MarketLine Blog

Strong Growth of Alcohol Consumption in Emerging Markets Prompts Mergers and Acquisitions

 

In the past few years, there has been a great deal of M&A (mergers and acquisition) activity in the alcohol market. Most of this activity is taking place in emerging markets: Asia-Pacific, Latin America and Africa. In 2007, Asia overtook Europe and the Americas as the biggest beer-drinking continent.

With regards to per capita alcohol consumption, European countries outperform other regions by far. The World Health Organization’s Global Status Report on Alcohol and Health 2011 revealed Moldova to have the highest per capita consumption, at 18.22 liters. Of the top 15 alcohol consumers per capita, only one country (South Korea) was outside of Europe. South Korea had a 2011 consumption of 14.80 liters.

Despite this, the European region is witnessing the slowest growth. Between 2000 and 2011, the European market grew by 16.5%. Comparatively, the Asia-Pacific and Middle East and Africa regions grew by 61% and 43.8%, respectively. Furthermore, the Asia-Pacific and ME&A regions are predicted to grow at a quicker rate than Europe and the Americas between 2011 and 2016. In China, particularly, beer consumption has grown exponentially. In 1992, Chinese consumers drank 12 pints per person, per year. By 2011, this had jumped by 425% to 63.

Such figures are the background to a flurry of global M&A activity, such as Heineken’s current bid to buy Asia Pacific Breweries (makers of Tiger Beer), Heineken’s acquisition of Femsa Cerveza (makers of Sol beer), SABMiller’s acquisition of Foster’s, and the 2008 £33bn merger between Anheuser-Busch and InBev, which created the world’s biggest brewer (AB InBev). Additionally, SABMiller recently opened a $100m brewery in Nigeria, citing that rapid growth, rather than competing for market share, was a key attribute.

Such efforts are paying off, with AB InBev expecting to generate 6% of profits in China by 2021, compared with 1% last year. For SABMiller, Asia accounted for 24% of lager sold by volume in 2011, compared to 20% in Europe and 19% in North America.

Such activity looks set to continue, particularly as strong growth in Asia and MEA&A shows no signs of slowing down.

Access our case study ‘Heineken the battle for Asia Pacific Breweries‘ or our wide range of profiles on alcoholic beverages here.

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