The Australian Competition & Consumer Commission has expressed concerns about Asahi Group Holding’s proposed acquisition of Carlton & United Breweries (CUB).
In July, Asahi and Anheuser-Busch InBev (AB InBev), which owns CUB, announced the deal, which would include Crown Lager, Carlton Draught and Great Northern Brewing Co brands (Food & Drink Business, 23/07/2019).
ACCC chair Rod Sims said the commission had formed a preliminary view that the proposed acquisition would reduce competition in the cider market because it combined the two largest suppliers.
“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,” Sims said.
“Asahi argued to us that cider and beer are part of the same market, but our preliminary view is that cider is a separate market and drinkers do not readily switch between beer and cider,” Mr Sims said.
The ACCC was also concerned about the highly concentrated beer market. Sims said that while Asahi was currently a small brewer in Australia (around 3.5 per cent of beer sales), it “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.”
Asahi’s beer brands include Asahi Super Dry, Peroni, Mountain Goat, Cricketers Arms and the new Two Suns brand. Asahi is a global beer company with revenue of over $25 billion worldwide in 2018. It is 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. This competitive presence, and the threat of Asahi growing more in the future, would be lost if this deal goes ahead,” Mr Sims said.
Many market participants expressed concerns about the deal, Sims said.
A statement released by Asahi said all parties were working with the ACCC to respond to its questions.
Asahi Beverages chair Peter Margin said: “Asahi’s acquisition of CUB is a significant one. We always expected that the review process would take some time, and we support the ACCC’s diligent and robust approach.
“We are working towards completing the deal as soon as possible once we have received regulatory approvals.”
The final ACCC decision is expected in March 2020. The ACCC statement of issues is here. Submissions close on 22 January.
Snapshot:
In Australia, Asahi manufactures and supplies a range of international and domestic beer, cider and spirits brands, including:
- Beer brands– Asahi Super Dry, Asahi Soukai, Peroni, Cricketers Arms, Pilsner Urquell, Grolsch, Mountain Goat, Green Beacon and Two Suns.
- Cider brand– Somersby (under licence from Carlsberg).
- Spirits brands– Nikka Whisky, Vodka Cruiser, Woodstock Bourbon, Mist Wood Gin, Untold Spiced Rum, Tequila Blu and Spicebox Whisky.
CUB is currently owned by the Belgium-headquartered, multinational brewing company, Anheuser Busch InBev SA/NV (AB InBev). AB InBev acquired CUB from SABMiller in October 2016. Its range includes:
- Beer brands– Great Northern, Victoria Bitter, Carlton Draught, Carlton Dry, Cascade Premium, Pure Blonde, Matilda Bay, Fat Yak, Melbourne Bitter, Crown Lager, Pirate Life, 4 Pines, Foster’s, Reschs and Balter. CUB also imports or manufactures, and then distributes, a range of other beer brands under licence, including Goose Island, Corona, Stella Artois, Belle-vue, Hoegaarden, Leffe, Beck’s, Lowenbrau, Franziskaner, Spaten and Budweiser.
- Cider brands– Strongbow, Mercury, Bonamy’s, Little Green, Spring Cider Co, Dirty Granny, Pure Blonde Cider. CUB also manufactures and distributes Bulmers under licence from Heineken.
- Spirits brands– Cougar, Black Douglas, Lexington Hill, Karloff, Continental Liqueurs, Coyote and Prince Albert.
CUB was ranked #8 and Asahi #15 in Food & Drink Business' Australia's Top 100 Food & Drink Companies 2019.
