China's beer wars South Africa Breweries. SABMiller case

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[...] Alors que SABMiller avait lancé au mois de mai une OPA de 4,30 dollars de Hong Kong par action sur le groupe brassicole chinois, son rival américain avait fait mardi une contre-offre supérieure de à 5,58 dollars de Hong Kong. Ce qui lui a permis de porter rapidement sa participation dans Harbin de 29% à 37%. L'offre valorise ainsi Harbin à 720 millions de dollars américains. Trop, apparemment, pour SABMiller qui a jeté l'éponge : le groupe britannique d'origine sud-africaine a annoncé jeudi qu'il abandonnait son offre d'achat et vendait sa participation de 29% dans Harbin Brewery au brasseur américain. [...]

[...] The reason for the acquisition is the fact that the Zambian beer market has declined over the last four years resulting in an industry too small to cater for two brewers The case of China The following events explain when SABMiller inters in China at the beginning and what the other investments in that country are. In 1994 South African Brewery took the joint control of the second- largest brewery in mainland China negotiated with China Resources Entreprise a privatisation arm of the government of the People's Republic of China. [...]

[...] SABI Africa and CBB see the strategic alliance as a long-term relationship, which will enhance the development of both group's beer and beverage businesses in Africa, and will give rise to financial benefits in a number of areas. The deal with Miller brand can be another good example. The Chief Executive of SABMiller summarized very well the objective of this transaction: the world's second largest brewer by volume, SABMiller is a leader in the global brewing industry and is attractively positioned for further market developments. [...]

[...] Category Market share Cheap standard brands 85-90% Domestic premium brands 7-10% International premium brands Source: the case study given in class The premium beer sector was already overcrowded and what's more the off-premises sales, in other words the take-home sales, was in growth mainly because it was quite popular and above all affordable compared to the Horeca prices (Hotels, restaurants, bars, karoke bars .). Thus, even if the premium beer was a bit more profitable for the brewer (margin of 40-60% compared to 20-35% for the standard beer) it was quite clever to follow the trend and to bet on the volume instead of trying to sell premium brands mainly available through “on-premises” channels with heavy advertising. [...]

[...] John Nicolson, Chairman of S&N's International Beer Division commented on the investment: “This investment is a natural evolution of a ten year relationship with Chongqing Breweries. Building on this relationship is an excellent way for S&N to become part of one of the biggest and fastest growing beer markets in the world. We have long admired the strength of the business and its managers, and look forward to contributing to its further success. S&N has had a longstanding commercial association with Chongqing Breweries involving the provision of technical support and brewing under license arrangements. [...]