Wednesday, May 19, 2004

Anheuser-Busch and SABMiller tangle over Harbin Anheuser-Busch (A-B) and SABMiller are running a furious ad campaign in the US comparing the tastes (!) of their beers, as Miller seeks to dethrone the "King of Beers." But one the other side of the globe, A-B (#1 worldwide) is engaged with SABMiller (#2 worldwide) in a rush to buy Harbin Beer, a dominant regional beer company in northeast China and #4 overall in the Chinese market. After all, beer sales are as flat as yesterday's can of Bud in the US and in Europe, and it's very costly to steal even a few decimal points of a percent. But China is the growth market, and investing in an established company is the fast way to build market share. The potential growth is huge, if economic expansion keeps going forward. It's not unlike oil companies grabbing up the last available oil reserves. It's part of a new trend for Anheuser-Busch, which got into the market of buying foreign breweries later than some others, as it concentrated on internal growth. But it is now an eager snapper-up. Another case of convergence in an oligopoly, along with the panic at being left out of the M&A frenzy. So when A-B grabbed up 29% of the brewery, it was a direct challenge to SABMiller, which already worried another 29%. A third 29% was bought by holding company Global Conduit, headed by an executive who was with #3 worldwide (and growing) Interbrew. Now Anheuser-Busch and SABMiller are each bidding high to get a dominant share, and it's all confused by the Chinese government's future rulings. Whatever the outcome, both Anheuser-Busch and SABMiller have extensive other interests in China and plan to keep expanding. Both companies are becoming dealmakers more than beer makers, and they are playing a zero-sum game, desperate to pick up the same cards to complete their hands. 4:09:58 PM

comment []