Today’s infographic is titled “Production Margins,” and it’s a pie chart showing the Cost Breakdowns for a Large Breweries. It was created for a Powerpoint presentation on the Beer Industry by Christian Adeler and Jon Bjornstad in 2011. Not surprisingly, the raw materials to make the beer is the lowest percentage, while packaging and taxes eat up over half of the costs alone.
Rumors and discussions of a possible merger between Anheuser-Busch InBev and SABMiller are nothing new, it’s been talked about by the business press off and on for a number of years now. But it had been quiet lately, most likely because of the deal by ABI to buy Grupo Modelo. But yesterday Reuters fanned the flames of merger once again, in a piece of speculation: Bets on for mega brewer merger as virgin ground shrinks.
With the acknowledged bullet points that “Asia main area with assets left to buy,” and that the ABI and SABMiller would combine the “growth markets” of Africa and Latin America,” they put the price for ABI to buy SABMiller at at least $100 billion. According to Reuters:
Now, with AB InBev planning to return to a comfortable pre-deal debt-to-EBITDA ratio of below two next year, industry experts are betting on a combination of its Budweiser and Stella Artois brands with SABMiller’s Peroni and Grolsch. Some expect a deal within a year.
“It’s more a question of when, not if,” said a banker who has worked on drinks deals. Others, also speaking on condition of anonymity, cited AB InBev’s record as a serial acquirer and the need for a target to match or surpass its $52 billion purchase of Anheuser Busch in 2008.
Asia, they claim, is the next frontier, though many of the bigger breweries are state-owned (which means expensive). Interestingly, while they admit that SABMiller would also be expensive the Reuters’ business analysts believe “a tie-up would be straightforward with antitrust issues relatively easy to fix and immediate benefits of scale.” Other analysts, however, do see potential problems with the merger from “regulators is in the United States and China” because of the market overlap in those countries.
Price, not surprisingly, is the elephant in the room, and the estimated $100 billion ticket price would make such a deal the “fifth-largest corporate acquisition ever.” Reuters places the current value of SABMiller at $84.5 billion and believes it’s in ABI’s best interest “to move fast before SABMiller gets more expensive.” But would SABMiller be interested in selling? “SABMiller’s two top shareholders — cigarette maker Altria Group and the Santo Domingo family of Colombia, which own 27 percent and 14 percent, respectively — ‘may think this is as good as it gets,’ said another banker.” So that suggests that the people behind the curtain might be amiable to the buyout. A couple of years ago, writing about this very possibility of a merger, I recalled that when the AB/InBev merger went down, someone joked that eventually there would be just one international beer company and it would just be called “Beer.” I remember laughing at the time, but truth really is stranger than fiction. So who knows? It should be an interesting year.
ABI Beer Brands …
plus …
SABMiller Beer Brands …
Equals = ?
Today’s infographic is an interesting treemap created by the Observatory of Economic Complexity, a collaboration between M.I.T. and Harvard. This one, contrasting yesterday’s, shows the amount of beer exported by the nations of the world, with the size of their relative amount of exporting shown by the size of the rectangle.
Today’s infographic is an interesting treemap created by the Observatory of Economic Complexity, a collaboration between M.I.T. and Harvard. This one shows the amount of beer imported by the nations of the world, with the size of their relative amount of importing shown by the size of the rectangle.
You probably saw the news over the past year that Walmart was going to be focusing to a greater degree on the sale of beer in their stores. Advertising Age had an interest glimpse into their plans, entitled How Walmart Plans to Double Beer Sales In Three Years . At the recent NBWA annual convention in Las vegas last week, Walmart’s Chief Merchandising and Marketing Officer, Duncan MacNaughton, said he was “pleased but not satisfied” with their progress so far, adding that he feels Walmart is “still ‘under-shared’ in beer sales compared with competitors.”
Does this Walmart beer display give some indication of their strategy to sell beer?
Apparently there’s currently an uneasy relationship with Walmart and beer wholesalers, which should surprise no one. Walmart is so big they’re used to getting their way and dictating whatever they want — some might say bullying — even if what they’re asking for is unreasonable or even not entirely on the same terms as everybody else enjoys.
Because they use “just-in-time” ordering systems, “their backrooms have no storage,” David Black, CEO of Northeast Sales Distributing, said in an interview. His company’s territory includes some 50 Walmarts in portions of Georgia and North Carolina. “They refuse the order or they make you sit there for three hours while they take something else.”
That’s something most, if not all, of the big chains do, of course, but Walmart has supposedly raised it to a fine art. Walmart also told the assembled beer distributors that they’re not considering a private label beer, which from their point of view is good news.
A battleship of Walmart beer sales.
Curiously, MacNaughton also said this. “We don’t want cute displays. We want ‘shoppable’ displays: item and price and can I get a case off the top. Sometimes we kid ourselves with pretty. Pretty is fun, but I want sales.”
A tank of Walmart beer.
A couple of months ago, Bloomberg covered this in Wal-Mart Stacking Beer in Aisles to Double Alcohol Sales, detailing more of their overall plans. For example, only about 3,700 of their nearly 11,000 stores currently stock beer, which is roughly one-third. In the short term they’ll be increasing that to around 5,000 stores (45%) and hope to eventually sell beer in as many as 6,600 locations, or 60% of their stores.
The Bloomberg report also included a video in which one of the talking heads mentions that while beer sales are relatively flat overall, it’s craft beer that’s selling well. Apparently they’ve also hired more buyers who will be focusing on more local beers, and “craft is playing into that in a big way,” apparently. But as the video later points out, the biggest customers by far are still the big players, and although the Boston Beer Co. is there, it’s dollar amount is far less than ABI, MolsconCoors or Heineken. Samuel Adams sells less than 4% of the beer that Budweiser does and 3.4% of the other three combined. So while they speculate that craft is the key to increasing sales, it doesn’t seem like that’s what they’re actually doing, though to be fair images of Walmart shelves do show a bit more diversity. I confess I don’t really shop our local Walmart, so I may have to check out the beer section from time to time to see if they really are changing their approach.
Today’s infographic is still another poster about Oktoberfest, which began seven days ago in Munich, Germany. This one is called Oktoberfest Facts and was created by Easy Jet Holidays, a travel website.
CLick here to see the infographic full size.
For our 80th Session, our host is Derek Harrison, who writes online at It’s Not Just the Alcohol Talking. His topic for this session asks bloggers to weigh in on the question that pundits and business analysts have been asking and answering frequently in recent months, Is Craft Beer a Bubble?
It’s a good time to be in the craft beer industry. The big brewers are watching their market share get chipped away by the purveyors of well-made lagers and ales. Craft breweries are popping up like weeds.
This growth begs the question: is craft beer a bubble? Many in the industry are starting to wonder when, and more importantly how, the growth is going to stop. Is craft beer going to reach equilibrium and stabilize, or is the bubble just going to keep growing until it bursts?
So on Friday, October 4, let us know where you stand on the bursting bubble hypothesis. Is the bubble precarious and ready to pop any second or as solid as a glass ball?
Today’s infographic is a mouthful: Private-Label, Craft Beers See Sales Growth. You probably already know this, by private label beers are beers produced under a generic or unique brand name by a brewery to be sold exclusively at a particular store, or more often chain of stores. The infographic was created by Supermarket News.
CLick here to see the infographic full size.
Today’s infographic shows Pint Prices Around The World, including where beer is cheapest, where consumption is highest, and where you can’t drink a beer, among other bits of beer-related info. It was created by Directline Holidays, a UK travel website.
Click here to see the infographic full size.
Today’s infographic comes from Next Generation Food, an EU website and shows you where you can buy the Top 10 Most Expensive Pints In The World, in British pounds. Topping the list, the United Arab Emirates. Though not part of the chart itself, the cheapest place for a pint is Panama, where 30p will get you a full glass of cerveza.
Click here to see the chart full size.
