AB InBev's rivals expected to benefit from merger too
While AB InBev’s planned $104.2 billion takeover of SABMiller will strengthen its position as the biggest beer company in the world, it also serves to bolster Molson Coors position in the market as it looks likely to take over a number brands and capitalise on AB InBev’s African focus.
AB InBev’s bid has been formally accepted by SABMiller and looks likely to go ahead pending regulatory approval. In gaining approval however AB InBev, which has a 45 per cent share in the beer market, will have to sell SABMiller’s stake in MillerCoors LLC, which has a 25 per cent market share.
This will mean brands including Miller Lite, Blue Moon and Keystone Light will be up for grabs and the new number two beer producer in the US, Molson Coors, will have first refusal on whether to buy them. The reason for this relates back to a joint venture with SABMiller in 2008 to create MillerCoors-which Molson has a 42 per cent share in.
Mark Swartzberg, an industry analyst with Stifel Nicolaus & Co, told the WSJ that other beer companies such as Heineken would be unlikely to pursue the available brands given Molson’s stake in MillerCoors which would make it difficult to exert any control in the joint venture.
AB InBev is expected to be busy with expansion into new markets like Africa and Latin America which could free up space in the US for Molson to step up its advertising and better compete with its rival. This will be helped by the fact that AB InBev’s key brands like Budweiser have been steadily losing ground due to the growing popularity of the craft beer market.