Can you feel the love? What the SABMiller-ABInBev Merger Means to You

It’s been quite the relationship. Years of playing hard to get, four bad dates, a little will-they-or-won’t-they action, but the two beer giants have finally fallen hopelessly in love. ABInBev is planning for a takeover, and that means a whole heck of a lot.

First things first, the SABMillerABInBev merger will cause 1 in 3 beers imbibed across the planet to be made by one company. I say the planet because this consolidation is indicative of a global shift in an industry that represents USD $101.5 billion annually.

A Short History Lesson

SABMiller started in 1895 in South Africa by Charles Glass, a British Ex-Pat seeking his fortune in Johannesburg during the gold rush. He established Castle Brewery, which still brews Castle Lager, South Africa’s most influential beer brand.

On the other hand, ABInBev was established in 2008 after InBev, the Belgium-Brazilian brewer acquired Anheuser-Busch. A-B was established in 1860 in St. Louis, Missouri, when Eberhard Anheuser gave up soap manufacturing to run a local Bavarian brewery. His son-in-law, Adolphus Busch, joined him after serving in the Civil War, and their family fully controlled the company until the sale to InBev, a composite of Artois (1366), Piedboeuf, Antarctica (1882), and Brahma (1888).

The global market share of just these two companies is 30.5%. Right now, the market breakdown is consolidated pretty heavily by the top five beer producers: ABInBev (20.8%), SABMiller (9.7%), Heineken (9.1%), Carlsberg (6.1%), and China Resources Enterprise (6%). This is poised to change.

Today

The market domination of Bud Light is at risk in the United States, as tastes are turning towards independent breweries. Craft Beers, like Brooklyn and Lagunitas, are garnering 11% of the market share and 19.3% of dollars spent, increasing 17.6% in 2014. They have brewed a whopping 22.2 million barrels of craft beer in that year. Although beer consumption growth has slowed to 0.5% annually, the rise of craft beer is not projected to slow.

On the other hand, home brewed beers have been ubiquitous across Africa for quite some time, like Umqombothi in South Africa or Pombe in Eastern Africa. But, the middle class there is growing: tripling over the past 30 years according to Deloitte. With this newly acquired wealth, African beer drinkers are turning towards established brands, and SABMiller owns 40 of those brands across the continent.

Implications

There is a lot at play here. After news of the reignited merger broke, SABMiller’s share price jumped 9%. And, antitrust regulators are all ready to bust out the red tape, and for good reason, because a monopoly of this size could cause cost to go way up. With great mergers, come great business overhauls.

When it comes to account volatility, beer and liquor brands changes creative agencies the second most often out of any industry. One in seven jobs change on average each week in New York. During a merger, business to business accounts (namely ad agencies) and job vulnerability spikes.

Final Thoughts

I have traveled the globe drinking beer, and I have had a sneaking suspicion that Miller has been producing all of those local beers anyway. Now, they will all just be made by Budweiser.

For further reading on the some of the topics discussed in this post, please subscribe to our newsletter for our special REDBrief SABMiller-ABInBev Series, which includes briefs on: 

5 Influential Marketing Contacts at Top Beer Companies

Beer Brands Landscape

African Advertising Agencies

2 thoughts on “Can you feel the love? What the SABMiller-ABInBev Merger Means to You

  1. Holy crap! This article was super informative and really helped me to understand what’s at stake with this merger. I am paranoid anytime two huge corporations join forces. It usually means bad news for the low level workers, and a higher price point for blue collar customers. Thanks for the great article!

    1. Thanks, Stanley! I agree with that. ABInBev has a history of buying local breweries and closing them to force them to purchase their more expensive beers. We will certainly be waiting to find out!

Let us know what you think

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s