Small Brewers Scale Bigger Obstacles

The competition for small brewers is heating up as big companies snap up more of the market share through acquisitions.

January 22, 2013

BAKERSFIELD, Calif. - Major beer brewers have been gradually buying up small brewers, narrowing the field of competition, which could mean local breweries will have to fight harder for market share, Marketing Daily reports.

A new report by Rabobank??s global Food & Agribusiness Research and Advisory found that the top brewers ?" AB Inbev, Carlsberg, Heinekin and SABMiller ?" have added more beer companies to their portfolios, and now small brewers find the competition has shifted from local companies to global giants.

With the economy triggering volume drops in mature markets, local breweries are on the cusp of discovering whether they will keep their standing or need to adopt a different strategy. The four major brewers captured a 16% market share in 2001, but now have close to half of the world??s beer volume.

Local brewers have seen a steady market share over time, with 56% in 2001 and 53% in 2011. "The brewing giants have not seen an acceleration in volume growth because their increased economies of scale have not been passed on to consumers," said Francois Sonneville, an analyst for Rabobank. "However, the giants have improved their margins at a faster rate than the beer market in general."

Rabobank found that 2011 saw local brewers grabbing a mere quarter of the profits, a sharp drop from its 45% share in 2001. The analyst recommends local brewers to keep an eye on volume instead of profit, by looking at their cost structure and talking about different ways of producing beer, such as co-manufacturing.

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