World: Beer industry to be focused on brand identity

The aggressive consolidation within the global beer industry continued apace in 2005, with SABMiller’s acquisition of Grupo Empresarial Bavaria leading a host of takeovers. Although this trend is expected to continue, the pace should be more relaxed during 2006. With this in mind, strengthening brand identity could now become a priority for the leading brewers, Canadean analysts announced June 01.

According to a brand new report from leading beverage industry analysts Canadean, Anheuser-Busch boasts the two largest brands by volume, but the strength of Bud Light and Budweiser lies mainly in the USA. Only Heineken can be regarded as a truly ‘global’ brand and sits firmly at the centre of the Dutch brewer’s business.

Strong branding and a unique on-trade pump have helped Scottish & Newcastle lead the way in the ‘Super-Chilled’ segment. Within 18 months of its launch, some 50,000 ‘condensation’ pumps were installed in the UK alone delivering Foster’s, Kronenbourg Blanc, John Smith’s Extra Cold and Strongbow. InBev’s ‘Big Chill’ campaign is among the competing offerings.

The mature beer markets of Western Europe and North America continue to decline. As a result, the major brewers have focused on high growth emerging markets and in doing so, appear to be following their own individual agendas.

China offers huge potential but is home to only one national brand, Tsingtao. It is no surprise then that the country has become a hotbed of M&A activity. At a cost of €614 million, InBev acquired Fujian Sedrin Brewery. SABMiller has also expanded its interests and in February of this year purchased the Quanzhou Qingyuan Brewery through its local joint venture with China Resources Enterprises.

India’s branded beer market is also largely underdeveloped with annual sales per capita of just 0.7 litres. Despite this, the popularity of inexpensive Indian Country Liquor presents a significant obstacle to future growth. Consumers need to be educated about the virtues of beer brands for India’s full potential to be realised.

SABMiller and Scottish & Newcastle have both been active in the sub-continent. SABMiller took control of Shaw Wallace Breweries and upgraded Charminar Brewery to increase output to 950,000 hectolitres. The company also earmarked US$125 million for future developments. Meanwhile, Scottish & Newcastle took a stake in United Breweries and Carlsberg received clearance to invest US$1 million in a new import and wholesaling subsidiary.

In Eastern Europe, Russia’s beer market leads the way but is less dynamic than China or India. Here, Heineken, InBev and BBH are taking advantage of being early entrants into the market. Heineken purchased five breweries during 2005 and became the country’s third largest player. In contrast, SABMiller missed out on Tinkoff Brewery and Krasny Vostok. Like several of its competitors, the brewer is struggling to gain a foothold in Russian soil.

Looking forward, the major brewers face a number of challenges. The decline of the beer markets in Western Europe and North America requires careful management at a time when robust strategies are needed for emerging markets and competition from wines and spirits is intensifying. Tough, but exciting, times clearly lie ahead.

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