Globally, the acquisition of SABMiller by AB InBev will form a company that accounts for 29% of a 198bn litre beer market, says Euromonitor International drinks analyst Jeremy Cunnington.
This is assuming that the enlarged brewer will have to divest SABMiller’s US operations to Molson Coors and interest in the SABMiller joint-venture with China Resources.
One of the penalties of creating the largest beer company the world has seen will be the probable need for AB InBev to relinquish the planet’s biggest beer brand, Snow, in China.
The country’s regulators will not allow a foreign company to control around 40% the beer market there. With its 49% stake in the China Resources joint-venture, AB InBev is expected to have to relinquish its leadership in a segment that is expected to grow by more than half by 2019 and be worth over US$44bn, according to Euromonitor estimates.
China Resources is yet to convey its views on the outcome of the merger.
Still, on a global level, the deal will make AB InBev more than three times bigger than its nearest rival, Heineken, which currently possesses 9% of the market.
The giant will rise to number three in Asia-Pacific, with 12% of the region’s 71bn litre volumes—five and one percentage point respectively behind Chinese giants China Resources and Tsingtao.
It will also mean that AB InBev will be the number one player in Australasia with 40% of the continent’s 2bn litre volumes, seven points ahead of Kirin.
It is yet to be seen what this will mean for the Australasian distribution of brands such as Corona by Lion, and what will happen with the recently re-signed distribution deal.
“The short answer is we don’t know, nor are we likely to know until 2-3 months down the line when the competition authorities take a look at it,” said Cunnington.
“We are still at the engagement stage of the arrangement, we’ve still got the rest of the wedding plans to be made and no doubt, various in-laws—or regulators—will stick their oars in.”
Daniel Grimsey, also of Euromonitor, warned that appearances on the deal’s impact in Australasia might be deceptive. Overall beer sales are only expected to grow by 1% annually in the region.
“When looked at in terms of beer overall, the impact of switching brands such as Corona, Stella Artois and Beck’s from Lion to Foster’s might look rather small,” Grimsey said.
“However, this works out as 45% of the highly profitable imported premium beer market. This segment grew by 14% in value terms in 2014, and is expected to grow at a compound annual growth rate of 4%, in value terms, over the next five years.”