Heineken to acquire Asahi Beverages brands

Asahi Beverages, owners of Carlton & United Breweries, has announced the sale of Stella Artois and Becks to Heineken.

The Japanese-owned brewer is selling the beer brands to satisfy the conditions imposed by the Australian Competition & Consumer Commission after buying Carlton & United Breweries from Anheuser-Busch InBev in a $16 billion deal.

Heineken also secured cider brands Strongbow, Little Green and Bonamy’s.

A statement from Asahi advised the acquisition of these brands by Heineken will fulfill Asahi Beverages’ obligations under the ACCC’s approval of our acquisition of Carlton & United Breweries.

“The deal remains subject to regulatory approval, which is expected in Q4 2020,” the statement said.

“There will be no manufacturing job losses nor brewery closures associated with this deal.”

The deal highlights the complicated nature of international brand ownership.

Heineken is in a joint venture with Lion in the Australian market, while the brands covered by the deal will be distributed in Australia by Drinkworks, the Australian sales and marketing arm of DB Breweries Limited (DB), Heineken’s wholly-owned Australasian subsidiary.

Drinkworks distributes a range of Heineken and DB beers and ciders in Australia, including Tiger, Sol, Monteith’s Beer and Cider and Orchard Thieves Cider.

Lion signed a long-term licencing deal with Heineken in 2017 to produce and sell the beer in Australia with the brand previously managed by a joint venture, Heineken Lion Australia.

What the deal means for Heineken in Australia, if anything, is yet to be known. However, Lion relinquished the Australian rights for Corona to CUB in 2016 following the ABInBev acquisition.

Increase or decrease in competition

In June, the ACCC found that neither future market entrants nor Australia’s 600 craft brewers were likely to “replicate Asahi’s competitive presence”, and appeared to be betting on the strength of the divested Beck’s and Stella Artois brands to replace that competition.

It said the while small players such as Asahi “significantly affect the intensity and/or quality of competition” in Australia’s “highly concentrated” beer market, it also considered that a new entrant or other existing smaller competitors were unlikely to replicate Asahi’s competitive presence.

Minor league competitor Coca-Cola Amatil was understood to be in the hunt for the brands, which would have created a stronger third player to replace Asahi competing against the current duopoly, with the ACCC finding the then separate Asahi acted as a competitor to the big two.

“Asahi is a well-resourced global competitor and offers a strong portfolio of brands in Australia,” the ACCC noted.

“Prior to the proposed acquisition, Asahi was committed to growing its Australian operations. Asahi’s presence in the on-premise channel made it a key competitor for taps that were not contracted to Lion and CUB.

“Market feedback indicated that Asahi acted in a way that constrained the beer prices of Lion and CUB.”

The watchdog found that despite their growing numbers Australia’s craft brewers provided little competitive pressure on Lion and CUB.

“Although there are a large number of individual craft beer brands being sold in Australia, with apparent low barriers to smaller-scale entry, these independent craft brewers only have shares of no more than 0.5–1 per cent each.

“The ACCC considered that while the presence of independent craft brewers may increase consumer choice, individual craft brewers may not place effective competitive constraint on the two large incumbents.”

IBA Response

The Independent Brewers Association said it continues to be concerned about the issue of competition, with Chair Peter Philp saying Ashahi’s divestment of the two beer brands to Heineken will do nothing to open up competition in the on-premise tap market.

“It clearly demonstrates that the only way to break into the on-premise market owned by the duopoly of CUB (Ashahi) and Lion (Kirin) is to acquire brands,” he said.

“Small independent breweries don’t have the balance sheet of companies like Heineken so what chance do we have to compete?

“Fortunately, consumers are increasingly recognising that Australian independent beers are amongst the best in the world and that there is an indie beer for every taste out there. Beer drinkers can feel good that the dollars they spend over the bar are supporting local business and employment with profits remaining in Australia rather than being siphoned offshore by the big multinational brewers.

“I’d encourage everyone to ask for indie beer at their local, particularly in these challenging times when many small brewers have been hit hard by the pandemic lockdowns.”

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