ACCC raises concerns on Asahi’s $16b CUB takeover


Posted

December 12, 2019 11:25:08

The proposed $16 billion takeover of Carlton & United Breweries by Japanese beer giant Asahi looks in danger of going flat with the competition regulator raising concerns about the deal.

Key points:

  • Asahi’s proposed takeover of CUB would combine the two biggest cider makers with about two-thirds of the market
  • Asahi has offered the giant Anheuser-Busch InBev $16b for all CUB’s brands
  • The ACCC will make its final determination on the deal in March next year

In its preliminary examination, the Australian Competition and Consumer Commission tilted towards the interests of drinkers in the transaction arguing it had the potential to dry up competition and raise prices, particularly for those who enjoyed a cider or two.

“The proposed acquisition would combine the two largest suppliers of cider in a highly concentrated market,” ACCC chair Rod Sims said.

“A combined Asahi-CUB would control the Somersby, Strongbow, Mercury and Bulmers cider brands, which account for about two-thirds of cider sales.

“We are concerned that the proposed acquisition may lead to higher cider prices.”

The ACCC also raised concerns about competition in the already very concentrated Australian beer market.

“While Asahi is currently a relatively small brewer in Australia, accounting for approximately 3.5 per cent of beer sales here, our preliminary view is that Asahi may act as a competitive constraint on the two largest beer brewers, CUB and Lion, and has the potential to be an even bigger threat in future,” Mr Sims said.

CUB has passed through a number of owners in recent years.

In 2011 it was taken over by South Africa’s SAB Miller, which in turn was consumed by the world’s biggest brewer, the Belgian/US outfit, Anheuser-Busch InBev, in 2016.

‘Keeping a lid on beer prices’

Asahi has made considerable inroads in the local market with brands including Asahi Super Dry, Peroni, Mountain Goat, Cricketers Arms, and has become the second largest supplier of premium international beers in Australia.

“Our preliminary view is that having Asahi in the market as a competitor to the big two brewers may help to keep a lid on beer prices,” Mr Sims said.

“This competitive presence, and the threat of Asahi growing more in the future, would be lost if this deal goes ahead.”

CUB’s brands include Victoria Bitter, Carlton Draught and Foster’s at the mass end of the market, as well as one time craft beers Matilda Bay, Fat Yak and Four Pines and international brands such as Corona, Stella Artois and Beck’s.

Its ciders include Strongbow, Mercury and Bulmers, which is made under licence from Heineken.

The ACCC will release its final decision on the deal in March next year.

Topics:

business-economics-and-finance,

company-news,

food-and-beverage,

takeovers,

australia



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