Beer Consolidation is only a small part of the total Beverage Consolidation Trend

Yes, there is big news in watching Heineken NV and Carlsberg AS, bid for UK based Scottish & Newcastle PLC. Even more after the SABMiller PLC combined US operations with Molson Coors Brewing Co. creating “MillerCoors.

Yes, that’s big news, as is the purchase of vitaminwater, Fuze, Fiji, Sobe and other non alcoholic beverages. The truth is that there is a beverage revolution. Not just in the “New Age Beverages” but in microbrew, distribution, international operations and more. SABMiller has purchased many beer companies and brands over the years, in the US we’ve seen the same trend with microbrews and now with non-alcoholics.

There are several points pushing this trend. The major and most noticeable trends are:
1. The Big Beverage Wars have guerrillas on all fronts. – The emergence of small alcoholic and non alcoholic specialty drinks creating the “New Age Beverages” now with real customers, real sales and a major piece of the beverage pie. Consumer started discovering that they could choose their own beer or other drink depending on taste, lifestyle, and health, even social or political reasons.

2. If you can’t beat them join them.- Large companies could not compete with these smaller companies in grass roots promotions, brand appeal or innovation so they started investing in them or buying them.

3. Distributors diversification.- Distribution companies or distributing franchises, such as beer distributors, starting diversifying their portfolio tremendously. This affected especially the large beer companies. Where before a beer distributor sold their name brand beer only, now they sell all kinds of microbrews, imports, and non-alcoholic beverages, especially in the new age category. This means up to 50% of their portfolio is not form the large beer company they represent.

These three just 3 points pushing the consolidation trend. When you have distributors selling 50% of your product, you need to do something about it! The easiest thing to do is buy other brands or merge with them, as we saw with beer and even energy drinks and other new age products.

All of this is topped with the large and new demand for beverages, where “old products” like large beer and soda company products grow in the -5% to 5% ratio new age beverages are growing a whopping 50% per year.

What’s next for the big beer companies? Buy more new age beverages, more microbreweries, and head south, to Mexico, one of the largest beverages consumers in the world. Not only that, the USA has a $1.5 Billion trade deficit with Mexico on Beer alone.


Jorge Olson is a Marketing and Business Strategist. He’s a beverage specialist at Liquid Brands Management, Inc. Find him at www.LiquidBrandsManagement.com