Mega Beer Merger Won′t Affect German Market, Expert Says | Business| Economy and finance news from a German perspective | DW | 14.07.2008
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Mega Beer Merger Won't Affect German Market, Expert Says

Belgium brewer InBev says it will buy US rival Anheuser-Busch for $52 billion to create the world's largest brewer. DW-WORLD.DE spoke with a beer expert about the mega merger's significance for the German market.

People at Munich's Oktoberfest toast one another with large glasses of beer.

Beer has been brewed for centuries in Germany

InBev, the maker of Stella Artois and Beck's, has agreed to pay $70 (44 euros) per share for Anheuser-Busch, the maker of Budweiser and Bud Light beers, up from its original unsolicited bid of $65 per share, both companies said on Monday, July 14.

The deal would be the largest in the industry and the third-biggest ever foreign takeover of a US company. Expected to be completed by the end of 2008, it still has to be approved by shareholders and competition authorities. Analysts say they aren’t expecting any problems.

The combined company Anheuser-Bush InBev would have about $36.4 billion (23 billion euros) in annual net sales, and would brew about a quarter of the world's beer. But the powerful fusion may not create much of a ripple in one of the world's most important beer markets -- Germany. Germans love their brew to be made close to home, and have little patience for foreign ales.

In an interview with DW-WORLD.DE, Marc-Oliver Huhnholz of the German Brewers’ Union said despite the fact that InBev produces Beck’s, one of Germany’s most famous beers, the new merger is not expected to have a major impact on the German market.

How do you think this will affect the brewing industry in Germany?

You have to understand that the German brewery sector, or the German market, is very singular, and not comparable to other markets in the world. It’s because of the German people who love their German beer. So it’s very hard for a foreign company to get into the market, and we have seen that. Anheuser-Busch tried some years ago to jump into the market, but wasn’t happy with this because the Germans, as I mentioned before, love their German beer. So there is no immediate impact on the German market because of the Anheuser-Busch or InBev Corporation. Their might be indirect effects for InBev when it comes to buying hops or other stuff to brew beer, but we see no direct impact on the German market.

InBev also owns Beck’s, one of the most internationally recognized German beers. What do you think the odds are that other German breweries are going to be consumed by a large corporation like InBev?

The Beck's brewery sign with the city of Bremen in the background.

Beck's is the most famous German beer produced by InBev

There are two sides to a takeover. There is one company that wants to buy a German brewery and the other side that wants to sell their German company. At the moment we see no other German brewery that wants to sell to another company from a foreign country. So we see no tendency for developments like Anheuser-Busch and InBev have done now to become the world’s largest brewery. I think German companies do not fear this large company any more than they fear the competition in the German market.

Beer has been brewed commercially in Germany for over a thousand years. The Weihenstephan Brewery in Bavaria is the world’s oldest. Does this long brewing tradition make it difficult for foreign brewers to break into the market?

Brewery in Bavaria with several large copper brewing kettles.

German brewers will have little to fear from the new multi-national conglomerate

It’s tradition. It’s part of the German culture. The people adore their beer brewed in their neighborhood. Beer is regional. It’s a regional product. And the Germans love their regionally brewed beer, and are not very open to beer brewed in foreign countries. They want to know what is in their beer, and with beer brewed under the German purity law, which is now over 500 years old, they know exactly what is in their beer and they like the taste. They do not like, for example, cherries in their beer, they do not like other components. They only like the malt, the water and the hops in it, and that’s it. I do not see that Anheuser-Busch and InBev will have a larger chance now by coming together to get into the German market.

InBev, being a Belgian-Brazilian company, is subject to European Union laws. So does the German Purity Law help to keep them from becoming a huge player in the German beer market?

If you want to sell beer in Germany, you’re allowed to, because the market has to be open for all products from Europe. But if you want to brew beer in German then you have to accept and use the purity law as a basis for the brewing of the beer.

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