World’s Largest Beer Companies Looking To Join Forces
Long known as the king of beers, Anheuser-Busch InBev has decided this title isn’t enough. They are now looking to merge with SABMiller, the world’s second biggest brewer and the company responsible for bringing Miller Genuine Draft to the public.
Experts believe this deal is worth $275 billion, as the two companies bring in $73.3 billion every year. This is more than triple what Heineken, the nearest competitor, earns annually.
With this merger, world domination may be closer than many think, at least for the beer industry.
Anheuser-Busch InBev is the proud maker of six beers known the world over including Budweiser, Corona, Beck’s, and Stella Artois. The corporation started as a local Brazilian brewery and has completed numerous mergers, including one in 2008 when InBev, a Brazilian-Belgian brewer, took over Anheuser Busch Cos.
This company now operates in 25 countries, produces in excess of 200 different beers, and is the world’s largest brewing company.
SABMiller is well known in Africa, which many consider to be the next beer frontier. A South African brewery, this company grew in the 1990s following the lifting of sanctions in the country upon the release of Nelson Mandela.
This move led to the company’s expansion abroad, and it soon moved into Eastern Europe, Asia, and other African companies. Since then, they have expanded through the purchase of various competitors and now operate in more than 80 countries.
Most are familiar with this company through their popular brand Miller Genuine Draft.
Major beer brands continue to face challenges, the largest being the increasing popularity of various craft beers. These beers—typically produced by small, often independent companies—have taken over a significant share of the market, and the numbers are expected to rise.
The merger of these two companies would help to regain some of the ground they have lost. Moreover, the merger of these two companies would allow Anheuser-Busch to increase their presence in other parts of the world, namely Africa, where SABMiller maintains a huge presence.
If the two companies combine, they will be prepared for big growth over the upcoming decade.
They would hold 31 percent of the beer market around the globe, with the second place competitor, Heineken, holding only 9 percent.
Antitrust regulators plan to closely scrutinize this merger, as they have recently shown skepticism when it comes to huge mergers of this type.
Government officials around the world will investigate this move, as it will provide the combined corporation with an overwhelming market share. The harm to competition remains the top concern at this time, simply because it may lead to higher prices for consumers.
In addition, it is believed that the merger would lead to more deals, as both organizations will, in an effort to gain regulatory approval, dispose of some assets.
For example, it is believed that MillerCoors would be dissolved as part of this deal and SABMiller would need to sell off its shares in CR Snow, the top-selling beer brand in China.
Finally, Anheuser-Busch InBev would need to win the approval of Santo Domingos and Altria, the two biggest investors in SABMiller. If any of the above doesn’t happen, the sale could be halted in its tracks.
Impact on the Industry
The big beer industry has taken a hit over the past few years. Craft beer now makes up 11 percent of the market, and many experts believe this presence will only grow.
As more turn to home brewing, big companies may find it hard to keep up. The merger of these two companies will benefit the industry, as these companies will receive more exposure in those markets posed for growth, including in Latin American countries such as Peru and Ecuador.
This exposure will also benefit the industry as a whole through this increased exposure, and all players are sure to appreciate this.
Only time will tell if the merger between Anheuser-Busch InBev and SABMiller will take place. Time is of the essence, however, as certain deadlines must be met.
The goal is to ensure fair competition so consumers aren’t held captive by one or two major brands, while allowing other companies to remain profitable and in a position to rival craft beers and wine. This merger needs to achieve both goals if world domination is to take place.
Information sourced from News.com.au and the New York Times