Last week AB InBev formalized its £71bn / $107bn offer for SABMiller, with the new entity expected to control around 30% of beer volumes. While the sheer size of the merger concerns the authors, they also fear the effect on public health in emerging markets.
They point to ‘the growing epidemic of alcohol related harm across low and middle income countries,’ while noting the combined mega-brewer’s intention to focus on Africa as a driver of growth.
AB InBev and SABMiller are the world’s biggest and second biggest brewers respectively.
SABMiller’s strengths are in Africa, which AB InBev sees as a ‘hugely attractive market.’ GDPs are increasing, and the middle class is growing.
Discussions during the merger have eyed up Africa as a critical driver of growth for the combined company. Meanwhile, Euromonitor predicts the continent will be the fastest growing region for alcoholic drinks between 2013 and 2018.
“SABMiller, which originated in South Africa, is the established industry leader in the region and so is well placed to exploit growth across sub-Saharan Africa,” said the editorial in the British Medical Journal (BMJ), written by Jeff Collin, professor of global health policy, University of Edinburgh, alongside colleagues Sarah E Hill and Katherine E Smith.
“The health implications of this forecast are disturbing: market growth on this scale is predicated on exploiting Africa’s low per capita consumption of beer, targeting low income consumers to drive increased sales.
“This expansive trajectory echoes that of transnational tobacco companies, with which the alcohol industry shares strategic similarities and has close corporate links as well as comparable health effects.”
However, global health and development agencies have engaged with the tobacco and alcohol industries in very different ways, continue the authors. While the tobacco industry is subject to tight regulations with voluntary measures deemed inadequate, rules are less strict for the alcohol industry, they continue.
What will the brewers’ strategy in Africa look like? Analyst
“Since SABMiller’s brand portfolio already contains a significant number of local African brands, the most likely strategy will be for SABMiller to stay the course with its current offerings, but to complement these with AB InBev brands that have demonstrated success elsewhere.”
Nick Petrillo, beer and spirits analyst, IBISWorld. Read the full article here.
The authors note the deal must navigate competition concerns across its markets, and calls on regulators to respond to health concerns.
“The proposed merger with AB InBev represents a major threat to global health, to which researchers, funders, and regulators must respond more effectively.
“Although regulation underpins efforts to control transnational tobacco companies, the global alcohol industry continues to occupy an ambiguous space in which an indirect acknowledgment of serious health effects coexists with the prospect of partnerships and shared objectives.
"WHO’s emerging framework for engagement with non-state actors, for example, precludes partnership with the tobacco and arms industries but makes no specific reference to alcohol.”
ABInBev: ‘Strong track records on responsible drinking’
In response to the BMJ editorial, a spokesperson for AB InBev said the merger will increase the availability of a wide range of beers which includes low and no alcohol varieties.
“AB InBev is committed to promoting the responsible enjoyment of our products,” the spokesperson said.
“The combination with SABMiller would provide consumers around the world – including those on the African continent – with more choice and more opportunities to taste a wide range of beers, including lower and no alcohol versions.
“By pooling both companies’ resources, expertise and best practices – including our strong track records on responsible drinking partnerships and programs – we believe we can make an even greater and more positive impact on the communities in which we live and work, and continue to drive a meaningful reduction in the harmful use of alcohol globally.”
Source: BMJ: 2015; 351 doi: http://dx.doi.org/10.1136/bmj.h6087