Why Inbev can buy Anheuser-Busch, in case you haven’t heard.

6 comments

July 15, 8:24 AM

by Charlie Papazian, Beer Examiner

 

 

It wasn’t that long ago that the seeds were sown for South African Breweries to become SAB-Miller.   These two companies will be the two largest brewing companies in the world.  

            The ruling management and leadership philosophy for both of these world brewing giants began in two emerging and developing countries. In a ten year frenzy they have bought brands and breweries all over the world.  They did this from their home base where where the rules for competition are different than in the United States.

            Once upon a time Inbev was Brahma, then the predominant brewing company in Brazil.   Its equal competitors were Antarctica and Kaiser. Then Brahma bought Antarctica, Kaiser was weakened and Brahma/Antarctica emerged as Ambev.   They had an enormous market share, perhaps as much or more than 80% of the beer market in Brazil.   Essentially they had a beer monopoly in Brazil.   Imagine a two-mile stretch of Brazilian beach where you have but one brand to choose from and it is a very (refreshing) light lager.   I’ve been there and found myself drinking pineapple flavored mix drinks for lack of a choice that suited my preferences.  Companies that have monopolies make a lot of cash and have the ability to control the competition. 80% market share would be deemed anti-competitive in the USA and would never be permitted. The U.S. government has a history of breaking up what they deem as a monopoly. 

            Ambev and Belgium’s Interbrew merged into Inbev and established their corporation in Leuven, Belgium. Brazilian management took over after brief leadership under the Belgians.

            South African Breweries, commanded a 99% share of the South African beer market. That’s a monopoly, legal in South Africa.   Monopolies make a lot of money and evidently a lot of cash. They quite effectively control competition. Upon visits to South Africa in the 90's I listened to the woes which competitors expressed.  South African Breweries have acquired brands and breweries throughout the world, including the acquisition of the Czech Republic’s historic Pilsner Urquell brewery. About the time when SAB bought the Miller Brewing Company their corporate headquarters moved to London.

            Now if America did not have anti-monopoly laws what could Anheuser-Busch have achieved? Perhaps they would be the ones buying Inbev or SAB-Miller. That's unsubstantiated and simple conjecture on my part.  If monopolies existed in the USA, there would not likely be 1,400 small independent brewers thriving in the United States.  But Anheuser-Busch’s “what-ifs” never happened.   It’s easy for me to say in hindsight.   It’s easier to make simple observations and commentary. Easy for others to overlook the beer (what about the beer?) and other details in the media frenzy surrounding Inbev’s almost done deal buyout of Anheuser-Busch.

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