Where is the non-alcoholic beer market heading to? Companies and brands. Baltika as a democratic leader. Heineken – how do you shake up the market and shove up the competitors. AB InBev Efes – premium corner. Non-alcoholic import beer. Non-alcoholic beer - Who drinks it? General conclusions. Summer beer. ...
“Catalogue of Russian Beer Producers 2020” includes 1285 businesses ranging from large subsidiaries of international companies to rather small restaurant and craft breweries.This issue has 171 more breweries compared to 2018 (155 business have been excluded and 326 have been included).Starting from 2019, FTS has been publishing data on excise payments by brewers (delayed by 1.5 years), that can be translated into beer equivalent for most of producers.Depending on the volumes, we ranked the brewers that provided information by 6 groups (see pic.). At one end of the production spectrum there are 2/3 of breweries outputting less than 10 thousand decaliters. Their net share amounts to as little as 0.2% of the total beer output volume. On the other end there are 6 federal groups accounting for almost 80%. ...
Dmitry Nekrasov’s Philosophy — on the Past, Present and Future of Ukrainian Brewing IndustryA meeting with Dmitry Nekrasov always turns into a training course: “Introduction to brewing business“. We are talking to a clever “playing trainer“ a person that can be called a godfather of the Ukrainian craft. He has a dozen of successful projects to his name. Dmitry told us about craft beer in Ukraine, on market cycles, on specifity of operating in retail and HoReCa, on union of Ukrainian brewers and certainly, how a brewery of his own, First Dnipro Brewery is doing.
The market of import beer in Russia: review and databasesThe market of import beer is rapidly growing and changing. But while in the past years it was growing due to brands variety, in 2019 major and affordable brands from TOP-10 were developing actively. It seems that the fact of a brand origin from far abroad counties, even if it is not well known but has moderate price and good distribution provides for million liters of sales in the territory of Russia. Among distributors AB InBev Efes was far behind, yet the role of Baltika and suppliers of the second row got more important. The boom of German brands was followed by stagnation of import from other traditional regions (and Belarus) instead the supplies from Mexico, Lithuania and Asian countries grew considerably.
SABMiller and InBev: The dance of the elephants
The world’s brewers have been consolidating at a phenomenal rate in the past ten to fifteen years, to the extent that only a small handful of them control the majority of beer brewed in the world today. The top four-ABI, SABMiller, Heineken and Carlsberg-collectively accounted for 49.9% of total global beer production in 2010.
But the very large deals, such as SAB’s acquisitions of Miller in 2002 and Bavaria in 2006 and Interbrew’s merger with Ambev in 2003 which formed InBev and Inbev’s acquisition of Anheuser-Busch in 2008 are largely a thing of the past. This is so because there are no medium to large brewers left to acquire, which leaves just the three global brewing giants-ABI, Heineken and SABMiller-dancing with themselves. Fosters of Australia, recently bought by SABMiller for $10bn, is only ranked number 30 in the global beer volume league.
So it is becoming increasingly difficult for the beer behemoths to make any appreciable difference to performance by acquisition - other than by making audacious acquisitions, such as that envisaged in an ABI/SABMiller deal.
Talks between SABMiller and ABI or its predecessor are not new; in 2007 the two groups held talks with a view to merging (this was before the acquisition of Anheuser-Busch by InBev when Inbev was appreciably smaller than it is today and in fact was smaller than SABMiller at the time). But InBev was not prepared to pay the premium required by SABMiller’s shareholders and so the deal fell through.
Currently, there has been no confirmation that any talks have taken place in recent times. Indeed, under London Stock Exchange rules, SABMiller would be obliged to notify the takeover authorities of such talks if they were deemed to be price-sensitive. The deafening silence from SABMiller suggests an absence of any talks.
At a purely superficial level, it is easy to see why such a mega-deal makes sense. While the two companies have largely grown by acquisition in the past twenty years or so, there has been remarkably little geographical overlap between them. If such a deal were to occur, regulatory approval in the different geographies in which they operate would hardly be an issue, with the notable exceptions of the US and China. In both of these jurisdictions, it is likely that the combined group would be forced to dispose of the SABMiller assets (Miller-Coors in the US and CR Snow in China), probably at a heavy discount to net asset value.
But there are other reasons why such a mega-deal just doesn’t make sense and why we do not believe it will happen, at least not in the foreseeable future.
Take Castel, for example, in which SABMiller holds a 20% stake. This is the company’s joint venture partner in the rapidly growing African beer market (outside of South Africa) and SABMiller has a pre-emptive right to make a bid for Castel in the event of that company ever wishing to sell. In the event of a change of control of SABMiller, it is not clear whether or not that pre-emptive right would remain and thus potential value could be lost in a an ABI-SABMiller merger.
If SABMiller were acquired by ABI at a 30% premium to the current share price, executive management share options that vested automatically on such a deal being consummated would be worth around $1bn. It is unlikely that these executives would be inclined to stay with the combined entity and even if they did, their incentivisation levels would surely decline appreciably.
But the main reason why we don’t believe that ABI will be making overtures to SABMiller (at least in the short to medium term) is the numbers just don’t make sense at this point in time. ABI only recently digested its 2008 acquisition of Anheuser-Busch and still has a lot of debt relating to that deal. To fund an $80bn or $85bn acquisition of SABMiller using debt would stretch its balance sheet to unacceptable levels. And while InBev was able to take on a huge amount of new debt to finance the Anheuser-Busch acquisition in 2008 that was not problematic, as Anheuser-Busch’s cash flows were almost entirely denominated in US dollars. SABMiller’s cash flows, on the other hand, are mainly derived from Colombian pesos and South African rands, which are more difficult to gear up in international debt markets.
The bottom line is that a deal between ABI and SABMiller appears unlikely in the foreseeable future, though we don’t discount it completely in the longer term. In the meantime, we are very happy with our SABMiller holding in our model portfolio.
*Chris Gilmour is an Analyst at Absa Asset Management Private Clients
3 Ноя. 2011