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AB InBev

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A series of aggressive acquisitions in a rapidly consolidating market has made AB InBev the world's biggest brewer by a considerable margin. The process began in 2000 when Belgian company Interbrew bought two of the UK's biggest beer marketers as well as a collection of German brands including Beck's. Added to the group's existing European flagship Stella Artois, and a strong portfolio of regional beers, these gave the company the right to describe itself as the "world's local brewer" by 2003, with a leading position in virtually every country in which it had a presence. This was followed in 2004 by what was in effect the takeover of Interbrew by South American brewer AmBev to form a new global giant under the name InBev. That deal gave the enlarged group a far more extensive global profile than its main rivals of the time, Anheuser-Busch and SABMiller, but it still lacked a significant presence in the US, the world's biggest beer market. That changed dramatically in 2008 when InBev succeeded in acquiring American giant Anheuser-Busch for a whopping $52bn. The resulting group, now Anheuser-Busch InBev, widened its lead further in 2013 with a deal to acquire the shares it didn't already own in Mexican partner Modelo. This steady expansion reached its crescendo in 2015 with a deal to acquire nearest rival SABMiller for an extraordinary $104bn. See also:


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Brands & Activities

It has been full steam ahead for InBev since 2000. What was once an obscure Belgian brewer was transformed into the global #1 through an ambitious series of acquisitions. With single-minded determination, the group moved into one market after another, absorbing the skills and assets of local players. The biggest influence by far has been the Brazilian team from AmBev who effectively took over management of the business from its original Belgian owners, even though they maintained the company's traditional headquarters in Leuven. Another key to the group's successful development prior to 2008 was its determination to steer well clear of the US market, leaving that battle royal to others. But when it did finally turn its attentions to the US, there was obviously no point in going after anything less than the market leader...

In June 2008, InBev made an offer to acquire US giant Anheuser-Busch for $46.3bn. After two weeks of consideration, that deal was declined by the Anheuser board for being too low. It had already been greeted with considerable hostility both within the American group and also among US consumers, proud and protective of the patriotic heritage of brands such as Budweiser. InBev responded to the rejection by threatening a legal battle to remove Anheuser's board. That threat turned out to be a negotiating tactic, preceding an increased offer worth $52bn, which was accepted. The deal was completed in November 2008.

Life was a little quieter for the next few years as the newly created AB InBev consolidated its portfolio and offloaded weaker units. Even after the acquisition of Budweiser, the giant group's weakness is that it lacks a single global powerhouse to match, say, Heineken or even Carlsberg. Budweiser is a monster in North America, but still has only limited penetration beyond English-speaking markets. That has been the group's main task since the takeover. Stella Artois too is a major brand in some countries but lacks a significant global profile just yet. Another possible contender was Beck's, but it has failed to establish a strong global footprint. Brahma was tested for a year or two as a potential worldbeater, but faced the daunting challenge of having to build a profile from scratch in every new market beyond Latin America. It has been relegated to the status of local champion in Latin America. Could Corona Extra, now controlled everywhere except the US, finally be AB InBev's elusive global lead brand? It is sold in more than 180 countries and is the biggest-selling imported brand in 38.

AB InBev was back on the acquisition trail again in 2015. After more than a year in which financial analysts had been outlining the potential advantages of a merger between the world's two biggest brewers, AB InBev began its courtship of SABMiller. Four steadily rising bids were rejected, but the fifth, for just over $104bn, was accepted. After months of negotiation with regulators around the world, separate side-deals were agreed with rivals brewers to offload SABMiller brands that would have given the merged group an unfair competitive edge. The deal was finally completed in October 2016.

In 2010, AB InBev broadened the appeal of its brands with high-profile sponsorship of the FIFA World Cup tournament in South Africa. Budweiser was the headline sponsor and "official" beer of the event, and there was also increased sports-related marketing for the group's Brahma, Jupiler, Hasseroeder, Korona and Chernigivske brands, tied into the participation of their country's respective teams.

The combined group now positions itself under the mission statement of being "the best beer company bringing people together for a better world". Although global beer consumption has been more or less flat in recent years, the addition of Modelo increased AB InBev's total beverage volumes to a record 459m hls in 2014. The addition of SABMiller towards the end of 2016 lifted total volumes for 2017 to an all-time high of 613m hls, but on a comparable organic basis, the figure was up only 0.2%. The group controls an extraordinary collection of well over 500 beer or malt beverage brands, produced in more than 260 breweries around the globe.

With the former #2 SABMiller now no longer in existence, there's no challenger close enough to threaten AB InBev's lead as the undisputed global #1 brewer, more than twice the size of its nearest competitor. The group's own beer brands contributed volumes of 438m hl, and soft drinks another 62m hl. (The group is a leading PepsiCo bottling partner in Latin America, and has now ties to Coca-Cola in Africa). It is the #1 or #2 brewer in 19 of the 23 countries in which it operates, and controls a network of more than 150 breweries worldwide. However, there is also nowhere else for AB InBev to go next, once it has digested the benefits of the SABMiller deal. With no significant potential brewery acquisition left, the group will either have to pursue a new direction - perhaps soft drinks? - or even ultimately break itself back up into smaller pieces.

As a result of the Anheuser-Busch takeover, InBev's global strategy changed after 2009 as it began moving away from its earlier positioning as the "world's local brewer". It pulled out of several smaller territories in Central Europe and Asia, to focus on 23 key markets in North America, Latin America and Western Europe.

The original InBev group's main global brands were Stella Artois and Beck's, based in Europe. Total retail sales were $2.3bn and $1.9bn respectively in 2012, according to the group's own declared internal estimates. Beck's is one of the group's most widely distributed brands, available in some 100 countries worldwide, although total volumes remain low at 7.2m hl. It has acted as a springboard for several spin-off products including Beck's Gold, low-alcohol lime-flavoured Beck's Green Lemon, and Beck's Ice, a unique clear mint-and-lemon flavoured brew introduced in 2008 in Germany. Other products include Beck's Premier Light in the US and Beck's Vier in the UK. Supporting the three global brands are two Belgian beers, positioned as "multi-country" products, global brands in-waiting as it were. Hoegaarden is a premium white beer, being rolled out internationally to attract the upper end of the market, and partnered by super-premium Leffe.

Latin America

Stella Artois and Beck's are dwarfed by the three Brazilian brands acquired as part of AmBev. Skol is the group's top-selling beer after the Bud family with declared retail sales of $7.4bn in 2012, followed by Brahma at $6.3bn and Antarctica with $3.8bn. These products are in turned underpinned by a collection of other Latin American brands controlled through a separate entity, AmBev, in which AB InBev has a controlling 74% voting stake. (See here for separate AmBev profile).

As a result of the Anheuser-Busch deal, AB InBev inherited the American company's 50.2% investment-only stake in Mexico's Grupo Modelo, brewer of Corona, the biggest imported beer in the US, and the #1 beer in Mexico. Under a long-standing pre-existing agreement, Modelo's beers were traditionally distributed in the US by an independent unit, Crown Imports, and had no direct connection with Anheuser-Busch. Modelo's controlling family had opposed the takeover of Anheuser-Busch by InBev and tried unsuccessfully to buy back the outstanding shares. In 2012, they acknowledged defeat, and accepted an offer from AB InBev for the outstanding shares. AB InBev offered to pay up to $20.1bn for the equity it didn't own.

However in early 2013 the US Department of Justice announced its opposition to the Modelo takeover on grounds it would reduce competition in the US market. In response, AB InBev agreed to surrender US rights to Corona to Crown Imports in perpetuity. AB InBev declared its own estimates for global retail sales for Corona, excluding the US, at $5.1bn in 2012. Sister brands Modelo Especial and Victoria had $1.7bn and $1.6bn respectively.

The SABMiller deal added significant additional operations in Colombia and a number of Central American markets under the umbrella of Grupo Bavaria. (See here for separate AmBev profile).


Despite its recent focus on the Americas, the group retains an extensive presence in Europe. In Belgium, the group's heritage brands include Belle-Vue and top-selling Jupiler (which overtook Stella Artois as the #1 brand in the early 2000s). It is the leading brewer with almost 56% local share. In the UK, InBev briefly became the #2 brewer as a result of its acquisition in 1999 of both Whitbread and Bass Brewers. However it was subsequently forced by regulators to sell off Bass's biggest brand, Carling, pushing the remaining UK operations into #3 position behind Scottish & Newcastle (now Heineken UK) and Carling's buyer, now Molson Coors. (It remains the #1 by off-trade take-home sales). The key brand for AB InBev UK remains Stella Artois. However, off-trade (ie take-home) sales have fallen sharply since 2012 as a result in cuts in promotional spending. Nielsen estimated total sales of around £540m for the year to Apr 2017 (quoted by The Grocer), down 3%. Sales of the main brand have stabilised, but variants Cidre and 4% suffered dramatic decliones in performance. Stella is supported by Budweiser (£306m off-trade) and Beck's (around £44m off-trade). The best performance in recent years has come from newly acquired Corona Extra, sales of which almost doubled in ye 2016 and then rose by another quarter in ye Mar 2017 to £118m. The group is said to be seeking an owner for fading jewel Boddingtons and Bass Ale. The group also distributes Castlemaine XXXX (under license from Lion Brands) and Murphy's Irish Stout (from Heineken). Scottish lager Tennent's was sold to C&C Group in 2009.

In Germany, a big but highly fragmented market, InBev is the #2 brewer by volume, although share is low at just over 9%. It started a determined assault on that market with the acquisition of Beck's in 2001, followed by Brauergilde Hannover in 2002, and family-owned groups Spaten and Dinkelacker a year later. As a result, the portfolio now houses Diebels, Hasseroeder, Gilde, Wolters, Loewenbrau and Franziskaner white beer as well as Beck's. InBev sold its minority stake in Spain's #3 brewer Damm in 2006.

Sun InBev is currently the #2 brewer in Russia, narrowly ahead of Heineken, and responsible for products including #2 brand Klinskoye, as well as Sibirskaya Korona (Siberian Crown) and Bagbier. Budweiser is marketed in Russia and most other CIS markets as Bud. In the Ukraine, the group is the local #1 as a result of local brand Chernigivske. The StarBev breweries across Central & Eastern Europe were sold in 2009 to private equity to pay down debts incurred with the acquisition of Anheuser-Busch. (They are now owned by Molson Coors).

The SABMiller deal gave AB InBev a minority stake in a joint venture with Turkish brewer Anadolu Efes in Russian, Turkey and a few other neighbouring territories. Previously, SABMiller had owned Russian brewery Kaluga, the #3 brewer in that market. Its main brand is Zolotaya Botchka and it also produces Miller and Holsten under licence. In 2012, SABMiller transferred control of this business to Turkish brewery Anadolu Efes in return for a 24% shareholding in the merged company. Anadolu Efes was already the dominant brewer and soft drinks marketer in Turkey and already had a presence in Russia. AB InBev inherited the minority shareholding. SABMiller's other brands in Europe were sold post-acquisition to Asahi Breweries.

In 2017, InBev agreed to merge its own operations in Russia and Ukraine with those of Anadolou Efes. By so doing, AB InBev will effectively take back partial control of SABMiller's CIS brewery operations. The combined business, to be named AB InBev-Efes, will be a 50/50 joint venture. Terms of the deal were not disclosed. It is expected to complete in the first half of 2018. Carlsberg's Baltic Beverages Holding is the biggest brewer in Russia with around 32% local share. The combined AB InBev-Efes will have around 21% ahead of Heineken on 11%.

The SABMiller acquisition also gave AB InBev a substantial presence in Africa, effectively for the first time. The cornerstone of SABMiller was originally South African Breweries. Even before the acquisition of Miller, South African Breweries was already the world's 5th largest brewer. Until comparatively recently, it had a virtual monopoly in South African beer, effectively 97% share. That iron grip was weakened, however, in 2007 when Heineken terminated SAB's 30 year-old license to manufacture and market the country's best-selling premium beer, Amstel, citing conflict of interest. The company's flagship brand remained wholly owned Castle Lager, a top-selling beer in several other African countries as well as South Africa. It is supported by more than 40 other products including the South African #1 Carling Black Label (or CBL), Hansa Pilsener, St Louis and Lion Lager, as well as flavoured alcoholic beverages Redd's and Brutal Fruit. Redd's was actually originated by SAB in 1996, but a perpetual license was granted to Molson Coors to handle the product in the US. SAB's biggest local competitor is Heineken.

SABMiller operated seven breweries in South Africa as well as 30 others in countries including Tanzania (the Safari and Kilimanjaro brands), Mozambique (2M), Botswana, Uganda (Eagle Extra) and Angola. Some of these are run in a strategic alliance with Groupe Castel of Namibia. In total, SABMiller and its partners had held an effective 60% share of the entire African beer market, now inherited by AB InBev. Several products in the continent are made from locally sourced and lower-priced or taxed ingredients such as sorghum or cassava. See SABMiller profile for more.

Asia Pacific

The combination of InBev's existing presence in China with Anheuser-Busch's local operations there created the country's #2 brewer, although it has since slipped into 3rd place by volumes following the sale of AB's 27% equity stake in Tsingtao. The group operates 36 breweries across the country. Key brands include Harbin, the local leader in the North East, and Budweiser, still one of only two beers with national distribution in that vast country. Other brands including Sedrin, Jinling, Double Deer, KK and Zhujiang. AB InBev declared global retail sales of $1.8bn for Harbin in 2012, and $1.1bn for Sedrin. In 2014, the group acquired another regional beer, Ginsber, for $868m.

The group has around 51% share of the Korean market through Oriental Brewery (OB), now South Korea's biggest brewer. Brands include Cass and OB. Previously a joint venture with Doosan Group, InBev took full control of the business in 2004. Five years later, following the acquisition of Anheuser-Busch, InBev sold OB to private equity group KKR for $1.8bn, although the brewery continued to serve as AB InBev's local licensee in Korea. Over the next few years, OB expanded rapidly, overtaking local rival Hite. In 2014, AB InBev bought back the business for a greatly increased $5.8bn.

The most significant bolt-ons in the Asia Pacific region from the SABMiller takeover were in India and Australia. SABMiller India's brands include Haywards 5000 and Royal Challenge. In Australia, the group had acquired Carlton United Brewers, whose brands include Carlton Draught, VB and Crown.


Group revenues for 2009, including the first full-year contribution from Anheuser-Busch, were almost $36.8bn. On an organic basis, the comparable year-on-year increase was around 2.5%. Reported profit was $4.6bn. Divestments and currency fluctuation caused revenues to slip slightly in 2010 to $36.3bn. Reported attributable profit was $4.0bn. A rebound in 2011 lifted revenues by 5% to $39.0bn, and profit jumped 45% to $5.9bn. There were finally signs of a recovery in the previously flat US market in 2012, pushing revenues up by a further 2% to $39.76bn, while profit jumped 24% to $7.28bn. However, the succession of big acquisitions has left the group nursing a mountain of debt. This peaked at more than $45bn at the end of 2009, but has been reduced since then by divestments and redemption. It had fallen to a still weighty $30.1bn by the end of 2012. Interest payments on that total were just under $2.0bn during the year.

For 2013, group revenues rose by 3% to $43.2bn, and revaluation of its original Modelo stake prompted net profits to more than double to $14.4bn. Excluding accounting adjustments and other exceptionals, normalised profit was up by a still-healthy 10% to $7.94bn. Another, and stronger, improvement in 2014 lifted revenues to $47.06bn, the highest level to-date. Reported net profits slipped back to $9.22bn, but there was an increase in normalised profit excluding exceptionals to $8.87bn.

Currencies impacted upon performance for 2015, with revenues slipping back to $43.60bn. At constant rates, growth would have been over 6%. Reported net profits fell to $8.27bn, while normalised profit excluding exceptionals was also down to $8.51bn.

The huge challenges posed by the SABMiller deal, and the time taken to negotiate it, weighed heavily on performance in 2016. Reported revenues were up 2% to $45.52bn as a result of the addition of SABMiller in 4Q, but on a comparable basis to the year before there was a 3% decline. Net attributable profit plunged to $1.24bn after steep finance expenses. Normalised profit excluding exceptional items almost halved to $4.85bn.

The group's four biggest markets by volumes were the US (109m hl), Brazil (85m hl of beer and another 29m of soft drinks), China (75m hl) and Mexico (42m hl). The US was the group's biggest market by revenues, accounting for 32% of the group total or $13.83bn, while Canada added another $1.8bn. However, Latin America is the biggest overall region, now divided for accounting purposes into three separate regions of North (including Brazil), South (Argentina, Bolivia etc) and West (Mexico, Colombia, Peru etc). Combined revenues from those three regions were $16.51bn. Latin America North was the biggest of the three in 2016, contributing revenues of $8.5bn. However, the combined total from all three Latin America markets, with only around one quarter's contribution from SABMiller, was $16.5bn. Europe and Asia Pacific were small by comparison at $6.0bn and $6.1bn respectively.

Figures for 2017 were stronger but challenges remain. Revenues of $56.4bn jumped by 24% on a reported basis, but a more modest 5% on a comparable basis. The key difference, given the more or less flat volumes, was higher pricing on beer sales. Net attributable profit soared to just under $8.0bn, but net debt remains sky high at a staggering $104bn. Finance expenses alone were $6.2bn for the year.

Continuing weakness in AB InBev's two biggest markets of the US and Brazil offset solid growth elsewhere in 2018, with Mexico the best performer overall. China and Colombia also performed well. However, crucially, Bud Light and Budweiser continued to lose share in the US. There were gains for stablemate Michelob and Bud family spin-offs Bud Light Orange and Budweiser Reserve, but AB InBev's combined beer volumes in North America slipped by 2.6%. Group revenues fell 3% to $54.6bn as a result of currencies and divestments. On a organic basis the group claimed a 5% lift. That was mainly the result of higher pricing and better sales from premium products: group volumes were more or less flat on an organic basis. Higher financial expenses relating in part to the group's still-massive $102.5bn debt mountain, as well as a higher tax charge, cut deeply into profitability. Net income plunged by more than a third to $5.7bn.

The group is controlled by Stichting AB InBev, a holding company which owns a 34% stake in the group. Various other privately controlled entities associated with it hold another 10% or so of equity. Ownership of all these private holdings is split between AmBev's former owners - the Brazilian investors Jorge Paulo Lemann, Marcel Herrmann Telles and Carlos Sicupira - and family trusts for Interbrew's original founding families. Although the shareholders' agreement between the Interbrew families and AmBev's Brazilian owners stipulates 50/50 control, it is the latter who are effectively the controlling shareholders of InBev. Just under 48% of AB InBev's equity is publicly owned.


Interbrew has the privilege of being one of the world's oldest brewers, tracing its roots back to the 14th century, when the Den Hoorn brewery in Leuven, Belgium, first began making beer. In 1717 that business changed its name after it was acquired by Sebastiaan Artois. His Artois brewery became one of continental Europe's most prosperous beermakers over the following two centuries. Its most successful brew, Stella Artois, was first brewed in 1926. After World War II, Artois began to expand its business beyond Belgium. It acquired control of Leffe in 1954, followed by Holland's Dommelsch Brewery in 1968, and Brasserie du Nord in France two years later. Stella took its first steps outside the French and Belgian market in 1976, when the company agreed its first licensing deal, with Whitbread in the UK.

Despite the success of Stella and other beers, Artois was denied the position of the most popular beer in its own country. Jupiler was introduced by Piedboeuf, a competitive family brewery which had been operating since the middle of the 19th century. Increasingly both companies were in danger of being squeezed out of the market by the relentless expansion of Carlsberg and Heineken. In 1987, Artois and Piedboeuf joined forces to create Interbrew. At the same time, the families who still controlled the respective businesses, handed over management to newly recruited executives (although they continue to have seats on the board).

The enlarged group continued to snap up smaller breweries and brands. Hoegaarden joined the portfolio in 1989, Belle-Vue in 1991. In 1995, the group made another major purchase, acquiring Canada's Labatt Brewing Company for around $2.9bn. This gave Interbrew an important foothold in the Americas and placed the company in the #3 position worldwide behind Anheuser-Busch and Heineken. The group was also adding a number of companies in eastern Europe to its collection. Interbrew acquired breweries in Hungary in 1991, Croatia and Romania in 1994, Bulgaria in 1995 and the Ukraine in 1996. As a result of its purchase of Labatt's, Interbrew also ended up with ownership of various Canadian sports teams and their stadiums, including baseball team the Toronto Blue Jays. It had been seeking a buyer for these assets for several years, and finally completed a deal to sell the Blue Jays to Rogers Communications for $112m in late 2000.

Interbrew acquired the UK's Whitbread brewery in 2000 for £400m. Whitbread's portfolio of owned brands was comparatively small, with only one major non-licensed brand, Boddingtons. But it was already the UK licensee for Stella Artois, as well as Heineken, which accounted for around a third of its business. However, competition between Heineken and Interbrew stopped the Belgian company from taking over the Whitbread's UK Heineken contract. Instead Whitbread was obliged to lease back from the Belgian company one of the breweries included in the sale and continued to produce Heineken under license until 2002. A month later Interbrew announced the purchase of Bass Brewers from what is now InterContinental Hotels for £2.3bn. This portfolio was dominated by the Carling lager brand, selling around 3.3 million barrels a year. The group also had a 55% stake in the Czech Republic's #3 brewery, Prague Breweries, makers of Staropramen beer and owned French vineyard Chateau Lascombes. Despite the fact that it was still awaiting approval of the takeover of Whitbread and Bass, the group impetuously announced it would give up private status in December that year, launching an IPO on the Belgian Stock Exchange. Also that month, Sun Interbrew, a joint venture in Russia with Sun of India, acquired Ukraine's #2 brewery Rogan.

However in January 2001, in a shock upset of Interbrew's UK ambitions, the company's acquisition of Bass Brewers was vetoed by government regulators. Interbrew had expected to be obliged to sell off some smaller brands, but had not anticipated a full block. The Competition Commission said the takeover would create an effective brewing and distribution duopoly in the UK between Interbrew and Scottish & Newcastle, and instructed Interbrew to sell Bass Brewers to a single approved bidder. The Belgian company responded by appealing against the decision, beginning a long campaign to break the business up instead of sell it whole. Finally, after several months of deliberation by regulators, Interbrew was granted improved terms for its Bass takeover. It was told to sell off the Carling, Caffrey's and Worthington brands, but allowed to keep Tennent's and Bass Ale, as well as breweries in Scotland and Northern Ireland. Carling was finally acquired by US brewer Adolph Coors for $1.7bn. Meanwhile, still chasing major acquisitions, Interbrew paid over the odds to snap up Beck's Brauerai, Germany's biggest beer exporter. The deal price was $1.56bn, making it one of the most expensive takeovers ever in the international brewing industry.

At the end of the year, a document was leaked to the British press showing plans for an imminent bid by Interbrew for South African Breweries. The brewer claimed that the document was largely forged, although parts of it were genuine, and stated that no such plans were being considered. (Instead SAB subsequently joined the frenzy of consolidation across the industry, acquiring Miller of the US). In 2002 Interbrew added a third Chinese brewer to its portfolio, paying $42m for a 70% stake in regional brewery KK Group, and acquiring a 24% stake in existing strategic partner Zhujiang. However the key deal was the merger with AmBev, announced in early 2004. The only potential complication involved in this deal was resolving the relationship between Labatt and Mexico's FEMSA Cerveza, a rival to AmBev. Even before Interbrew's purchase of Labatt, the Canadian company had agreed a strategic alliance with FEMSA, makers of Dos Equis, Bohemia and Sol beers. As a sideline to the AmBev deal, Interbrew agreed to sell back to FEMSA the 30% stake it owned, and also dissolved their North American distribution partnership. The company also reacquired US distribution rights to its own Bass Ale, previously distributed under license by Diageo.

In what was then its most ambitious acquisition, Interbrew announced in March 2004 a complex deal to merge with Brazil's AmBev, then the world's 5th biggest brewer, paying €3.3bn to acquire an effective 56% equity holding in AmBev. In return, AmBev absorbed Interbrew's interests in Canada and the US, represented by the Labatt Brewing Company. The deal closed in August 2004.

Last full revision 16th June 2017

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