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SABMiller has acquired Dutch brewer Grolsch, allowing it to compete more effectively with rivals

Brewing giant SABMiller has completed the E816 million takeover of Dutch Brewer Grolsch. Upon confirmation of the takeover, SABMiller announced plans to move into the emerging markets of South America and Africa with its portfolio of higher margin premium beers, including the newly acquired Grolsch brand, evidencing how the trend towards premiumization is driving the global beer market.

SABMiller has confirmed, via its corporate website, that it has acquired an 80% share of Grolsch for E625 million, taking its total shareholding in Grolsch to almost 95%.

The takeover will help SABMiller keep pace with the consolidations that have characterized the brewing industry in recent years. The accepted imperative within the industry is to leverage economies of scale, maintain a low-cost base and pursue a strategy of premiumization through selling higher margin beers.

In many core beer markets, most notably Europe and North America, the volume of beer consumption is decreasing, as consumers seek to improve their health by cutting down on alcohol or switching to what they perceive to be healthier alcoholic drinks. Other pressures facing brewers globally include the rising soft and hard commodity prices for barley and aluminium, both used in the production and packaging of beer.

This latest move by SABMIller represents one in a recent series of proposed or actual takeovers. The recent acquisition of Scottish & Newcastle (S&N) by Heineken and Carlsberg demonstrated the importance of premium beers to the future success of all brewers. This particular takeover was so keenly contested because it would decide the ownership of Baltic Beverages Holdings (BBH). BBH, with its distribution network and upscale brands, was seen as the 'Jewel in the Crown' of S&N and key to future growth in the premium beer sector in Russia and neighbouring markets.

Premium beer sales are also the motivation behind the acquisition of Grolsch. SABMiller sees Grolsch as a valuable brand to add to its existing premium beer portfolio, which already includes brands such as Peroni and Pilsner Urquell.

SABMiller envisages marketing Grolsch within its premium beer portfolio in the nascent premium markets of South America and Africa. However, this strategic phase will require sustained economic conditions in both regions that favor the expansion of an affluent middle class. This specific goal may prove to be elusive although the overall goals of consolidation and premiumization should prove prudent.

Related Research:

• Growth Strategies in Alcoholic Drinks: Emerging trends in beer, wine and spirits

[edit] Sources

• Datamonitor