Inbev and Anheuser-Busch

Course: Mergers & Acquisitions – Pre-

1) Competition in the brewing industry

Brewing companies had largely started out as family ownerships and then grew over the years through acquisitions. These acquisitions were fuelled by investment and growth opportunities both at home and abroad. However, the main characteristic of growth in brewing industry has been through acquisitions. Companies that served to domestic regions wanted to go transatlantic and thus looked for opportunities to tap into foreign market share. However, companies were only able to gain market share by taking it / acquiring another company. Nonetheless, competition among both domestic and international players had been fierce in the overall drink industry primarily in the mature markets such as US mainly due to availability of varieties of beers and brands, the nature of the product and because of low switching costs. In the US, rivalry extended across the entire industry spectrum where all brands fought to gain market share in an industry where sales growth remained stagnated. Also, since consumers rarely ‘traded down’, companies offer one premium or super-premium brand. This was basically aimed at broadening the segment niche by using advertisement messages which showed an appealing lifestyle and highlighted the benefit of ‘trading up’ to this level of beer. However, growth existed in the emerging markets such as China and this market was characterized by ‘imported’ beers or beers from large international brewers that looked for presence and market share.

Different companies competed with different methodologies. InBev was more un-orthodox in its competitive approach as it had a grow/defend/maintain matrix that adhered to different markets. The sales did not come from advertisement campaigns but instead through local brands and its interest in targeting the masses with one of its matrixes. Anhueher-Busch however competed differently as it offered distribution rights and incentives...