In recent business news, SABMiller has agreed to a “takeover offer from rival Anheuser-Busch InBev”. After four previous attempts, the top two biggest beer companies will combine and produce around 30% of the world’s beer, while controlling 31% of the global beer market. While Anheurser-Busch InBev is focused in the Americas and Europe, its merge with SABMiller will encompass African brands which expand the company’s market by increasing its consumer base.
Beer giant Anheuser-Busch InBev will grow to encompass SABMiller
With the merge of the companies, one of Porter’s Five Forces is presented. Anheurser-Busch InBev will now own more of the global market share, thus leading to an increase in entry barriers in the beer industry. The merge increases the entry barriers because the new firm has greater control over the market and therefore has the opportunity to impact the price of beer. The elimination of one of their main rivals also encompasses the idea that companies often take a threat and turn them into a partner. SABMiller is one of Anheuser-Busch InBev’s biggest rivals therefore by merging the two companies together, Anheuser-Busch grew their company to encompass the strengths of their once rival. With Anheusuer-Busch InBev positioned at the top of the ladder, the future merged firm will create a business that has larger customer segments (with the appeal of African brands) and an updated value proposition (increased branding).
Will the major deal create a beer monopoly?
Referred to article :
- Beer giants AB InBev and SABMiller agree takeover terms
- Porter’s Five Forces
- Photo: AB InBev’s brands
- Photo: Chance card
Further Readings:
- Anheuser-Busch InBev agrees to buy SABMiller in biggest beer deal ever (Note: title states that Anheuser-Busch InBev “agrees” to buy SABMiller while the BBC Article states that SABMiller finally agrees after four previous attempts by Anheuser-Busch)