The £68bn marriage of London-listed SABMiller and Anheuser-Busch InBev – the company behind America’s favourite beer Bud Light – unites the world’s two dominant brewing empires.
But despite both owning famous brands such as Budweiser and Stella Artois (AB InBev), and Peroni and Coors (SABMiller), neither is a household name.
Both empires have more humble roots, having built themselves up through a series of acquisitions and mergers to become the two largest brewers in the world.
SABMiller
The SAB in SABMiller stands for South African Breweries, which was founded in Johannesburg in 1895. Its main product was Castle beer, produced to quench the thirst of prospectors in the South African gold rush of the mid-1880s, according to the company’s website.
SAB bought its two nearest rivals, Ohlsson’s and Chandlers, in 1956, giving the company 98% of South Africa’s beer market. As international sanctions against apartheid increased, SAB expanded into other businesses in its home market such as hotels, grocery stores, furniture manufacture and clothes retailing.
After apartheid was lifted, SAB sold off its non-brewing activities and under chief executive Graham Mackay embarked on a period of rapid international expansion. Mackay gained the capital to build his empire by moving SAB’s main listing from Johannesburg to London in 1999.
In 2002, Mackay bought the US brewer Miller from Philip Morris for $5.6bn including debt and changed the company’s name to SABMiller. The deal left Philip Morris, the owner of Marlboro cigarettes and now renamed Altria, with a large holding in the combined SABMiller.
Further expansion included buying Foster’s in Australia, Peroni in Italy and Pilsner Urquell in the Czech Republic. SABMiller’s CR Snow joint venture in China is that country’s biggest brewer.
Mackay, who died in 2013, also formed a joint venture with Molson Coors in the US, MillerCoors, and bought brewers in South America. This year SABMiller entered the UK craft beer market, buying London’s Meantime brewery.
AB InBev
Through its ownership of Stella Artois, AB InBev’s roots stretch back to 14th-century Belgium. Three aristocratic Belgian families still own a significant share of the business but the company’s modern-day story started in 1989 when three Brazilian investment bankers bought the Brazilian brewer Brahma for $50m.
AB InBev is now the biggest component in their business empire which also includes Heinz and Burger King, making the leader of the three dealmakers, Jorge Paolo Lemann, Brazil’s richest man with a fortune put at $23bn.
Brahma bought Brazilian rival Antarctica in 1999 to form AmBev, giving it 70% of the country’s beer market. It expanded in Argentina before combining in 2004 with Interbrew, the Belgian maker of Stella Artois and owner of Beck’s, to form the world’s biggest brewer. In 2008, it bought Anheuser-Busch, the US maker of Budweiser, for $52bn to form AB InBev.
The company, headed by Lemann’s protege Carlos Brito, says its dream is to be “the best beer company, bringing people together for a better world”. But critics argue its ruthless cost-cutting and efficiency have turned beer into a joyless product. The company is known for its high-pressure culture and merciless use of metrics to judge the performance of its young executives.
In the US, revenue has stagnated, partly because beer drinkers have been turning away from Budweiser in favour of craft brews made by independent producers. AB InBev has responded by buying up craft brewers such as Chicago’s Goose Island, Blue Point in New York state and, this year, Seattle’s Elysian.
US beer enthusiasts have claimed AB InBev is trying to confuse consumers or put independent brewers out of business with low prices. The company did little to endear itself to these drinkers with an advert during this year’s Super Bowl ridiculing bearded beer hobbyists and claiming Budweiser is “brewed the hard way”.
