Big brewers were right to go on the M&A trail, says Rabobank

By Guy Montague-Jones

- Last updated on GMT

Related tags Brewers Mergers and acquisitions Rabobank

A new Rabobank report suggests that the consolidation strategy employed by the biggest global brewers is paying dividends.

Over the past decade the competitive landscape at the top of the beer market has been marked by considerable merger and acquisition activity. The end rest is much greater concentration at the top so that by 2009 the top-10 brewers accounted for 61 per cent of global beer volume, compared to 38 per cent in 2000.

Rabobank analyst Francois Sonneville said: “The most striking change is the emergence of a top-four. The combined market share of Ab InBev (Belgian), SABMiller (South African), Heineken (Dutch) and Carslberg (Danish) tripled between 2000 and 2009, and these four brewers almost quadrupled their volumes.”

Faced with stagnant volume growth in developed markets and a rapid increase in consumption in emerging regions, these big players have sought to shift their global footprints accordingly and take advantage of potential economies of scale. But have their efforts proved successful?

Value creation

Comparing the performance of the top-four with a constructed peer group of 20 listed major brewers, Rabobank concluded that their strategy has led to value creation.

Looking at developments in return on capital employed (ROCE), which compares profits with capital invested, the bank found that the top brewers have both improved their margins and created value.

Sonneville said: “Despite initial pressure on the ROCE from M&A activity, the top-four have managed to outperform the peer group in the long run.”


Does that mean that continued M&A activity is the way forward for brewers? The analyst suggested that the equation may not be as straightforward as it once was.

“Over time, acquisitions have become more expensive. So brewers find it difficult to decide the best course to add value to their business in an increasingly aggressive environment.”

But brewers have little choice but to face up to the reality of this new environment. According to one CEO quoted in the Rabobank report, “You’re either at the table or on the menu.”

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