The Merger Between Two Major Beer Competitors, The Market

The Merger Between Two Major Beer Competitors, the Market Structure for Beer, and it’s Effect on Consumers The two beer giants, AB InBev, who provides beverages such as Corona, Stella Artois, and Budweiser, and SABMiller (Chew 2015), had a controversial merger approved by the European Commission after various negations (Bray 2016). The company will trade under the name Newbelco (Nurin 2016) and according to The Economist, â€Å"The combined firm would earn roughly half the industry’s profits and sell one in every three pints of beer quaffed worldwide† (2015). This seemed to be in the best interest of both companies because they will now be a superpower in the beer market. In order to ensure the merger went through, AB InBev had to agree to†¦show more content†¦Anything over 1800 is considered an oligopoly. This formula allows that the less distributed the market shares, the bigger the HHI will be. The largest possible would be 10,000 because a monopoly h as 100% of market share. If a firm were to be too powerful post merger, or would hold too big a piece of market share, then the European Commission is not supposed to approve it. That being said, I believe that the European Commission should not have approved the merger. Newbelco has nearly a monopoly on popular beer brands, the kind that are household names. Their only competing brands are Coors and Miller, but if AB InBev raised their prices, I believe that the minimal competition wouldn’t have a powerful enough effect to push prices down or drive down their profits. The EC even admits â€Å"Fewer players, encountering each other in a higher number of markets, would have found it easier to tacitly coordinate on prices at national level† (Bray 2016). This means that even within an oligopoly the smaller it is the easier it is to conclude, push down output, and raise prices because you have less competitors to work with. The global power and expansiveness of this merged company (The Economist 2015) may even allow it to impose even more barriers to entry, there are already some in an oligopoly, which is even more harmful for competition. These barriers to entry keep smaller firms from entering into the market. For example, Forbes relays thatShow MoreRelatedForeing Market Diversification: Corona Beer986 Words   |  4 PagesForeign Market Entry and Diversification: Corona Beer Foreign Market Entry and Diversification: Corona Beer Grupo Modelo is the number one beer producer in Mexico and the producer of Corona, one of the leading import beer brands sold in the United States. This paper will highlight the trends in the global beer market and how Grupo Modelo’s international expansion was achieved through strategic partnerships. It will also discuss Grupo Modelo’s strategies to enter new markets and their challengesRead MoreAnheuser Busch - Sabmiller Merger1267 Words   |  6 PagesAnheuser Busch – SABMiller Merger Anheuser-Busch was created when German immigrants Eberhard Anheuser and Adolphus Busch met in the mid-19th century. They banded together to become the most inventive force in the industry at the time. Through innovation and aggressive marketing tactics, they became one of the nation’s largest brewers, breaking the one million barrels sales mark for the first time in 1901. They managed to survive the depression by offering non-alcoholic drinks and cereal productsRead MoreCorona Beer Case Study Essay3581 Words   |  15 PagesEXECUTIVE SUMMARY Introduction: Corona Beer, produced in Mexico by Grupo Modelo since 1922, entered the United States beer market in 1979, and by 2007, was the number one imported beer in the United States (with 1.9% market share of the global beer industry) having recently taken that position from Heineken, a rival (with 1.6% market share of the global beer industry). Corona used a broad differentiation strategy with a â€Å"fun in the sun† marketing image. It also achieved strategic success by usingRead MoreStrategic Planning : Miller Lite1400 Words   |  6 Pagessteps of strategic management. A few benefits are that the company is able to find success between their organizations environment and the external environment, the company will have a purpose when flowing their mission and goals, and they are able to adapt quickly to change (Wheelen p. 4-6). Strategic planning is preparation for the future of a company. All companies have the same goal of success. And two driving forces behind success is sustainability and innovation. Sustainability refers to howRead MoreMerger Types with Examples903 Words   |  4 PagesMerger Types - Various Type of Merger A merger refers to the process whereby at least two companies combine to form one single company. Business firms make use of mergers and acquisitions for consolidation of markets as well as for gaining a competitive edge in the industry. Merger types can be broadly classified into the following five subheads as described below. They are Horizontal Merger, Conglomeration, Vertical Merger, Product-Extension Merger and Market-Extension Merger. 1) HorizontalRead MoreSleemans Case Study Essay1367 Words   |  6 Pagesafter a (much earlier) run-in with the law. After being forced to sell its brewery in 1933 to pay taxes on beer smuggled into the US in defiance of its Prohibition laws, the Canadian brewer opened the taps once again in 1985. The companys brands include Sleeman, Upper Canada, Okanagan Spring, Seigneuriale, Shaftebury, and Maritime Beer. It also owns Quebec microbrewer, Unibroue. The companys beers are sold in Canada, the US, and the UK.  Sleeman Breweries has been a subsidiary of  Japans  Sapporo Breweries  sinceRead MoreMurphys Brewery924 Words   |  4 PagesMURPHY BREWERY IRELAND SYNOPSIS This case examines the marketing of Murphy’s Irish Stout at the time of the merger between Guinness and Grand Metropolitan. Murphy Brewery is owned by Heineken International and has expanded its scope beyond Ireland in recent years. However, the brand is a distant second internationally to Guinness in the stout category. Furthermore, the company has launched a new brand—Murphy’s Irish Amber. This case discusses the Murphy’s situation in Ireland, the UK, andRead MoreBusiness Ethics1611 Words   |  7 PagesBusiness Ethics – Assignment 1 1. The Sales Rep. A sales representative for a struggling computer supply firm has a chance to close a multimillion-dollar deal for an office system to be installed over a two-year period. The machines for the first delivery are in the company’s warehouse, but the remainder would have to be ordered from the manufacturer. Because the manufacturer is having difficulty meeting the heavy demand for the popular model, the sales representative is not sure that the subsequentRead MorePorter s Five Forces Framework Essay1605 Words   |  7 Pagespower of buyers, as well as suppliers. (See Figure 1.). Porter’s Five Forces Framework Source: Adapted from Porter, 2008, p.27. Figure 1. The diagram indicates â€Å"Porter’s Five Forces Framework.† First of all, rivalry among existing competitors is also known as industry rivalry, which contains many kinds of competition, such as pricing strategies, new product launching, advertising campaigns, improvement of current goods and services, and sales promotion. (Dalken, 2014, p.3.). These typesRead MoreBusiness Ethics1603 Words   |  7 PagesBusiness Ethics – Assignment 1 1. The Sales Rep. A sales representative for a struggling computer supply firm has a chance to close a multimillion-dollar deal for an office system to be installed over a two-year period. The machines for the first delivery are in the company’s warehouse, but the remainder would have to be ordered from the manufacturer. Because the manufacturer is having difficulty meeting the heavy demand for the popular model, the sales representative is not sure that the subsequent