This case is centred on the European brewing industry and examines how the increasingly competitive pressure of operating within global markets is causing consolidation through acquisitions, alliances and closures within the industry. This has resulted in the growth of the brewers’ reliance upon super brands. In the first decade of the twenty-first century, European brewers faced a surprising paradox. The traditional centre of the beer industry worldwide, and still the largest regional market, Europe, was turning off beer. Beer consumption was falling in the largest markets of Germany and the United Kingdom, while burgeoning in emerging markets around the world. China, with 7 per cent annual growth, had become the largest single market by volume, while Brazilian volumes had overtaken Germany in 2005 (Euromonitor, 2006).
Table 1 details the overall decline of European beer consumption. Decline in traditional key markets is due to several factors. Governments are campaigning strongly against drunken driving, affecting the bars. There is increasing awareness of the effects of Kingdom, there is growing hostility towards socalled pubs and clubs. Wines have also become increasingly popular in Northern European markets. However, beer consumption per capita varies widely between countries, being four times higher in Germany than consumption European markets have been showing good growth. The drive against drunken driving and binge drinking has helped shift sales from the “on-trade” (beer consumed on the premises, as in pubs or restaurants) to the off-trade (retail). Worldwide, the off-trade increased from 63 per cent of volume in 2000 to 66 per cent in 2005. The off-trade is increasingly dominated by large supermarket chains.
Acquisition, licensing and strategic alliances have all occurred as the leading brewers battle to control the market. There are global pressures for consolidation due to overcapacity within the industry, the need to contain costs and benefits of leveraging strong brands. For example, Belgian brewer Interbrew purchased parts of the old Bass Empire, Becks and Whitbread in 2001 and in 2004 announced a merger with Am Bev, the Brazilian brewery group, to create the largest brewer in the world, InBev. The second largest brewer, the American Anheuser-Busch, has been investing China, Mexico and Europe. In 2002, South African Brewers acquired the Miller Group (USA) and Pilsner Urquell in the Czech Republic, becoming SABMiller. Smaller players in fast-growing Chinese and South American markets are being snapped up by the large international brewers too. Medium-sized Australian brewer Fosters is withdrawing from direct participation in many international markets, for examples selling its European brand-rights to Scottish & Newcastle. Table 3 lists the world’s top 10 brewing companies, which accounted for around half of the world beer volumes. There remain many small specialist and regional brewers, such as the Dutch company Grolsch (see below) or the British Cobra Beer, originating in the Indian restaurant market.Table 1
Country 1980 2000 2001 2002 2003 2004 2005