The book, The Beer Monopoly, by Ina Verstl and Ernst Faltermeier, goes into detail regarding how the four largest beer companies, ABI, SABMiller, Heineken, and Carlsberg, landed their current positions. The historical perspective of each company is well detailed, going back to the starting foundations of each organization.
What makes this book even more fascinating is how the authors focus on each company’s long-term business strategy and culture. In other words, what makes each of the four companies tick! Being in the industry for a number of years, we are familiar with the history of each of the four companies discussed, yet the book adds additional depth by carefully detailing the formation of each.
ABI’s modus operandi, as we all know, is acquiring companies and cutting out the fat, along with a great deal of bone. ABI’s business model is not to grow by building brands, as their performance record indicates, but, rather, growing by swallowing companies. ABI is a highly centralized and controlled company.
SABMiller, now part of ABI globally, and after becoming successful in South Africa, focused on being acquired by InBev. In anticipation of this move, SABMiller relocated their corporate headquarters to London and, for the most part, ran a decentralized model which understood that brands were local, not global. SABMiller focused on building successful beers, and it worked well for them, having sold to ABI last year.
The Heineken and Carlsberg stories are somewhat more complicated, in that both are privately owned entities, and have different purposes. Heineken, controlled by a family with many shareholders, was the first brewery to focus globally. They approached this model by identifying breweries, or JVs, with other breweries in multiple key countries. Heineken’s recent acquisition of Femsa, from Mexico, was instrumental in the company’s long term global survival. Heineken, like ABI, is a highly centralized organization with key markets run by Dutch management. Heineken’s ownership structure would make it difficult for another company to acquire them.
Carlsberg, unlike Heineken is owned by a foundation that supports a number of individuals. Also highly centralized, Carlsberg took a risk and focused on owning the Russian market. Carlsberg invested heavily only to see that country highly tax and regulate the alcoholic industry. Even though Carlsberg is in control of the beer market share in Russia, overall volume has collapsed. Carlsberg has little focus and presence in North America. Carlsberg ownership structure is also such that any attempt to acquire it would be very difficult.
The world growth markets, according to The Beer Monopoly, are Africa and China. The later, however, has not become the volume provider many breweries believed it would. There is, however, hope for Africa. When looking to the future, globally, it is clear that few, if any, opportunities exist to buy into a country like these four brewing powerhouses have done in the past. The big boys are simply no longer there.
So the question remains, at least in the short term, will these breweries be focused on the craft segment, and those opportunities flourishing in the industry? Based on what we have seen from Lagunitas, Ballast Point, Goose Island and others, it is working, just on a smaller base.
The book examines the industry today. Rest assured future chapters will be even more interesting. The Beer Monopoly, chapter 2……
Editors note; RIP; James “Jim” Barrett, the last in a long line of Schlitz Gulf Division managers for Texas when it was the largest state Schlitz had. Jim served in WWII in the navy and spent his entire professional life with Schlitz. Jim retired with his wife Barb, to Granbury, Texas shortly after Stroh took over Schlitz in the 1980s. Jim was 90.