Anheuser-Busch InBev has a vision — it’s to grow its stature and profits as the biggest beer company in the world — and we can learn much by the way this beer giant executes its strategy. Ten years ago, the world’s beer industry was highly fragmented, and back then Anheuser-Busch’s 8.5 percent market share was enough to make it the global beer leader. What a difference a decade makes.
In 2015, AB InBev is reported to have about 21 percent of the world’s market share in beer, and this Belgian-based, world beverage mogul has recently just offered to buy its rival brewer, SABMiller, for a deal reportedly valued at $104 billion. Currently, SABMiller has a global market share of around 10 percent, which would give AB InBev a world-conquering 30 percent of the global market if the merger goes through. Thirty percent is bad, right? Well, it’s worse here. While the company should have to sell off many of its American assets to satisfy the U.S. Justice Department, the company is still approaching 50 percent market share in the United States.
While the SABMiller deal is largely a move to grow its international markets, AB InBev definitely has its Terminator eye clearly focused on the U.S. beer industry. In a market flooded in beer brands, the company is going to need a crafty strategy to grow its coffers, and Money magazine has narrowed that strategy down into a five-point plan.
#1. Create your own quasi-craft brands.
#2. Snatch up craft brews that’ll sell out.
#3. Defend macro brews, bash craft snobs.
#4. Control distribution.
#5. Merge and overwhelm the marketplace.
Let us add three more to that list: Crush your enemies, see them driven before you and hear the lamentations of their women. Also, we might put distribution at No. 1. The most concerning and secretive news lately seems to be AB InBev buying or strong-arming wholesalers to disrupt craft beer distribution; check out this story on the subject. Then check out this complete guide to all the Big Beer activity in the last 12 months:
We’ve seen the five strategies above for years, but Money wisely simplified these tactical tentacles into list form. And because the domestic beer market has become so competitive, AB InBev will need to tie this strategy into a message, and having a big bankroll for advertising and marketing might be its greatest competitive advantage — directing consumer tastes.
There are many competitive advantages to creating one gigantic beer company too. Namely, advertising. According to a Marketplace report, AB InBev and SABMiller spend a total of $500 billion annually on sports sponsorships. But now that they’re not competing with each other for partnerships with, say, the Milwaukee Brewers or the Olympics, they’ll have more negotiating power and probably will be able to save some of that cash. “They will have a lot more leverage in the marketplace,” Chris Pearlman, executive vice president with Van Wagner Sports and Entertainment, explained. “Ultimately [they will] spend less than they would have had they remained separate.”
We suggest you read the entire article by Brad Tuttle.