On
September 16, 2015, SABMiller, the worlds second largest brewing company,
announced that it was being courted by AB InBev, the worlds largest brewing
company. This comes at a time when craft breweries are gaining traction while
the large beer companies are loosing customer. InBev, the worlds largest brewing
company began back in 1989 when Jorge Paulo Lehmann and his two partners bought
a Brazilian beer company called Brahma for $50 million. Brahma acquired one of
their rivals, Antarctica ten years later and became AmBev.. Then in 2004, AmBev
merged with Interbrew, a Belgian company that owned Stella Artois and Beck’s
and InBev was created. In 2008, InBev acquired Anheuser-Busch, a United States
company, for $52 Billion and their expansion did not stop there. In 2012, InBev
paid $20 billion for Grupo Modelo, a Mexican company, fortifying their position
as the largest brewing company in the world. Now there is talk of a merger
between the two largest brewing companies in the world, which would bring the
beer industry closer to a monopolized industry. If the two firms do merge, they
would account for roughly half of the industries profits. Because the two firms would be so
dominate in the beer market, antitrust regulators are a barrier for the merger.
One way that to appease regulators is for each of the companies to drop some of
their smaller acquisitions. This would make it more of an even playing field.The merger is not for certain, but
relatively likely. InBev has been able to increase the profitability of the
companies that it has aqucired and SABMiller has been having problems recently.
A merger might be what SABMiller needs to heal itself. But if the merger goes
through, the massive conglomerate would gain more market power and might be
able to drive prices up, increasing the producer surplus while decreasing the
consumer surplus.
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