When an industry's two largest companies merge, that usually means bad news for the third-largest company - and, in brewing, that is Heineken.
Asked how his world will change once Anheuser-Busch InBev completes its £70bn merger with SABMiller, Jean-François van Boxmeer, Heineken's chairman and chief executive is phlegmatic. “It will not change a lot“, he said last month, pointing to the brewers' larger lack of territorial overlap. “AB InBev takes geographies where it was not present before - there is no market in which they have a synergistic deal.“
Eammon Ferry, analyst at Exane BNP Paribas, agrees to an extant but says that in two of Heineken's biggest markets, India and Nigeria, a merged AB InBev-SABMiller “will prove a formidable competitor ... and could take market share away.“ This may be why, in India, Heineken appears to have its sights on a potential takeover of United Breweries, in which it holds a stake.
In Africa, AB InBev's strategy will be to push its own brands, such as Corona and Budwieser. Heineken may find it toughercto compete against these than against Peroni, which was SAB's main brand there, but will now be sold.
Trevor Sterling, analysr at Bernstein, says: “The nightmare scenario for Heineken would be if AB InBev were to use the profits in one of its markets to fund a price war in an inportant market for Heineken, such as Mexico or Nigeria. But AB InBev ... will likely be focused on paying own debt.“