Last Call

Big Breweries Gear Up for Final Round of Beer Battles

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Global beer battles could sweep up German companies.
  • Why it matters

    Why it matters

    Despite their proud and historic tradition, German breweries are little more than takeover targets for the global beer giants.

  • Facts

    Facts

    • Four big brewing companies – AB Inbev, SABMiller, Heineken and Carlsberg – already control almost half of the global beer market.
    • Smaller breweries can’t compete for the global beer business because of the expense of logistics and middlemen.
    • The German market leader is Radeberger.
  • Audio

    Audio

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It’s a familiar ritual for visitors to British pubs: Shortly before closing, the barman rings a loud bell and makes a last call for drink orders. That warning might be what big brewing companies have in mind now. The takeover bid by the British/South-African company, SABMiller, for Dutch rival Heineken is an unmistakable sign in the beer business – the giants are preparing for a new and possibly final round of consolidation.

Alan Clark, the chief executive of SABMiller, isn’t simply acting out of pure business calculations, but also out of fear that his own company could be swallowed up by the market leader, AB Inbev. In a few years, the global beer business could be completely reshaped and concentrated in three, or possibly only two top companies. 

Heinieken SAB Miller

Even if Mr. Clark’s push to merge with Heineken isn’t original, it follows an undeniable economic logic. The four big firms – AB Inbev, SABMiller, Heineken and Carlsberg – already control almost half of the world market.  They take in 49 percent of worldwide sales revenues from beer, and earn 60 percent of operating profits in the industry.

The money comes not only from British pubs and German taverns, but also from emerging countries, thanks to the increasing thirst of many Asians for beer. It is the large breweries that are mostly profiting from this new growth market because the expense for logistics and middlemen is simply too much for small companies.

So to a large extent, the globalization of the beer market has left German breweries behind, regardless of their proud tradition. Even the German market leader, Radeberger, is a dwarf in comparison to the global beer giants. In the upcoming showdown, Germany won’t be a player – but its breweries will make attractive takeover targets.

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This article was translated by George Frederick Takis. Greg Ring also contributed. Carsten Herz is Handelsblatt’s correspondent in London. To contact him: herz@handelsblatt.com 

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