Holy hops! Talk about the unthinkable. So far plans for this merger are all talk and speculation, or so I hope.
After the merger of Anheuser-Busch (AB) and Interbrew-Ambev (InBev) in 2008, AB-InBev became the world’s largest brewer, generating 36.8 billion dollars of revenue in 2009. Anheuser-Busch InBev is currently one of the top-5 consumer product companies in the world and manages a portfolio of well over 200 beer brands including the No. 1 and No. 2 position in 19 different markets.
South African Breweries (SAB) purchased The Miller Brewing Company in 2002 forming SAB-Miller, the second largest brewer in the world boasting revenue of 25.3 billion dollars in 2009.
The merger of two companies of this magnitude is not something to take lightly. A stock analyst and former InBev employee noted that, “… buying SABMiller would give A-B InBev greater exposure to emerging markets such as Latin American and Africa and would counter ‘the continuing ills of the U.S. domestic beer market.’” Later, Credit Suisse went on to note that, “Over time, we believe both these companies [AB-InBev & SAB Miller] strategic interests will continue to align and this would be of benefit to both sets of shareholders.” Analysts estimate a purchase price for SABMiller of $71 billion which is $19 billion more than the $52 billion InBev purchased Anheuser-Busch for. Wow, that’s a lot of six packs!
Jay Brooks over at Brookston Beer Bulletin commented that,
“When Anheuser-Busch and InBev merged, I remember someone joking that eventually there would be just one international beer company and it would just be called “Beer.” I chuckled at the time, but maybe they were on to something.”
What about the beer drinkers?
A merger between the two industry giants would mean one company would control around 80% of the U.S. brewing market (according to data from the Brewers Association) indicating that there would probably need to be some type of restructuring before a merger of this magnitude would be approved. Let’s hope so. Also worthy of nothing, if this merger did go through it would mean the largest brewery in the U.S. (and the world) would be a foreign company. However, this isn’t entirely a new development, as the purchase of the largest US brewer (Anheuser-Busch) by InBev a foreign company caused quite a stir a few years ago.
Anti-Competitive Behavior
Also, in 2004 the South African Competition Commission began investigating anti-competitive behavior by SAB after receiving complaints from liquor distributors alleging that SAB colluded with third party distributors to carve up the South African beer market and curb the ability of distributors to stock its rivals products. SAB argues that its distribution practices are economically efficient, highly competitive and, therefore, contributes to consumer welfare. The hearings started on the 11th of August and are expected to continue until the February 27th 2011. If a merger between these two goes through, SAB may have a difficult time defending their “competitive” distribution practices. Also, SAB wouldn’t have to worry about competition all that much especially in foreign markets considering they would now be owned by their biggest competitor and together will be the world’s largest brewer.
Can anyone tell me how this would be legal? The government broke up AT&T back when there was only one telephone company, same with cable TV and Microsoft. If this happens, it might as well be a declaration of war against mass produced, flavorless beer (it’s all about quality, not quantity). Beer should be about brewing something you want to drink and maybe a few other people will be crazy enough to like it too, not about profit shares and investors! Ultimately, sure any brewery is a business but the tastes of the American people are steadily changing and the craft beer industry has proven that you don’t have to sell flavorless, passionless beer to be successful! The craft beer movement will have to step its game up to an all out revolution if this merger goes through because now with the two major competitors becoming one, they’ll be able to focus more of their marketing dollars and target their next biggest competition, the craft beer industry.
So grab yourself a beer, keep supporting your local breweries, spreading the word about craft beer and hopefully this merger will not materialize. Who knows, in a few months this may all just seem like a nightmare we had after a night out drinking with friends.
