AB InBev: Combination with SABMiller has ‘exceeded expectations’

By Rachel Arthur

- Last updated on GMT

The combined business has a portfolio of more than 500 brands. Pic:iStock/tomorca
The combined business has a portfolio of more than 500 brands. Pic:iStock/tomorca

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AB InBev says it has adopted a ‘new way of looking at the beer category’ following its combination with SABMiller: while cost synergies are proving to be greater than predicted.

AB InBev completed its take-over of SABMiller (who were at the time the world’s biggest and second biggest brewers respectively) in October 2016,​ creating a new ‘megabrew’ entity. 

AB InBev acknowledges that 2017 was a transformative year for the company, adding that it is well on its way to ‘achieving its most successful business integration ever’.

‘We’re excited about the growth opportunities’

Following the take-over, AB InBev boasts more than 500 brands, and holds seven of the top 10 most valuable beer brands (according to rankings from BrandZ). Nineteen of its beverages are billion dollar brands. 

AB InBev now serves more than 100 countries: with its take-over of SABMiller giving it a stronger foothold in Asia, Africa, and Central and South America. Meanwhile, it says the resulting geographical diversity limits the company’s dependence and exposure to any one region, while positioning it well for long-term growth.

AB InBev says the merger has created an entity that is ‘greater than the sum of its parts’: and that the reshaped brand portfolio is in a key position to capture future growth opportunities. 

“The combination with SAB has exceeded our expectations,”  ​the company stated in its FY2017 results this morning. “We have incorporated the best of both companies by bringing together world-class talent, integrating best practices and deepening our understanding of consumers and occasions across all markets.

“Cost synergies are not only greater than originally expected, but they are also being delivered at a faster pace. Revenue synergies, although not externally quantified, are well underway through the successful launch of our global brands into new territories, among other activities.

“We have also adopted a new way of looking at the beer category that recognizes different market maturities and the role of brand portfolios in driving category growth. As we look forward, we are excited about the growth opportunities in our expanded footprint for both developed and developing markets.”

AB InBev says it achieved cost savings of $1.3bn in FY2017, bringing the total achieved to $2.1bn out of the expected total of $3.2bn.

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