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From 2009 to 2013 the Global Beer Industry has performed in the following ways:
Average year on year revenue growth of 2.7%
Average year on year volume growth of 2.1%
4% 3%
Standard Lager
Premium Lager
Specialty Beer
9%
26%
58%
Low- and non-alcoholic beer
Big Four Brewers Dominated the Global Beer Market at the end of 2013
Anheuser-Busch InBev
20%
52%
SABMiller
12%
Heineken
Carlsberg
11%
6%
Other
Other
SABMiller
Heineken
Carlsberg
AB InBev
(AllianceBernstein)
Political Factors
North America
Western Europe
Asia Pacific
Africa
(AllianceBernstein)
Economic Factors
North America
17% of global consumption of beer, 24% of net revenue, and 30% of global profit in
2012
Not as sensitive to economic downturns as other commodities
13% of global beer consumed, 14% of net revenue, and 24% of global profit in 2012
Monopolistic or duopolistic markets, GDP correlated with consumption
Western Europe
14% of global beer consumption, 17% of net revenue, and 12% of global profit in
2012
Structural decline in per capita consumption, fragmented market structure,
aggressive concentrated retailers
13% of global consumption of beer, 11% of net revenue generated, and 8% of global
profit in 2012
GDP correlated with consumption
Asia Pacific
36% of global beer consumption, 27% of net revenue, and 18% of global profit in
2012
High growth in consumption, mix of market development
Africa
6% of global beer consumption, 7% of net revenue, and 10% of global profit in 2012
Low consumption per capita, GDP correlation with consumption
(AllianceBernstein)
Sociocultural Factors
North America
Western Europe
Asia Pacific
Africa
(AllianceBernstein)
Technology Factors
Global Similarities
Region
Technology Factors
Global Similarities
(AllianceBernstein)
Legal Factors
North America
Fewer laws concerning worker rights, pay requirements, anti trust, and other areas of
operation addressed in North America
Less likely to be effective oversight and rule enforcement in this region
Western Europe
Intrusive regulatory system, varies by country, can involve the purity of the
ingredients, what ingredients can be included in beer, how the beer is produced, and
requirements to meet in order to sell
Asia Pacific
Africa
Lower capacity to enforce any labor, consumer, or production laws and a higher
chance for corruption to hamper the efforts in law enforcement
Regional Beer Market Breakdown Illustrates Importance of US and European Markets (2012)
100
80
60
40
20
(AllianceBernstein)
Africa
Asia Pacific
C & E Europe
W Europe
C & S America
N. America
Increasing Globalization
Opening of the emerging markets to the beer industry
Marketing Innovation
Shift towards engaging consumers digitally and more accurately
(AllianceBernstein)
7
6
5
4
3
2
1
0
100
200
300
Brands in Portfolio
(Theheinekencompany.com)
(SABMiller)
(AB InBev)
(Grundberg)
400
500
(AllianceBernstein)
Economies of Scale
Mass-market segment, price based competition
Largest segment of beer sold
Strong Network of
Wholesaler/Retailer Distributors
45% of beer sold to retailers supermarkets,
33% to on trade - restaurants
(AllianceBernstein)
(SABMiller)
(AB InBev)
(Theheinekencompany.com)
(Grundberg)
+
-
Threat
Threat of
of New
New Entrants
Entrants --- Moderate
Moderate
Increase
Increase threat
threat of
of new
new entrants:
entrants: readily
readily accessible
accessible suppliers,
suppliers, retailer
retailer need
need to
to stock
stock aa wide
wide range
range of
of beer,
beer, many
many underserved
underserved
regions
with
high
growth
prospect,
national
breweries
enter
global
market
regions with high growth prospect, national breweries enter global market
Barriers
Barriers to
to entry:
entry: Capital
Capital investment
investment in
in brewing
brewing equipment,
equipment, need
need for
for international
international supply
supply chain,
chain, establishing
establishing distribution
distribution
networks,
government
regulation,
oligopolistic
market,
global
brand
recognition
networks, government regulation, oligopolistic market, global brand recognition
Threat
Threat of
of New
New Entrants
Entrants --- Moderate
Moderate
+
-
Increase
Increase threat
threat of
of new
new entrants:
entrants: readily
readily accessible
accessible suppliers,
suppliers, retailer
retailer need
need to
to stock
stock aa wide
wide range
range of
of beer,
beer, many
many underserved
underserved
regions
with
high
growth
prospect,
national
breweries
enter
global
market
regions with high growth prospect, national breweries enter global market
Barriers
Barriers to
to entry:
entry: Capital
Capital investment
investment in
in brewing
brewing equipment,
equipment, need
need for
for international
international supply
supply chain,
chain, establishing
establishing distribution
distribution
networks,
government
regulation,
oligopolistic
market,
global
brand
recognition
networks, government regulation, oligopolistic market, global brand recognition
+
+/+/-
Threat
Threat of
of Substitutes
Substitutes Moderate
Moderate to
to Strong
Strong
No
No switching
switching costs
costs for
for end
end consumers
consumers of
of beer
beer and
and substitutes
substitutes
Retailers
Retailers like
like supermarkets
supermarkets need
need to
to stock
stock aa wide
wide range
range of
of beer
beer and
and substitutes,
substitutes, they
they arent
arent likely
likely to
to replace
replace beer
beer with
with
substitutes.
Threat
is
strong
but
consistent
and
limited
substitutes. Threat is strong but consistent and limited
(Global Beer Industry Profile)
On
On trade
trade retailers,
retailers, like
like restaurants
restaurants and
and bars,
bars, tend
tend to
to heavily
heavily favor
favor beer
beer or
or one
one of
of its
its substitutes
substitutes and
and arent
arent likely
likely to
to change
change
Threat
Threat of
of New
New Entrants
Entrants --- Moderate
Moderate
+
-
Increase
Increase threat
threat of
of new
new entrants:
entrants: readily
readily accessible
accessible suppliers,
suppliers, retailer
retailer need
need to
to stock
stock aa wide
wide range
range of
of beer,
beer, many
many underserved
underserved
regions
with
high
growth
prospect,
national
breweries
enter
global
market
regions with high growth prospect, national breweries enter global market
Barriers
Barriers to
to entry:
entry: Capital
Capital investment
investment in
in brewing
brewing equipment,
equipment, need
need for
for international
international supply
supply chain,
chain, establishing
establishing distribution
distribution
networks,
government
regulation,
oligopolistic
market,
global
brand
recognition
networks, government regulation, oligopolistic market, global brand recognition
Bargaining
Bargaining Power
Power of
of Suppliers
Suppliers
Weak
Weak to
to Moderate
Moderate
+
+
-
Breweries
Breweries rely
rely heavily
heavily on
on
third
party
suppliers
and
third party suppliers and
have
have minimal
minimal vertical
vertical
integration
integration
Grain
Grain suppliers
suppliers can
can serve
serve
other
buyers
in
the
alcohol
other buyers in the alcohol
industry,
industry, agriculture
agriculture industry,
industry,
or
food
industry
or food industry
Hop
Hop growers
growers operate
operate on
on aa
smaller
smaller scale,
scale, reducing
reducing
bargaining
bargaining power
power
Low
Low switching
switching costs
costs for
for
breweries
breweries when
when moving
moving
between
suppliers
between suppliers
+
+/+/-
Threat
Threat of
of Substitutes
Substitutes Moderate
Moderate to
to Strong
Strong
No
No switching
switching costs
costs for
for end
end consumers
consumers of
of beer
beer and
and substitutes
substitutes
Retailers
Retailers like
like supermarkets
supermarkets need
need to
to stock
stock aa wide
wide range
range of
of beer
beer and
and substitutes,
substitutes, they
they arent
arent likely
likely to
to replace
replace beer
beer with
with
substitutes.
Threat
is
strong
but
consistent
and
limited
substitutes. Threat is strong but consistent and limited
(Global Beer Industry Profile)
On
On trade
trade retailers,
retailers, like
like restaurants
restaurants and
and bars,
bars, tend
tend to
to heavily
heavily favor
favor beer
beer or
or one
one of
of its
its substitutes
substitutes and
and arent
arent likely
likely to
to change
change
Threat
Threat of
of New
New Entrants
Entrants --- Moderate
Moderate
+
-
Increase
Increase threat
threat of
of new
new entrants:
entrants: readily
readily accessible
accessible suppliers,
suppliers, retailer
retailer need
need to
to stock
stock aa wide
wide range
range of
of beer,
beer, many
many underserved
underserved
regions
with
high
growth
prospect,
national
breweries
enter
global
market
regions with high growth prospect, national breweries enter global market
Barriers
Barriers to
to entry:
entry: Capital
Capital investment
investment in
in brewing
brewing equipment,
equipment, need
need for
for international
international supply
supply chain,
chain, establishing
establishing distribution
distribution
networks,
government
regulation,
oligopolistic
market,
global
brand
recognition
networks, government regulation, oligopolistic market, global brand recognition
Bargaining
Bargaining Power
Power of
of Suppliers
Suppliers
Weak
Weak to
to Moderate
Moderate
+
+
-
Breweries
Breweries rely
rely heavily
heavily on
on
third
party
suppliers
and
third party suppliers and
have
have minimal
minimal vertical
vertical
integration
integration
Grain
Grain suppliers
suppliers can
can serve
serve
other
buyers
in
the
alcohol
other buyers in the alcohol
industry,
industry, agriculture
agriculture industry,
industry,
or
food
industry
or food industry
Hop
Hop growers
growers operate
operate on
on aa
smaller
smaller scale,
scale, reducing
reducing
bargaining
bargaining power
power
Low
Low switching
switching costs
costs for
for
breweries
breweries when
when moving
moving
between
suppliers
between suppliers
+
+/+/-
Bargaining
Bargaining Power
Power of
of Buyers
Buyers
Moderate
Moderate
Supermarkets
Supermarkets represent
represent
almost
half
of
all
almost half of all buyers,
buyers,
and
are
often
and are often
consolidated
consolidated
Small
Small or
or non-existent
non-existent
switching
switching costs
costs for
for buyers
buyers
Producers
Producers sell
sell only
only aa small
small
amount
of
their
product,
amount of their product,
rely
rely heavily
heavily on
on retailers.
retailers.
Large
Large buyers,
buyers, like
like
supermarkets,
supermarkets, need
need to
to stock
stock
aa wide
range
of
beer
wide range of beer
Many
Many oligopolistic
oligopolistic markets,
markets,
with
limited
choices
with limited choices for
for
buyers
buyers to
to switch
switch to
to
Threat
Threat of
of Substitutes
Substitutes Moderate
Moderate to
to Strong
Strong
No
No switching
switching costs
costs for
for end
end consumers
consumers of
of beer
beer and
and substitutes
substitutes
Retailers
Retailers like
like supermarkets
supermarkets need
need to
to stock
stock aa wide
wide range
range of
of beer
beer and
and substitutes,
substitutes, they
they arent
arent likely
likely to
to replace
replace beer
beer with
with
substitutes.
Threat
is
strong
but
consistent
and
limited
substitutes. Threat is strong but consistent and limited
(Global Beer Industry Profile)
On
On trade
trade retailers,
retailers, like
like restaurants
restaurants and
and bars,
bars, tend
tend to
to heavily
heavily favor
favor beer
beer or
or one
one of
of its
its substitutes
substitutes and
and arent
arent likely
likely to
to change
change
Threat
Threat of
of New
New Entrants
Entrants --- Moderate
Moderate
+
-
Increase
Increase threat
threat of
of new
new entrants:
entrants: readily
readily accessible
accessible suppliers,
suppliers, retailer
retailer need
need to
to stock
stock aa wide
wide range
range of
of beer,
beer, many
many underserved
underserved
regions
with
high
growth
prospect,
national
breweries
enter
global
market
regions with high growth prospect, national breweries enter global market
Barriers
Barriers to
to entry:
entry: Capital
Capital investment
investment in
in brewing
brewing equipment,
equipment, need
need for
for international
international supply
supply chain,
chain, establishing
establishing distribution
distribution
networks,
government
regulation,
oligopolistic
market,
global
brand
recognition
networks, government regulation, oligopolistic market, global brand recognition
Bargaining
Bargaining Power
Power of
of Suppliers
Suppliers
Weak
Weak to
to Moderate
Moderate
+
+
-
Breweries
Breweries rely
rely heavily
heavily on
on
third
party
suppliers
and
third party suppliers and
have
have minimal
minimal vertical
vertical
integration
integration
Grain
Grain suppliers
suppliers can
can serve
serve
other
buyers
in
the
alcohol
other buyers in the alcohol
industry,
industry, agriculture
agriculture industry,
industry,
or
food
industry
or food industry
Hop
Hop growers
growers operate
operate on
on aa
smaller
smaller scale,
scale, reducing
reducing
bargaining
bargaining power
power
Low
Low switching
switching costs
costs for
for
breweries
breweries when
when moving
moving
between
suppliers
between suppliers
+
+/+/-
+
+
+
+
Rivalry
Rivalry Strong
Strong
The
The global
global beer
beer market
market is
is dominated
dominated by
by
the
big
four,
which
control
almost
50%
the big four, which control almost 50% of
of
the
the market
market
The
The mass-market
mass-market products
products offered
offered are
are
hardly
differentiated,
with
standard
hardly differentiated, with standard and
and
premium
premium lagers
lagers representing
representing almost
almost 84%
84%
of
beer
sold
around
the
world
of beer sold around the world
Beer
Beer is
is subject
subject to
to downward
downward price
price
pressures
by
retailers
and
consumers,
pressures by retailers and consumers, and
and
economies
economies of
of scale
scale are
are very
very important
important in
in
price-based
price-based competition
competition
North
North America
America and
and Western
Western Europe,
Europe, the
the
two largest
largest profit
two
profit pools,
pools, are
are saturated
saturated
markets
and
have
low
or
negative
markets and have low or negative growth
growth
prospects
prospects
+
+
+
-
Bargaining
Bargaining Power
Power of
of Buyers
Buyers
Moderate
Moderate
Supermarkets
Supermarkets represent
represent
almost
half
of
all
almost half of all buyers,
buyers,
and
are
often
and are often
consolidated
consolidated
Small
Small or
or non-existent
non-existent
switching
switching costs
costs for
for buyers
buyers
Producers
Producers sell
sell only
only aa small
small
amount
of
their
product,
amount of their product,
rely
rely heavily
heavily on
on retailers.
retailers.
Large
Large buyers,
buyers, like
like
supermarkets,
supermarkets, need
need to
to stock
stock
aa wide
range
of
beer
wide range of beer
Many
Many oligopolistic
oligopolistic markets,
markets,
with
limited
choices
with limited choices for
for
buyers
buyers to
to switch
switch to
to
Threat
Threat of
of Substitutes
Substitutes Moderate
Moderate to
to Strong
Strong
No
No switching
switching costs
costs for
for end
end consumers
consumers of
of beer
beer and
and substitutes
substitutes
Retailers
Retailers like
like supermarkets
supermarkets need
need to
to stock
stock aa wide
wide range
range of
of beer
beer and
and substitutes,
substitutes, they
they arent
arent likely
likely to
to replace
replace beer
beer with
with
substitutes.
Threat
is
strong
but
consistent
and
limited
substitutes. Threat is strong but consistent and limited
(Global Beer Industry Profile)
On
On trade
trade retailers,
retailers, like
like restaurants
restaurants and
and bars,
bars, tend
tend to
to heavily
heavily favor
favor beer
beer or
or one
one of
of its
its substitutes
substitutes and
and arent
arent likely
likely to
to change
change
Newcomers would have to overcome decent barriers to entry and then fight an uphill
battle in mainly oligopolistic markets
There are numerous substitutes for beer and many substitutes for any given brand within
the beer offerings
(AB InBev)
Volume (% of Total)
(AB InBev)
Revenue (% of Total)
Success in acquiring brewers, integrating them into the AB InBev group, and streamlining
their performance and efficiency
Anheuser-Busch
Modelo Group
Oriental Brewery
Numerous smaller craft brewers
AB InBev also operates soft drink bottling plants in the Americas to capitalize on
economies of scope
$3,497 million in net revenue from soft drink operations
(AB InBev)
(Leonard)
Opportunities
Weaknesses
Threats
(AB InBev)
Current Ratio
Net Profit
Margin
Return on
Assets
Return on
Equity
2010
.801
11.1%
3.5%
11.4%
2011
.627
14.9%
5.2%
15.6%
2012
1.01
18.2%
5.9%
17.6%
2013
.729
33.3%
10.1%
28.5%
2014
.680
19.6%
6.4%
18.4%
(AB InBev)
(Financials.morningstar.com)
(SABMiller)
North America
Africa
Latin America
Europe
Asia Pacific
Volume (% of Total)
(SABMiller)
Revenue (% of Total)
SABMiller also expands by buying breweries and applying global efficiencies to them to
increase profitability
SABMiller has invested more into the soft drink business than AB InBev
20.6% of beverages sold by volume by SABMiller were soft drinks
Work with Coka Cola in Central America, South Africa, and 21 countries in Africa
(SABMiller)
Opportunities
Weaknesses
Threats
(SABMiller)
Current Ratio
Net Profit
Margin
Return on
Assets
Return on
Equity
2010
.651
10.6%
5.1%
9.6%
2011
.705
12.4%
6.1%
10.9%
2012
.698
19.4%
7.5%
16.8%
2013
.669
14.1%
5.8%
12.4%
2014
.538
20.2%
6.3%
12.8%
(SABMiller) (Financials.morningstar.com)
Enter markets via acquisition and invest initially to dominate and get returns later
when the market takes off
China is one of the quickest growing markets with the highest volume of consumption,
and a quickly growing consumption per capita
SABMiller already is in a joint venture in China with the CR Snow brewery, the largest
brand in the country
CR Snow is a leader among many competitors, with around 20% of a highly fractured
market (Zekeria)
SABMiller should invest heavily with the goal of controlling over 40% of the market, which
is about the level of control AB InBev has in the US
Goal is to increase the profit margin on the high volume operations in China
THANK YOU
WORKS CITED
Global Beer Industry Profile. (2014). Beer Industry Profile: Global, 1-37.
Leonard, Devin. 'The Plot To Destroy America's Beer'. Bloomberg Businessweek 2012: n. pag. Print.
AllianceBernstein,. The Bernstein Global Beer Guide: Third Edition. Hong Kong: Bernstein Research, 2015. Print.
AB InBev. (2015). 2014 Annual Report of AB InBev. Retrieved from
http://www.ab-inbev.com/content/dam/universaltemplate/abinbev/pdf/investors/annual-and-hy-reports/2014/AB_InB
ev_AR14_EN_full.pdf
SABMiller. (2015). 2014 Annual Report of SABMiller. Retrieved from
http://www.sabmiller.com/docs/default-source/investor-documents/reports/2014/financial-reports/annual-report-2014
.pdf?sfvrsn=8
Anheuser-Busch Inbev. N.p., 2015. Web. 28 Mar. 2015.
Grundberg, Flemming. 'Carlsberg Beer Gets Makeover'. WSJ. N.p., 2015. Web. 27 Apr. 2015.
Theheinekencompany.com,. 'The HEINEKEN Company - Age Gate'. N.p., 2015. Web. 27 Apr. 2015.
Financials.morningstar.com,. 'Balance Sheet For Anheuser-Busch Inbev SA ADR
(BUD) From Morningstar.Com'. N.p., 2015. Web. 28 Apr. 2015.