Beer Quarterly Q3 2021: The Beer Wars

For global brewers, tapping into organic growth in the domestic market is typically the priority for driving growth, as it represents the least costly, lowest risk path to improving profits. However, when consumption in the domestic market peaks, brewers are often forced to consider M&A options to drive growth. In these cases, brewers must often decide between sticking to brewing and expanding into new, lesser-known geographies, or staying in their home market and expanding into new, lesser-known product segments – both of which have their rationale, but also an inherent set of risks. With beer consumption stagnating or declining across nearly all global markets today, brewers are being forced to explore these options and make increasingly difficult choices.

Report summary

In this edition, we explore the opportunities and challenges for brewers to expand beyond their core product segments and/or geographies. We start with a look at the experience of the large Japanese brewers, who began facing declining consumption almost 50 years ago, and actively began exploring expansion options both in new geographies and new product segments.
For a view on expansion beyond the core beer market, we look at the experience of US brewers, who have traditionally taken a ‘beer-first’ or ‘beer-only’ approach to M&A. US brewers are now actively expanding into adjacent products, such as hard seltzer, but have so far resisted major moves into new segments (e.g. soft drinks).
We also lean into the experiences of European brewers, who have actively pursued expansion beyond their core domestic markets for decades. However, with few growth markets left on the global horizon, we explore some of the lessons learned and best practices from expansion moves to date.
What is clear is that global brewers today face a challenging context. We offer this analysis not with the intention of providing a simplistic path to success – there are no easy answers or one-size-fits-all solutions. Instead, our intention is to provide a useful background on some key lessons learned to date, and how to think about the path forward; for those global brewers grappling with these decisions, we would value the opportunity to be part of the conversation.

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