Anheuser-Busch InBev on Tuesday announced the successful completion of its multi-billion dollar merger with SABMiller.
AB Inbev said the combined company would have operations in “virtually every major beer market” and an expanded portfolio that included global, multi-country and local brands, “providing more choices for consumers around the world”.
“As a truly global brewer, we will be able to achieve more together than each of us could separately,” said Carlos Brito, AB InBev’s chief executive.
The statement from the company covered expected areas including top-line growth and increasing shareholder value, but also referred to commitments “to helping farmers, retailers, entrepreneurs and communities thrive”.
In this context it is worth referring to recent comments by South Africa’s Minister of Economic Development, Ebrahim Patel, about events and pressures beyond top-line growth and shareholder value that influenced the final format of the deal.
Patel, talking to the African News Agency (ANA) on the sidelines of the 10th annual Competition Law, Economics & Policy Conference in Cape Town on Thursday, October 6, described the deal as one where action by South Africa’s competition authorities had transformed a transaction that was set to benefit a group of shareholders into a deal designed to benefit society at large.
Patel said that when the deal was first announced “we were not excited”. He said it was clear that shareholders would benefit from the transaction, but “we saw no value proposition for South Africa”.
So, Patel said, the challenge had been put to AB Inbev to re-engineer the deal so that there would be positive benefits for South Africa.
“That led to an agreement where the company is putting R1-billion on the table to develop local suppliers,” he said.
Currently South Africa is a net importer of the beer inputs, hops and barley. This is set to change thanks to a challenge the competition authorities gave AB Inbev rather than a simple stamp of approval for their merger.
“The challenge we gave AB Inbev, the challenge they have accepted, is over the next few years to work to bring small-scale farmers into the supply chain,” said Patel.
As a result, AB Inbev has promised to bring 800 new small-scale farmers into the production of beer inputs. At the end of this period, the minister added, the aim is for South Africa to be a net exporter of the inputs that go into beer in the form of value-added malt.
Now that the deal has completed and the government is no longer exactly holding a gun to AB Inbev’s head, the heat is off but only to a degree. It looks likely that the South African competition authorities, at the very least, will keep an eye on the world’s global mega-brewer.