just-drinks.com editor's weekly highlights
In This Issue...
The leading lights in the beer world seem to be in agreement that the next wave of industry consolidation is set to break soon. There is speculation, however, over who will be the participants.
Late last week, the market buzzed with rumours that Heineken could table a bid for UK-based rival Scottish & Newcastle, either alone or in tandem with Denmark’s Carlsberg.
In this case, however, our initial doubts appear to be right on the money. There is a list of factors as long as your arm as to why Heineken would be unlikely to bid for S&N, many of which were confirmed to us by analysts.
How would Heineken finance a deal, for a start, given its ownership structure, under which the Heineken family controls 51% of the brewer? Buying S&N could also throw up competition issues in markets like Russia and France.
Perhaps, more pertinently, an acquisition of S&N would run contrary to how many of the brewing multinationals believe they can generate sustained long-term volume and earnings growth. The future is in emerging markets like India, China and Vietnam. An acquisition of S&N would only serve to anchor Heineken in a region – Western Europe – were growth nowadays is hard to come by.
So where’s the next round of major M&A going to come from? There has been constant talk of SABMiller buying into Ireland’s C&C Group, the owner of Magners, That, too, seems unlikely, given SABMiller’s lack of experience in cider, its propensity to buy into emerging markets and doubts about the longevity of Magners’ astronomical growth.
Anheuser-Busch and InBev are widely seen as two brewing giants who could easily come together. On a global basis, there aren’t many markets in which they compete head on. What is certain is that their recent deal in the US has only served to fuel speculation that the two brewers could deepen their relationship in the future.
But is size per se valuable in the beer industry? The vast majority of the beer consumed around the world is made up local brands, so it can be tough for the world’s brewing giants to derive much in the way of cross-border synergies through selling a global brand in a similar way to Coke and Pepsi.
There’s much for all of us interested in the dynamics of the global beer industry to ponder – and we’re happy to be your outlet for such musings, on our forums.
Until next time...
Olly Wehring, Managing Editor
Synthetic corks and screw-caps may have once been frowned upon by wine cognoscenti, but no longer, and the growing popularity of alternative closures has put the natural cork industry under pressure. In this month’s just-drinks interview, Antonio Amorim, president of the world’s largest natural cork producer Amorim & Irmaos, puts the case for cork.
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