WSJ on global beer consolidation

The Wall Street Journal uses the news that Carlsberg and Heineken have formed a consortium to bid for the United Kingdom’s best-selling brewer, Scottish & Newcastle, as an opportunity to explain “Why Consolidation Storm Is Brewing in Beer Industry.

The maneuvers, coming about 2½ years after the most recent wave of beer-industry consolidation, are a reaction to shifts in beer-drinking habits across the globe. In Western Europe and the U.S., beer sales growth is sluggish amid increasing competition from wine and spirits.

Of course the story mentions concerns about the rising cost of ingredients, emphasizing that price and market share are at least as important to the large companies as the beers they brew.

The WSJ points out the S&N takeover is far from a done deal and other companies could enter bids.

Another possible suitor for S&N is Anheuser-Busch, the world’s third-largest brewer by volume. The St. Louis-based beer maker is heavily dependent on the U.S. market and may be attracted to the opportunity to gain a big stake in Russia or the U.K. W. Randolph Baker, Anheuser’s chief financial officer, declined to comment.

Jean-Francois van Boxmeer of Heineken makes the difference between being a giant brewing company and a small-batch brewer quite evident when he says that it takes so much capital that it isn’t worth the expense being in many of the world’s markets unless your company is either the No. 1 or No. 2 player.