Belgium-based beer maker Anheuser-Busch InBev has purchased the remaining stake it does not currently own in Grupo Modelo, the manufacturer of Corona, for $20.1 billion in cash.
InBev already holds a 50% non-controlling stake in Modelo, which it gained in 2008 when it purchased Anheuser-Busch for $52 billion. The new $20.1 billion purchase is higher than the $12.1 billion AB InBev was originally rumored to pay, and signals the competitiveness of the Mexican beer market, which is the world’s sixth-largest.
AB InBev CEO Carlos Brito says: “Grupo Modelo has been one of our most important partners for more than 20 years, and we are very pleased to evolve our long and successful relationship into this combination.”
The combined company includes Corona, Pacifico and Modelo, and is expected to have $47 billion in annual sales with 150,000 employees worldwide. The deal is expected to save AB InBev $600 million annually.
Nothing is final until regulators in the US and Mexico approve the purchase.
Modelo Holds 56% Of Mexican Market
Founded in 1925, Modelo controls 56% of the Mexican beer market, while rival Heineken NV controls 41%. Heineken owns the Dos Equis, Tecate and Sol brands, which it purchased in 2010 from Fomento Economico Mexicano SAB.
Once the home of regional brewers, Mexico’s largest beer manufactures are now owned by Europeans. The Central American market is fast growing, and purchasing Modelo allows AB InBev to take advantage of Central American sales. It also offers an opportunity to make Mexican beers better-known globally.
In April, AB InBev purchased Cerveceria Nacional Dominicana, a Dominican brewer, for $1.24 billion to help it further reach the Central America target audience.
According to market researcher SymphonyIRI Group, the top-selling imported beer in the US is Corona; also in the top five are Corona Light, Modelo Especial and Dos Equis.
Key Statistics - Global Beer Market (source: MarketLine)
- In 2010, the beer market grew globally by 0.5% reaching $495 billion in value. In 2015, the beer market is predicted to be valued at $524 billion globally. This represents an increase of nearly 6% from 2010.
- In 2010, the beer market grew globally by 1.3%, reaching nearly 170 million liters in volume. In 2015, the beer market is predicted to have over 180 million liters in volume globally. This represents an increase of nearly 9% from 2010.
- The largest segment of the global beer market is standard lager; lager accounts for close to 60% of total market value.
- Slightly more than 44% of global beer market value comes from Europe.
- The world’s leading player in the global beer market is Anheuser-Busch InBev, which generates slightly more than 20% of market share by volume.
- The global beer market is fairly fragmented, with the top-three players holding 41% of total market volume.