Budweiser maker Anheuser-Busch InBev announced Tuesday that it has reached an agreement with Miller maker SABMiller to join forces in the biggest beer deal of the decade.
AB InBev raised its offer for SABMiller to $US67.62 a share, valuing the company at over $US109 billion. The two beer beasts combined would result in a merged group with a value of around $US275 billion.
In the past 12 months, there have been more than a dozen craft-beer mergers and acquisitions by larger breweries.
AB InBev already dominates 39.9% of the global profit pool; SABMiller, 17.9%. So just imagine the reach the two could have together.
Sounds like it might be bad news for craft, but it’s actually the opposite. The craft beer community is a proud and close-knit one. There’s a unique camaraderie among craft brewers and drinkers alike in creating and sharing a complexity of flavours that can’t typically be found in large-scale beer. Craft beer is already a small-yet-mighty adversary to “macro” breweries like Budweiser and Miller, and the big guys are scared. AB InBev and SABMiller both have been buying up craft breweries left and right in the last few years because they recognise the growing popularity of craft beer — not to mention the growing threat of it to big-beer companies. Why else would Budweiser go on the defence against craft beer in last year’s Super Bowl ad? The ad generated a lot of criticism for the brand, and united craft drinkers against the Goliath that’s trying, and failing, to mock microbreweries.
An AB InBev/SABMiller merger would have the same effect: a rallying of craft beer lovers everywhere in support of “the little guys.”
Brewers Association director Paul Gatza believes that even in the wake of a big-beer merger, craft will continue carving a growing space for itself, as it’s always done.
“Many craft brewers would look at a potential deal of Anheuser Busch-InBev and SABMiller as not relevant to their businesses and will keep on doing what they do — make flavorful and high quality beer, engage beer drinkers, and serve the community,” he writes. “The American public continues to respond by sampling more new craft brewed beers and buying more of their favourites. Those societal trends won’t change because of this deal.”
Gatza told Business Insider, “People take beer very personally. When something happens to their favourite beer or their ability to get it, or something helps or hurts a brewer they care about, they internalize it and want to do something about it. People may see [the merger] as a time to rally around their local brewery.”
Though there’s usually talk of an AB In-Bev/SABMiller merger “about once a year,” says Gatza, “this time it looks like something is going to happen… The timing seems right this time, and there also seems to be a general feeling that now this time it’s going to happen.”
Gatza says that big breweries are scared of their smaller, craft competitors:
“And they’re addressing this through shifting the amount of marketing dollars to online and social media,” he says, “through creating their own brands” — like MillerCoors’ Blue Moon — “to compete in the craft space, and through purchases of smaller brewers” like AB InBev’s purchase of Chicago’s Goose Island in 2011.
Gatza acknowledges that the merger is unrelated to big beer’s fear of craft, and instead is a good financial move for the beer behemoths at this point in time.
“But craft culture is emerging in countries all over the world,” he notes. “This could be a play to combat some of that growth.”
Business Insider Emails & Alerts
Site highlights each day to your inbox.