Monday, 1 September 2008

The Big Seven

No, it's not the title of a spaghetti western. Those of you of more tender years may never have heard of the seven brewing companies that used to control the production and sale of beer in Britain.

Between them, these companies owned a third of Britain's pubs and produced more than 90% of Britain's beer. Back in the 1970's and 1980's. With the capitulation of Scottish & Newcastle to the advances of Heineken and Carlsberg, the last survivor of the Big Seven is slipping into history. It's a reminder of the temporary nature of most commercial success.

Here are all the gory details:

How long will brewing's current giants survive? Multinationals like Inbev, Heineken, Carlsberg, SABMiller. Not as long as you might imagine, I suspect.


Anonymous said...

Well, the question is pretty much "how long can they sustain growth when beer consumption is sinking on many markets ?". Currently the answer to crumbling market shares usually is mergers or buying up competitors.

Large mergers are gently reaching their limit, because EU competition and US antitrust legislation render any merger where the partners have overlapping geographical coverage, too complicated.
For example, Carlsberg and Heineken could have merged last year if they'd wanted, because their field of activity did complement one another. But they chose to go down together on S&N and share the spoils. But now their cumulated market share is too large on many European markets to allow for a merger without coming under scrutiny from the EU commission.

My take on it is that the big boys will fill the gaps in their coverage by snapping up surviving national brewers and large regionals... but it won't last for ever, either.

With market shares crumbling on, and little left to takeover to make up for this, it's likely the big boys will close down "unprofitable" breweries, concentrating on just a handful of plants for Europe, for example... but that won't last for ever either, and by doing this, they'll alienate consumers further...

So indeed, within a decade or so, one or the other of the big boys will have to face up that beer brewed from just water and general expenses cannot sustain growth anymore (it already doesn't, all of the above is mere delaying tactics) and then, one after the other, they're likely to go down, and it's likely very few of them will still be around in 30 or 50 years' time.

But then others will have risen to take their place...

Anonymous said...

Indeed, Laurent - in fact, of course, you've just described exactly what has happened to the UK's brewing industry over the past 20 years, and I'm sure that, as you say, the same thing will happen in Europe and across the world over the next two decades.