The Reporter (Lansdale, PA)

Takeover bid heralds growth of megabrew

How will consumers be affected if AB InBev, the largest brewer in the world, takes over SABMiller, second-largest brewer in the world?

- By Matt Brasch For Digital First Media

During the past 20 years the beer industry has developed different descriptiv­e names for breweries based on their size, from “microbrew” in the 1980s to “craftbrew” and “nanobrew” today.

Recently, AB InBev, the largest brewer in the world, offered $106 billion to take over SABMiller, the second-largest brewer in the world. If this takeover goes through — and there is every indication that it will — consumers may now be seeing the growth of “megabrew.”

To understand the true proportion­s of this acquisitio­n, first we have to look at the players. Who is AB InBev? According to an Oct. 9 report by Morningsta­r Equity Research, “Anheuser-Busch InBev is the largest brewer in the world and one of the world’s top five consumer product companies ... After the Modelo acquisitio­n [in 2013], the company’s portfolio now contains five of the top-10-selling beer brands and 17 brands with retail sales over $1 billion. AB InBev was created by the 2008 merger of Belgium-based InBev and U.S.-based Anheuser Busch,” which included the Budweiser brands of beer.

An Oct. 13 profile provided by Morningsta­r explained, “SABMiller is the second-largest brewer in the world and has gone through a dramatic evolution since its beginnings as a provincial South African

brewer. The company controls roughly 10 percent of the global beer market, while operating such top brands as Snow, Miller, Peroni, Pilsner Urquell, and Grolsch, as well as some leading craft beers such as Leinenkuge­l. SABMiller has the number-one or numbertwo spot in more than 90% of the markets in which it competes.”

In sum, the largest brewer in the world intends to take over the second-largest brewer in the world. According to an Oct. 7 InBev press release, “The combinatio­n of AB InBev

and SABMiller would result in a truly global brewer that would take its place as one of the world’s leading consumer products companies. Given the largely complement­ary geographic­al footprints and brand portfolios of AB InBev and SABMiller, the combined group would have operations in virtually every major beer market, including key emerging regions with strong growth prospects such as Africa, Asia, and Central and South America.”

An Oct. 15, a joint press release by AB InBev and SABMiller was issued that announced that an agreement had been made in principle, with the resulting deal at approximat­ely $106 billion. Before the deal goes

through however, the U.S. government will review the transactio­n to ensure that anti-trust laws are not violated — in other words, that a monopoly is not created. More likely than not, there will be concerns about the percentage of market share that the resulting entity will control, and according to Morningsta­r, it is anticipate­d that “One likely antitrust concession includes a breakup of SABMiller’s joint venture with MolsonCoor­s, MillerCoor­s.”

For clarificat­ion, SABMiller owns beers such as Blue Moon, Coors, Coors Light, Coors Extra Gold, Keystone, Keystone Light, Molson Canadian, Crispin Ciders, Miller High Life, Miller Lite, Fosters, Leinen-

kugels, Redds Apple Ale, and Smith & Forge Hard Cider. Imagine those lines in the same company as Budweiser, Bud Light, Stella Artois, Corona, Beck’s, Hoegaarden, Leffe Blonde, Michelob Ultra, and Modela. This is going to be a huge beer company, to say the least!

So what will be the impact of this transactio­n on consumers and the craft beer industry?

Po s si bly, consumers could be i mpacted by a lack of competitio­n between the traditiona­l U.S. rivals, Bud versus Miller, however anti-trust laws could provide some protection from price setting in this regard. What might be more of an i mpact to

the consumer would be the increased inf luence and power of the megabrews to obtain shelf space in local stores and distributo­rs and push out small batch, local craft brew.

While imposing at first, as long as local craft breweries continue to produce high quality products, the consolidat­ion of the megabrews may be nothing more than a high level corporate maneuver. “... [Consolidat­ion of megabrews] comes as many beer drinkers in the United States and Europe shift their attention to craft breweries that are independen­t of global conglomera­tes. AB InBev picks up few craft brands with SABMiller, but the deal is more im-

portantly a geography play as it expects to gain a significan­t toehold in high growth African and Asian markets,” explains Antoine Gara in an Oct. 13 article at

So in the end, if U.S. craft beer fans continue to follow the rallying cry of “20% market share by 2020” and support local craft beer, this consolidat­ion of megabrew may have no real impact on the craft beer consumer.

 ?? PHOTO BY MATT BRASCH ?? Miller Lite and Budweiser are shown next to each other on the shelves at Ambler Beverage Exchange.
PHOTO BY MATT BRASCH Miller Lite and Budweiser are shown next to each other on the shelves at Ambler Beverage Exchange.
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