Up until1990s, SAB was a regional player in South Africa. With the ending of apartheid a range
of new growth opportunities opened up for SAB. The 1990's saw SAB's strategic focus shift from
pursuing purely regional growth to towards globalization. It began expanding and growing
internationally by acquisition. SABMiller's acquisition strategy was based on three key trends ;
- Growth in emerging markets
- Increasing popularity of premium brands
- Industry consolidation
SABMiller 's strategic logic behind acquisitions can be viewed from its acquisition management in
emerging market and the acquisition management in developed markets.
- Acquisitions in Emerging markets;
SAB's first wave of acquisition started with acquisitions of small local breweries in the easter
european countries and continued within the other developing countries in Asia & Latin
America. Its growth during 1990-2000 has come through entering developing markets,
acquiring businesses and brands, and growing them. Its acquisition philosophy can be summed
up as;
- Acquire a local established brand, value-add by leveraging SABMiller's capabilities to improve local brewer's financial and operating performance.
- Use SABMiller's marketing efficiencies to increase the value of the local brand, then penetrate the local market further with efficient branding & distribution strategy.
- Once business in the local market is well positioned, then continue to make other local acquisitions, which adds further value by operational synergies.
During the 1990s, SAB expanded into Africa, Hungary, Romania, Poland, Slovakia, Russia.
When acquisitions was not possible it had pursued Joint Venture or partnerships in India,
Vietnam & China. Some of the joint ventures was later acquired completely by SAB.
SABMiller's has traditionally pursued growth with expanding into emerging markets,
however starting early 2000 onwards, it moved towards a balanced diversified portfolio by
entering developed markets. Emerging markets offer high growth but are very risky, where as
in a less risky developed markets, SABMiller can maintain margin and volume.
- Acquisitions in Developed market;
The next wave of acquisitions which began around 2001 onwards, was more about mergers of
larger & established brewing companies in developed countries in US & Western Europe. The
acquisitions from 2001 – today was motivated towards building a balanced brand portfolio
supported by a global operational consolidation, but at the same time taking advantages of
economic growth in emerging markets.
In 2001,SAB acquired Miller Brewing Company. Acquisition of Miller which was a
large company gave a significant market share in US, immediate visibility in developed market
and an opportunity to apply SABMiller's capabilities to improve Miller's operating performance
and increase economics of scale. It also gave new sales opportunities to position other
international brand from its brand portfolio to the US market.
In developed mature markets, beer consumption is declining and consumers are moving
towards “premiumisation”, the process where the consumers move from mainstream brands to
premium brands (Elliot, 2009). The premium beer segment made the industry attractive as it is
fast growing. SABMiller had to build a portfolio of international brands to be strategically
competitive. During 2003 onwards premiumisation had formed an important element of
SABMiller’s growth strategy (Annual report 2003).
SABMiller started acquiring brands in developed countries like Grolsch, Perroni, to get
immediate access to established market and also to enhance its market share in premium beer
markets. This strategic logic for the acquisitions in the developed countries acquisition can be
summed up as;
- Acquire a well established brand to get immediate market access,
- Renovate and relaunch the core brand and strengthen it. For Ex; Miller Draft & Miller Lite in US, relaunch of Perroni in UK.
- Broaden the brand portfolio to include international brands and leverage global capabilities to optimize both local and global brands.
- Introduce premium brand when the market gap for premium beer exists.
- From SABMiller's Ansoff Matrix analysis (Appendix E), SABMiller had exploited the brand extensions opportunities in both emerging and developed markets by product development and market development.
- Acquisition of Fosters in 2011;
Acquisition of Fosters' can be looked along the same lines as SAB's acquisition of Miller
to enter US. This acquisition will allow SABMiller an industry visibility in Australia. Foster is
an established company with a significant brand portfolio in Australia with 40% export market
(SABMiller Fosters Presentation, 2012). The acquisition of Foster also gives SABMiller the
turnaround opportunity to apply its capabilities to improve operating performance,improve
quality and gain further market share and Brand extensions.
Mergers and acquisitions has been the most important strategic choice for SABMiller to achieve
globalization. Emerging markets are important for SABMiller as developing countries have the high
growth potential, whilst the beer consumption in developed economies are declining. SABMiller
should continue building an international premium beer portfolio which is a growth segment in the
developed economies, but at the same time focus on emerging market expansion especially China and
India.