So, You Think Anheuser-Busch InBev is Big Enough?

Well, it seems it might be, but rumour has it that it’s not! Here’s what’s been circulating around these past few days:

The Guardian newspaper reports that Matrix Corporate Capital analysts recently met with executives from Diageo and found that the minds behind the largest drinks company in the world are not necessarily opposed to the idea of merging with a greater force in the beer biz, like Heineken, SABMiller or even the headline-mentioned ABIB.

Diageo’s reaction to comments suggesting that perhaps a merger with SABMiller or Heineken could pre-empt action by ABIB suggested to the analysts that they have a “genuine openness to corporate action.” This left the Matrix side of the table with the impression that “Diageo’s door is open to a deal.”

And not just a deal with SABMiller or Heineken, either! The analysts also reported that “Diageo was much more open to (a deal with ABIB) than we had anticipated,” although noted that the general consensus at the table was that SABMiller would be the most logical next target for the brewing behemoth.

So, ABIB could merge with SABMiller and grow even more massive, likely first selling off their joint venture business in the U.S., MillerCoors, to the other half of that team, MolsonCoors. Which would make the last company, what?, MolsonMillerCoors? And ABIB would become SABABIB?

But wait, that’s not all! Speaking with  another contact today, I found that there is speculation in the financial world not that ABIB would take over SABMiller, but that SABMiller would swallow the larger brewing company. And if not SABMiller, then some other company, as financial circles appear to be chewing over the idea that the world’s largest brewing company is being cut, trimmed and primed for a sell-off.

All of which means, well, what exactly? I’m no expert, but if you ask me it demonstrates that the big brewers have all but given up on restoring the lustre to their flagship brands in existing markets and settled on the way forward as either exploiting underdeveloped companies or buying or merging with other existing brewers to add to market share.

Or in other words, as I noted back here, don’t expect the big North American beer brands to bounce back any time real soon.

5 Replies to “So, You Think Anheuser-Busch InBev is Big Enough?”

  1. ABIB’s Brazilian masters are bankers, not brewers. A move like this is only natural. Reminds me of Nomura’s investment in Czech breweries last decade; all about the Benjamins, baby.

    1. Ever think you’d be feeling nostalgic about the Busch clan, Lew? Whatever else they might have been, at least they were brewers first!

  2. Hmmm…. I’m still trying to wrap my mind around the implications of this for the Czech market, specially now that ABIB has divested Staropramen, etc…. Too much for this early in the morning.

  3. One factor to keep IMHO in mind : if such a merger happens, it may find the European Commission and national competition watchdogs standing in its way and ordering for some activies to be sold on markets where the new entity might reach too high a market share.
    That happened to Interbrew once (remember when they sold the Bass brewery to Coors but kept the brand ?). More recently, when S&N Kronenbourg was bought by Heineken and Carlsberg, the two latter announced from the launch of the operation who would take what, to keep the heat of the EU competition fuzz off their backs…

    In Europe at least, we’ve reached a point where any merger by brewing multinationals would see the competition watchdogs, national or EU-wide, step in and force the new entity to sell on part of its activities.
    This sure may not block major mergers and takeovers altogether, but may complicate them a fair bit…

    1. It’s still just idle speculation, of course, but yes, Laurent, I imagine there would be some divestment necessary, although perhaps not as much in some scenarios as you might think. Diageo, for instance, would run into problems in Ireland merging with Heineken — all three big stouts under one roof! — and, as noted, an ABIB/SABMiller merger would likely mean the loss of MillerCoors Stateside, but considering the size of the companies being mentioned, there is surprisingly little overlap.

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