Like it or not, the world appears headed toward increasingly gigantic brewers. Anheuser-Busch InBev NV, the world’s biggest brewer, announced in September it is trying to take over SABMiller PLC, the second biggest. If four current trends prevail, more consolidation is sure to follow.
No. 1: Beer sales have gone flat in North America and Europe. They are expanding at less than 1% a year, forcing big brewers to look to acquisitions for growth.
No. 2: Craft beers are eating into big brewers’ market share. Artisanal brews have doubled their slice of sales since 2008 and now account for 9% of the market.
No. 3: To maintain sales volumes, big brewers must think globally. China is already the world’s largest beer market by volume, and by 2017 it is expected to be No. 1 in revenue as well.
No. 4: Not any old acquisition will do: Big brewers need to swallow other big brewers to significantly boost sales. Together AB InBev and SABMiller control 30% of the global market.
Market share
- Anheuser-Busch InBev: 20.8%
- SABMiller: 9.7%
- Heineken: 9.1%
- Carlsberg: 6.1%
- Other: 54.3%
HOW DO YOU PLAY THESE TRENDS?
Boston Beer Co. (NYSE: SAM), maker of Samuel Adams, is the largest publicly traded craft brewer in the United States. It could benefit from more defections to craft brews or become an acquisition target itself.
Molson Coors Brewing Co. (NYSE: TAP) could benefit if SABMiller is acquired and competition regulators force the company to divest its U.S. joint venture with Molson Coors as part of the deal. Taking full control of the unit would swell the sales of Molson Coors.
Heineken NV (Euronext: HEIA) is the largest global brewer left without a dance partner. While family- dominated for now, it will become an increasingly attractive target for bigger brewers as the list of prospective acquisitions shrinks.