Anheuser-Busch InBev, SABMiller Combo Could Produce Supply Chain Savings

InBev’s proposed takeover of SABMiller would quickly lower costs ranging from raw materials to distribution

The Wall Street Journal

Sept. 16, 2015—A merger between Anheuser-Busch InBev NV and SABMiller PLC would quickly pay off through savings from combining the two brewers’ supply chains and distribution networks, but the real prize—merging beer production—may prove more challenging, a beverage industry expert says.

AB InBev said Wednesday it had approached SABMiller about a takeover that would merge two companies that control roughly 30 percent of the global beer market. If approved by the companies and regulators, the newly minted beer giant would find it relatively easy to combine purchases of raw materials, as well as transportation and logistics operations needed to get beer to stores, said Mike Burnette, a supply chain professor at the University of Tennessee.

Burnette said AB InBev already operates the most efficient supply chain among brewers in the U.S., the world’s second-largest beer market after China. That includes everything from control of barley and hops at farms to standardized at plants and to the stocking of store shelves. SABMiller has been attempting to reach the same levels of efficiency in the U.S. via MillerCoors LLC, which it runs as a joint venture with Molson Coors Brewing Co. Incorporating SABMiller’s U.S. supply and distribution into the stronger AB InBev network could be accomplished quickly, he said.

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