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ANALYSIS OF THE GLOBAL BEER INDUSTRY

AND COMPARISON OF COMPETITORS


AB INBEV AND SABMILLER
Justin Read

ROADMAP

Overview of the Global Beer Industry and the Big Four

PESTEL Analysis of the Global Beer Industry

Industry Driving Forces

Strategic Group Map of the Big Four

Industry Key Success Factors

Competitive Strength Assessment of the Big Four

Five Forces Analysis of the International Beer Industry

AB InBev Company Profile and Performance

SABMiller Company Profile and Performance

Recommendations for AB InBev and SABMiller

GLOBAL BEER INDUSTRY HAS BEEN GROWING STEADILY

From 2009 to 2013 the Global Beer Industry has performed in the following ways:
Average year on year revenue growth of 2.7%
Average year on year volume growth of 2.1%

In 2013 the total market revenue was approximately $514.5 billion


Net revenue was approximately $177 billion
EBIT was $35.2 billion
Average profit margins are about 20%

Global beer market projected to grow 3.4% from 2013 to 2018

(Global Beer Industry Profile)

Lagers Dominate the Most Common Styles of Beer Sold

4% 3%

Standard Lager

Premium Lager

Specialty Beer

Ales, Stouts, and Bitters

9%

26%

58%
Low- and non-alcoholic beer

(Global Beer Industry Profile)

Big Four Brewers Dominated the Global Beer Market at the end of 2013

Anheuser-Busch InBev
20%

52%

SABMiller
12%

Heineken
Carlsberg

11%
6%

(Global Beer Industry Profile)

Other

Big Four's Share of Regional Profits at the end of 2012

Other
SABMiller
Heineken
Carlsberg
AB InBev

(AllianceBernstein)

PESTEL FACTORS: POLITICAL FACTORS INDICATES


MODERATE IMPACT ON BEER INDUSTRY
Region

Political Factors

North America

Consistent tax and regulatory enforcement, politically stable

Central and South America

Some political instability and government interference in economy


Some institutional voids consistent electricity, quality water, financial
institutions

Western Europe

Consistent tax system, numerous regulations, minor political instability

Central and Eastern Europe

Tax and regulatory inconsistencies, some political instability

Asia Pacific

Higher degree of government participation in the economy

Africa

Higher degree of government participation in the economy


Institutional voids to overcome consistent electricity and water, distribution
channels, financial institutions

(AllianceBernstein)

(Global Beer Industry Profile)

PESTEL FACTORS: ECONOMIC FACTORS INDICATES


REGIONAL IMPORTANCE FOR BEER INDUSTRY
Region

Economic Factors

North America

17% of global consumption of beer, 24% of net revenue, and 30% of global profit in
2012
Not as sensitive to economic downturns as other commodities

Central and South America

13% of global beer consumed, 14% of net revenue, and 24% of global profit in 2012
Monopolistic or duopolistic markets, GDP correlated with consumption

Western Europe

14% of global beer consumption, 17% of net revenue, and 12% of global profit in
2012
Structural decline in per capita consumption, fragmented market structure,
aggressive concentrated retailers

Central and Eastern Europe

13% of global consumption of beer, 11% of net revenue generated, and 8% of global
profit in 2012
GDP correlated with consumption

Asia Pacific

36% of global beer consumption, 27% of net revenue, and 18% of global profit in
2012
High growth in consumption, mix of market development

Africa

6% of global beer consumption, 7% of net revenue, and 10% of global profit in 2012
Low consumption per capita, GDP correlation with consumption

(AllianceBernstein)

(Global Beer Industry Profile)

PESTEL FACTORS: SOCIOCULTURAL FACTORS ARE


POSITIVE FOR THE BEER INDUSTRY
Region

Sociocultural Factors

North America

Well established beer culture


Slow population growth, some change in culture with minority population
growth

Central and South America

Beer is popular; it is paired with soccer, nightlife activities, and dancing


Younger demographics

Western Europe

Strong historical beer culture. Very nationalistic culture


Older population, low growth rate

Central and Eastern Europe

Large population, younger demographics


Social acceptance and encouragement of alcohol consumption

Asia Pacific

Generally not a well established beer culture


Growing population and per capita consumption

Africa

Not a well established culture of beer


Large population, low per capita consumption

(AllianceBernstein)

(Global Beer Industry Profile)

PESTEL FACTORS: TECHNOLOGY AND ENVIRONMENTAL


FACTORS ARE GLOBALLY SIMILAR
Region

Technology Factors

Global Similarities

Energy and water efficiency manufacturing upgrades


Wastewater treatment
Reduced materials use in packaging
Digital engagement of consumers

Region

Technology Factors

Global Similarities

Watershed health in key grain growing regions


Supply of water for quality and quantity of hops and grains
Wastewater management
Reduction of waste from packaging

(AllianceBernstein)

(Global Beer Industry Profile)

PESTEL FACTORS: LEGAL FACTORS ARE SIMILAR IN AIM BUT


DIFFER IN IMPACT BY REGION
Region

Legal Factors

North America

Worker safety, product quality standards, appropriate advertising, distribution


channels- especially in the US where the three tier system is required, and packaging
requirements

Central and South America

Fewer laws concerning worker rights, pay requirements, anti trust, and other areas of
operation addressed in North America
Less likely to be effective oversight and rule enforcement in this region

Western Europe

Intrusive regulatory system, varies by country, can involve the purity of the
ingredients, what ingredients can be included in beer, how the beer is produced, and
requirements to meet in order to sell

Central and Eastern Europe

Significant regulatory differences and inconsistencies within and between countries in


the region
Ambiguous and inconsistent application of laws

Asia Pacific

Intrusive regulatory system by virtue of more active government role in economy


Regulate production, sales, content, packaging, distribution, licenses

Africa

Lower capacity to enforce any labor, consumer, or production laws and a higher
chance for corruption to hamper the efforts in law enforcement

(AllianceBernstein) (Global Beer Industry Profile)

Regional Beer Market Breakdown Illustrates Importance of US and European Markets (2012)
100

80

60

40

20

(AllianceBernstein)

Africa
Asia Pacific
C & E Europe
W Europe
C & S America
N. America

INDUSTRY DRIVING FORCES INDICATE THE IMPORTANCE OF


THE EMERGING MARKETS

Change in Long-term Growth Rate


US and European markets saturated,
slowed overall growth
Emerging markets beginning to accelerate in growth

Increasing Globalization
Opening of the emerging markets to the beer industry

Marketing Innovation
Shift towards engaging consumers digitally and more accurately

Growing Preferences for Differentiated Products


Ciders, occasion specific drinks, near beer, pre mixed drinks, fruit beer
Consumers in all markets are open to non-traditional beer products

(AllianceBernstein)

Strategic Group Map Highlights Differences of the Big 4

7
6
5
4

Regional Markets Present In

3
2
1
0

100

200

300

Brands in Portfolio

(Theheinekencompany.com)

(SABMiller)

(AB InBev)

(Grundberg)

400

500

(AllianceBernstein)

KEY SUCCESS FACTORS HIGHLIGHT IMPORTANCE OF


EFFICIENCY AND COST REDUCTION
Water and Energy Efficient Production
Sustainable image, reduce input costs,
promote water security

Economies of Scale
Mass-market segment, price based competition
Largest segment of beer sold

Changes in Cost and Efficiency


Includes two previous factors, large part of
competitive advantage in industry

KEY SUCCESS FACTORS HIGHLIGHT IMPORTANCE OF


EFFICIENCY AND COST REDUCTION

Strong Network of
Wholesaler/Retailer Distributors
45% of beer sold to retailers supermarkets,
33% to on trade - restaurants

Breadth of Product Line


Consumers demand a wide range of
product and increasingly new
products

(AllianceBernstein)

Well Known and Recognized Brand


or Brand Portfolio
Important to stand out in groups of
random brands, customer loyalty

COMPETITIVE STRENGTH ASSESSMENT REVEALS AB INBEV


AND SABMILLER LEAD THE PACK

(SABMiller)

(AB InBev)

COMPETITIVE STRENGTH ASSESSMENT REVEALS


HEINEKEN IS A SOLID THIRD PLACE

(Theheinekencompany.com)

(Grundberg)

+
-

Threat
Threat of
of New
New Entrants
Entrants --- Moderate
Moderate
Increase
Increase threat
threat of
of new
new entrants:
entrants: readily
readily accessible
accessible suppliers,
suppliers, retailer
retailer need
need to
to stock
stock aa wide
wide range
range of
of beer,
beer, many
many underserved
underserved
regions
with
high
growth
prospect,
national
breweries
enter
global
market
regions with high growth prospect, national breweries enter global market
Barriers
Barriers to
to entry:
entry: Capital
Capital investment
investment in
in brewing
brewing equipment,
equipment, need
need for
for international
international supply
supply chain,
chain, establishing
establishing distribution
distribution
networks,
government
regulation,
oligopolistic
market,
global
brand
recognition
networks, government regulation, oligopolistic market, global brand recognition

(Global Beer Industry Profile)

Threat
Threat of
of New
New Entrants
Entrants --- Moderate
Moderate

+
-

Increase
Increase threat
threat of
of new
new entrants:
entrants: readily
readily accessible
accessible suppliers,
suppliers, retailer
retailer need
need to
to stock
stock aa wide
wide range
range of
of beer,
beer, many
many underserved
underserved
regions
with
high
growth
prospect,
national
breweries
enter
global
market
regions with high growth prospect, national breweries enter global market
Barriers
Barriers to
to entry:
entry: Capital
Capital investment
investment in
in brewing
brewing equipment,
equipment, need
need for
for international
international supply
supply chain,
chain, establishing
establishing distribution
distribution
networks,
government
regulation,
oligopolistic
market,
global
brand
recognition
networks, government regulation, oligopolistic market, global brand recognition

+
+/+/-

Threat
Threat of
of Substitutes
Substitutes Moderate
Moderate to
to Strong
Strong
No
No switching
switching costs
costs for
for end
end consumers
consumers of
of beer
beer and
and substitutes
substitutes
Retailers
Retailers like
like supermarkets
supermarkets need
need to
to stock
stock aa wide
wide range
range of
of beer
beer and
and substitutes,
substitutes, they
they arent
arent likely
likely to
to replace
replace beer
beer with
with
substitutes.
Threat
is
strong
but
consistent
and
limited
substitutes. Threat is strong but consistent and limited
(Global Beer Industry Profile)
On
On trade
trade retailers,
retailers, like
like restaurants
restaurants and
and bars,
bars, tend
tend to
to heavily
heavily favor
favor beer
beer or
or one
one of
of its
its substitutes
substitutes and
and arent
arent likely
likely to
to change
change

Threat
Threat of
of New
New Entrants
Entrants --- Moderate
Moderate

+
-

Increase
Increase threat
threat of
of new
new entrants:
entrants: readily
readily accessible
accessible suppliers,
suppliers, retailer
retailer need
need to
to stock
stock aa wide
wide range
range of
of beer,
beer, many
many underserved
underserved
regions
with
high
growth
prospect,
national
breweries
enter
global
market
regions with high growth prospect, national breweries enter global market
Barriers
Barriers to
to entry:
entry: Capital
Capital investment
investment in
in brewing
brewing equipment,
equipment, need
need for
for international
international supply
supply chain,
chain, establishing
establishing distribution
distribution
networks,
government
regulation,
oligopolistic
market,
global
brand
recognition
networks, government regulation, oligopolistic market, global brand recognition

Bargaining
Bargaining Power
Power of
of Suppliers
Suppliers
Weak
Weak to
to Moderate
Moderate

+
+
-

Breweries
Breweries rely
rely heavily
heavily on
on
third
party
suppliers
and
third party suppliers and
have
have minimal
minimal vertical
vertical
integration
integration
Grain
Grain suppliers
suppliers can
can serve
serve
other
buyers
in
the
alcohol
other buyers in the alcohol
industry,
industry, agriculture
agriculture industry,
industry,
or
food
industry
or food industry
Hop
Hop growers
growers operate
operate on
on aa
smaller
smaller scale,
scale, reducing
reducing
bargaining
bargaining power
power
Low
Low switching
switching costs
costs for
for
breweries
breweries when
when moving
moving
between
suppliers
between suppliers

+
+/+/-

Threat
Threat of
of Substitutes
Substitutes Moderate
Moderate to
to Strong
Strong
No
No switching
switching costs
costs for
for end
end consumers
consumers of
of beer
beer and
and substitutes
substitutes
Retailers
Retailers like
like supermarkets
supermarkets need
need to
to stock
stock aa wide
wide range
range of
of beer
beer and
and substitutes,
substitutes, they
they arent
arent likely
likely to
to replace
replace beer
beer with
with
substitutes.
Threat
is
strong
but
consistent
and
limited
substitutes. Threat is strong but consistent and limited
(Global Beer Industry Profile)
On
On trade
trade retailers,
retailers, like
like restaurants
restaurants and
and bars,
bars, tend
tend to
to heavily
heavily favor
favor beer
beer or
or one
one of
of its
its substitutes
substitutes and
and arent
arent likely
likely to
to change
change

Threat
Threat of
of New
New Entrants
Entrants --- Moderate
Moderate

+
-

Increase
Increase threat
threat of
of new
new entrants:
entrants: readily
readily accessible
accessible suppliers,
suppliers, retailer
retailer need
need to
to stock
stock aa wide
wide range
range of
of beer,
beer, many
many underserved
underserved
regions
with
high
growth
prospect,
national
breweries
enter
global
market
regions with high growth prospect, national breweries enter global market
Barriers
Barriers to
to entry:
entry: Capital
Capital investment
investment in
in brewing
brewing equipment,
equipment, need
need for
for international
international supply
supply chain,
chain, establishing
establishing distribution
distribution
networks,
government
regulation,
oligopolistic
market,
global
brand
recognition
networks, government regulation, oligopolistic market, global brand recognition

Bargaining
Bargaining Power
Power of
of Suppliers
Suppliers
Weak
Weak to
to Moderate
Moderate

+
+
-

Breweries
Breweries rely
rely heavily
heavily on
on
third
party
suppliers
and
third party suppliers and
have
have minimal
minimal vertical
vertical
integration
integration

Grain
Grain suppliers
suppliers can
can serve
serve
other
buyers
in
the
alcohol
other buyers in the alcohol
industry,
industry, agriculture
agriculture industry,
industry,
or
food
industry
or food industry

Hop
Hop growers
growers operate
operate on
on aa
smaller
smaller scale,
scale, reducing
reducing
bargaining
bargaining power
power

Low
Low switching
switching costs
costs for
for

breweries
breweries when
when moving
moving
between
suppliers
between suppliers

+
+/+/-

Bargaining
Bargaining Power
Power of
of Buyers
Buyers
Moderate
Moderate
Supermarkets
Supermarkets represent
represent
almost
half
of
all
almost half of all buyers,
buyers,
and
are
often
and are often
consolidated
consolidated
Small
Small or
or non-existent
non-existent
switching
switching costs
costs for
for buyers
buyers
Producers
Producers sell
sell only
only aa small
small
amount
of
their
product,
amount of their product,
rely
rely heavily
heavily on
on retailers.
retailers.
Large
Large buyers,
buyers, like
like
supermarkets,
supermarkets, need
need to
to stock
stock
aa wide
range
of
beer
wide range of beer
Many
Many oligopolistic
oligopolistic markets,
markets,
with
limited
choices
with limited choices for
for
buyers
buyers to
to switch
switch to
to

Threat
Threat of
of Substitutes
Substitutes Moderate
Moderate to
to Strong
Strong
No
No switching
switching costs
costs for
for end
end consumers
consumers of
of beer
beer and
and substitutes
substitutes
Retailers
Retailers like
like supermarkets
supermarkets need
need to
to stock
stock aa wide
wide range
range of
of beer
beer and
and substitutes,
substitutes, they
they arent
arent likely
likely to
to replace
replace beer
beer with
with
substitutes.
Threat
is
strong
but
consistent
and
limited
substitutes. Threat is strong but consistent and limited
(Global Beer Industry Profile)
On
On trade
trade retailers,
retailers, like
like restaurants
restaurants and
and bars,
bars, tend
tend to
to heavily
heavily favor
favor beer
beer or
or one
one of
of its
its substitutes
substitutes and
and arent
arent likely
likely to
to change
change

Threat
Threat of
of New
New Entrants
Entrants --- Moderate
Moderate

+
-

Increase
Increase threat
threat of
of new
new entrants:
entrants: readily
readily accessible
accessible suppliers,
suppliers, retailer
retailer need
need to
to stock
stock aa wide
wide range
range of
of beer,
beer, many
many underserved
underserved
regions
with
high
growth
prospect,
national
breweries
enter
global
market
regions with high growth prospect, national breweries enter global market
Barriers
Barriers to
to entry:
entry: Capital
Capital investment
investment in
in brewing
brewing equipment,
equipment, need
need for
for international
international supply
supply chain,
chain, establishing
establishing distribution
distribution
networks,
government
regulation,
oligopolistic
market,
global
brand
recognition
networks, government regulation, oligopolistic market, global brand recognition

Bargaining
Bargaining Power
Power of
of Suppliers
Suppliers
Weak
Weak to
to Moderate
Moderate

+
+
-

Breweries
Breweries rely
rely heavily
heavily on
on
third
party
suppliers
and
third party suppliers and
have
have minimal
minimal vertical
vertical
integration
integration
Grain
Grain suppliers
suppliers can
can serve
serve
other
buyers
in
the
alcohol
other buyers in the alcohol
industry,
industry, agriculture
agriculture industry,
industry,
or
food
industry
or food industry
Hop
Hop growers
growers operate
operate on
on aa
smaller
smaller scale,
scale, reducing
reducing
bargaining
bargaining power
power
Low
Low switching
switching costs
costs for
for
breweries
breweries when
when moving
moving
between
suppliers
between suppliers

+
+/+/-

+
+
+
+

Rivalry
Rivalry Strong
Strong
The
The global
global beer
beer market
market is
is dominated
dominated by
by
the
big
four,
which
control
almost
50%
the big four, which control almost 50% of
of
the
the market
market
The
The mass-market
mass-market products
products offered
offered are
are
hardly
differentiated,
with
standard
hardly differentiated, with standard and
and
premium
premium lagers
lagers representing
representing almost
almost 84%
84%
of
beer
sold
around
the
world
of beer sold around the world
Beer
Beer is
is subject
subject to
to downward
downward price
price
pressures
by
retailers
and
consumers,
pressures by retailers and consumers, and
and
economies
economies of
of scale
scale are
are very
very important
important in
in
price-based
price-based competition
competition
North
North America
America and
and Western
Western Europe,
Europe, the
the
two largest
largest profit
two
profit pools,
pools, are
are saturated
saturated
markets
and
have
low
or
negative
markets and have low or negative growth
growth
prospects
prospects

+
+
+
-

Bargaining
Bargaining Power
Power of
of Buyers
Buyers
Moderate
Moderate
Supermarkets
Supermarkets represent
represent
almost
half
of
all
almost half of all buyers,
buyers,
and
are
often
and are often
consolidated
consolidated
Small
Small or
or non-existent
non-existent
switching
switching costs
costs for
for buyers
buyers
Producers
Producers sell
sell only
only aa small
small
amount
of
their
product,
amount of their product,
rely
rely heavily
heavily on
on retailers.
retailers.
Large
Large buyers,
buyers, like
like
supermarkets,
supermarkets, need
need to
to stock
stock
aa wide
range
of
beer
wide range of beer
Many
Many oligopolistic
oligopolistic markets,
markets,
with
limited
choices
with limited choices for
for
buyers
buyers to
to switch
switch to
to

Threat
Threat of
of Substitutes
Substitutes Moderate
Moderate to
to Strong
Strong
No
No switching
switching costs
costs for
for end
end consumers
consumers of
of beer
beer and
and substitutes
substitutes
Retailers
Retailers like
like supermarkets
supermarkets need
need to
to stock
stock aa wide
wide range
range of
of beer
beer and
and substitutes,
substitutes, they
they arent
arent likely
likely to
to replace
replace beer
beer with
with
substitutes.
Threat
is
strong
but
consistent
and
limited
substitutes. Threat is strong but consistent and limited
(Global Beer Industry Profile)
On
On trade
trade retailers,
retailers, like
like restaurants
restaurants and
and bars,
bars, tend
tend to
to heavily
heavily favor
favor beer
beer or
or one
one of
of its
its substitutes
substitutes and
and arent
arent likely
likely to
to change
change

FIVE FORCES ANALYSIS INDICATES THE GLOBAL BEER


INDUSTRY ISNT PARTICULARLY ATTRACTIVE

Breweries already established in the industry have a more attractive position

Newcomers would have to overcome decent barriers to entry and then fight an uphill
battle in mainly oligopolistic markets

There are numerous substitutes for beer and many substitutes for any given brand within
the beer offerings

Buyer power reduces the attraction for breweries

Emerging markets fragmented (China) or oligopolies (Africa), developed markets


saturated and/or declining

AB INBEV COMPETES INTERNATIONALLY WITH A


TRANSNATIONAL STRATEGY

Interbrew + AmBev + Anheuser-Busch = AB InBev (2008)

Best Cost Provider generic strategy


Price based competition in mass-market beer
Differentiation based competition in craft, occasion, near beer, and premixed drinks

Transnational Global Strategy


Focused Brand Strategy Three-Tier Marketing
Global, International, and Local Champions
Growth Driven Platforms
Emphasize key markets, investment in premium and craft, share of throats, and
regional beer brands
Heavily concentrated in the Americas

(AB InBev)

AB InBev Concentrated in the Americas (2014)

Global Export and Holding


Companies
Asia Pacific
Europe
Latin America South
Latin America North
North America

Volume (% of Total)

(AB InBev)

Revenue (% of Total)

AB INBEV GROWS THROUGH ACQUISITION AND


DIVERSIFICATION

Cost saving focus at AB Inbev

Success in acquiring brewers, integrating them into the AB InBev group, and streamlining
their performance and efficiency
Anheuser-Busch
Modelo Group
Oriental Brewery
Numerous smaller craft brewers

AB InBev also operates soft drink bottling plants in the Americas to capitalize on
economies of scope
$3,497 million in net revenue from soft drink operations

(AB InBev)

(Leonard)

AB INBEVS SWOT REVEALS ADVANTAGES IN STRENGTHS


AND OPPORTUNITIES
Strengths

Present in large profit pools and emerging


markets
Well recognized brand portfolio
Effective marketing strategy
Innovative product development
Dominant player in its markets
Cost saving expert

Opportunities

Acquire breweries in markets to establish


or improve market share
Emerging markets where population is
underserved

Weaknesses

Threats

(AB InBev)

Limited geographic distribution and


presence
Too focused on cost saving, losing sales
volume in American markets
Bad current ratio

Climate impact on grain or hop supply and


quality
Declining consumption per capita in some
saturated markets
Dominated markets becoming fractured by
new entrants
Possible changes in regulations, taxes,
trade agreements

AB INBEVS STRATEGY AND EXECUTION HAVE RESULTED IN


GENERAL SUCCESS
Year

Current Ratio

Net Profit
Margin

Return on
Assets

Return on
Equity

2010

.801

11.1%

3.5%

11.4%

2011

.627

14.9%

5.2%

15.6%

2012

1.01

18.2%

5.9%

17.6%

2013

.729

33.3%

10.1%

28.5%

2014

.680

19.6%

6.4%

18.4%

(AB InBev)

(Financials.morningstar.com)

SABMILLER COMPETES INTERNATIONALLY WITH A MULTIDOMESTIC STRATEGY

South African Breweries + Miller = SABMiller (2008)

Best Cost Provider generic strategy


Price based competition in mass-market beer
Differentiation based competition in craft, occasion, near beer, and premixed drinks

Multi-domestic International Strategy


Focus on local breweries, local expertise, deep knowledge of individual markets
Less focus on international brands in portfolio
Apply global efficiencies through regional hubs to local breweries

Spread out globally, initially focused in emerging markets


then entered the US

(SABMiller)

SABMiller Operates Fairly Evenly In Volume Across Regions (2014)

North America

Africa

Latin America

Europe

Asia Pacific

Volume (% of Total)

(SABMiller)

Revenue (% of Total)

SABMILLER GROWS THROUGH ACQUISITION AND


DIVERSIFICATION

SABMiller also expands by buying breweries and applying global efficiencies to them to
increase profitability

SABMiller is dispersed across a much wider range than AB InBev


Strong presence in China with CR Snow
Strong presence in Africa through SAB

SABMiller has invested more into the soft drink business than AB InBev
20.6% of beverages sold by volume by SABMiller were soft drinks
Work with Coka Cola in Central America, South Africa, and 21 countries in Africa

(SABMiller)

SABMILLERS SWOT INDICATES STRENGTH THROUGH ITS


LOCAL FOCUS
Strengths

Present in every region in the world


Present in mostly monopoly or duopoly
markets
Wide portfolio of local and national beers
Deep knowledge of markets
Consolidating global operations to increase
efficiencies

Opportunities

Acquire breweries in markets to establish


or improve market share
Emerging markets where population is
underserved
Benefiting from the growth of the African
markets in the long term

Weaknesses

Threats

(SABMiller)

Weak current ratio


No global beer brands
Patchwork brand awareness

Climate impact on grain or hop supply and


quality
Declining consumption per capita in some
saturated markets
Dominated markets becoming fractured by
new entrants
Possible changes in regulations, taxes,
trade agreements

SABMILLERS STRATEGY AND EXECUTION HAVE RESULTED


IN GENERAL SUCCESS
Year

Current Ratio

Net Profit
Margin

Return on
Assets

Return on
Equity

2010

.651

10.6%

5.1%

9.6%

2011

.705

12.4%

6.1%

10.9%

2012

.698

19.4%

7.5%

16.8%

2013

.669

14.1%

5.8%

12.4%

2014

.538

20.2%

6.3%

12.8%

(SABMiller) (Financials.morningstar.com)

RECOMMENDATIONS FOR AB INBEV EMPHASIZE EXPANSION


BEYOND THE AMERICAS

Increase exposure to Asia Pacific and Africa in particular


Large potential for future growth
Risk losing opportunity to establish oligopolistic market if wait to move
Opportunity to establish more international champion brands for different regions

Enter markets via acquisition and invest initially to dominate and get returns later
when the market takes off

RECOMMENDATIONS FOR SABMILLER FOCUS ON


INVESTMENT IN CHINA

China is one of the quickest growing markets with the highest volume of consumption,
and a quickly growing consumption per capita

SABMiller already is in a joint venture in China with the CR Snow brewery, the largest
brand in the country

CR Snow is a leader among many competitors, with around 20% of a highly fractured
market (Zekeria)

SABMiller should invest heavily with the goal of controlling over 40% of the market, which
is about the level of control AB InBev has in the US
Goal is to increase the profit margin on the high volume operations in China

THANK YOU

WORKS CITED
Global Beer Industry Profile. (2014). Beer Industry Profile: Global, 1-37.
Leonard, Devin. 'The Plot To Destroy America's Beer'. Bloomberg Businessweek 2012: n. pag. Print.
AllianceBernstein,. The Bernstein Global Beer Guide: Third Edition. Hong Kong: Bernstein Research, 2015. Print.
AB InBev. (2015). 2014 Annual Report of AB InBev. Retrieved from
http://www.ab-inbev.com/content/dam/universaltemplate/abinbev/pdf/investors/annual-and-hy-reports/2014/AB_InB
ev_AR14_EN_full.pdf
SABMiller. (2015). 2014 Annual Report of SABMiller. Retrieved from
http://www.sabmiller.com/docs/default-source/investor-documents/reports/2014/financial-reports/annual-report-2014
.pdf?sfvrsn=8
Anheuser-Busch Inbev. N.p., 2015. Web. 28 Mar. 2015.
Grundberg, Flemming. 'Carlsberg Beer Gets Makeover'. WSJ. N.p., 2015. Web. 27 Apr. 2015.
Theheinekencompany.com,. 'The HEINEKEN Company - Age Gate'. N.p., 2015. Web. 27 Apr. 2015.
Financials.morningstar.com,. 'Balance Sheet For Anheuser-Busch Inbev SA ADR
(BUD) From Morningstar.Com'. N.p., 2015. Web. 28 Apr. 2015.