World: The brewing giants have in recent years cast their nets in the developing beer regions

Because many of the traditional beer heartlands are reaching maturity and inevitably many of the brewing giants have in recent years cast their nets further a field to cash in on the faster growth rates enjoyed in the developing beer regions, Canadean commented in its latest report.

Leading operators are looking to increase their presence in the long term growth markets of Asia, Central & South America and East Europe, which all grew by more than 5% in 2005 and are forecasted to make up nearly two thirds of global beer sales by 2011.

Number three brewer, SAB Miller's acquisition of the South American brewing giant, Grupo Empresarial Bavaria in September, was probably the headline news of 2005, the South American brewery had been touted as one of the last entry points into the Latin American market and the purchase represents the company's biggest deal to date. Prior to the deal going through, the company was underrepresented in the region, with just 2% of its volumes coming from that part of the world.

With growth of 8% in 2005 and an expansion approaching 40%, between 2000 and 2005, China has been the focus of much activity in recent years and while the pace of consolidation may have slowed in other parts of the world, 2005 was again a relatively busy year in China. The world's number two brewer, Anheuser Busch, with 83% of its sales still coming from its home market of North America, has been looking to distribute its eggs into other baskets and has been active in the Chinese market. It followed its 2004 acquisition of Chinese brewer, Harbin by increasing its stake in the Chinese brewer, Tsingtao to 27% in 2005, signalling its intention to position itself in the mainstream and not just at the premium end of the Chinese market.

The leading global beer player, InBev, has also identified China as source of future growth and its progress in the market continued, with the announcement in early 2006 that it has bought Fujian Sedrin. InBev has been undergoing a period of restructure and integration and has not just been sniffing out future acquisition targets. 2005 saw the company offload the Rolling Rock brand and sell its stake in Damm, while 2006 has seen the sale of the Palermo, Bierkert and Imperial brands as well as the Lujan Brewery in Argentina.

There is still scope for more consolidation and the process is by no means finished but a slowdown was not unexpected. A period when the leading groups start to rationalise their operations, with more brewery closures and better portfolio management was inevitable.

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