices for con­sumers.

But whereas a lot of the at­ten­tion will fo­cus on the best-known brands in the US and Europe, AB InBev’s sights are on other coun­tries. As prof­its wane in the Amer­i­cas, AB InBev wants to ex­pand into Africa.

En­tic­ingly, SABMiller has a huge pres­ence in Africa, the next beer fron­tier.

“The days of big prof­its in the US are gone,” said Jonny Forsyth, a global drinks an­a­lyst for Min­tel, the mar­ket re­search firm. “They have to po­si­tion them­selves in the big beer growth mar­ket for the next 10 years.”

Shares of SABMiller rock­eted about 20 per­cent higher on news of the ap­proach, push­ing its mar­ket value to around $90 bil­lion. Shares of AB InBev rose 6 per­cent.

The com­pa­nies are be­ing pushed into con­sol­i­da­tion by erod­ing mar­ket share and com­pe­ti­tion, iron­i­cally, by the lit­tle guy. Craft beers now make up 11 per­cent in vol­ume in the US mar­ket, Min­tel said.

AB InBev and SABMiller are them­selves prod­ucts of this con­sol­i­da­tion trend. In ev­ery way, they are think­ing big.

“We are driven by our pas­sion to cre­ate a com­pany that can stand the test of time and cre­ate value for our share­hold­ers, not only for the next 10 or 20 years but for the next 100 years,” An­heuser-Busch InBev CEO Car­los Brito and chair­man Kees J. Storm wrote in a let­ter to share­hold­ers. “Our mind­set is truly long term.”

But Africa, where home brew still dom­i­nates, of­fers a chance to grow. And that’s where SABMiller – the one­time South African in­dus­trial con­glom­er­ate – of­fers a foothold.

The for­mer South African Brew­eries ex­panded in the early 1990s when Nel­son Man­dela’s re­lease from prison led to a lift­ing of sanc­tions on South Africa and al­lowed the com­pany to ex­pand abroad.

Though the Euro­pean beer mar­ket was dom­i­nated by the likes of Guin­ness and Heineken, SAB took ad­van­tage of the open­ing of­fered by the fall of the Ber­lin Wall to sweep into Eastern Europe and buy brew­ers on the cheap. Its ex­pan­sion also stretched to other African coun­tries in­clud­ing Mozam­bique, and to Asia.

The com­pany bought Czech brewer Plzen­sky Praz­droj, maker of Pil­sner Urquell, in 1999, US-based Miller Brew­ing Co. in 2002 and Foster’s of Aus­tralia in 2011. To­day the com­pany em­ploys about 69,000 peo­ple in more than 80 coun­tries, from Aus­tralia to Zam­bia, Colom­bia and the Czech Re­pub­lic.

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