Business Analysis : Sabmiller Plc

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2. Business analysis 2.1 Business description SABMiller plc is one of the largest brewing companies in the world, which specializes in production and delivery of beers and carbonated soft drinks. This multinational corporation operates in five regions including Latin America, Africa, Europe, North America and Asia Pacific. It was founded in 1895 in South African and is headquartered in London, the United Kingdom. SABMiller pays attention to shareholder value creation and aim to provide superior shareholder return. Besides, like Heineken and AB InBev, SABMiller wants to drive topline growth through the existing brands in the future and it requires investment in marketing. Minimalizing the cost of materials and reducing the waste and…show more content…
The merger between Anheuser-Busch and InBev in 2008 and Heineken 's acquisition of Asia Pacific Breweries in 2012 are evidences for this. The number of huge beer companies has been narrowed down by M&A. As a result of such trend, the potential profitability of existing brewers may be improved by increasing industry concentration. The second trend is that beer has become increasingly globalized in the past few decades. Drinks are originated in one country and then produced and sold all over the world. The process of globalization of beer has significantly accelerated during this period with the increased tendency of multi-national beer enterprises acquiring existing beer companies and constructing new breweries in emerging markets and licensing production of their brands outside their home countries (Boesler, n.d.). These industry tendencies combined with the nature of the overall beer market present a number of opportunities for major companies who have already gain a large amount of market shares such as SABMiller. However, the analysis of Porter’s five forces indicates a low industry ROE level. Data source: group estimate As shown in Figure 1, although entry barriers are considerably low for the craft beer segmentation, barriers are high for the companies who want to become major brewers. Therefore, taking the intense rivalry in the brewer industry into account, there is a certain degree of price competition among different
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