Ben Wise on Branding

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Opportunities From the Heineken-Femsa Deal

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Earlier this week Heineken announced a $7.6 billion deal to buy Femsa, the Mexican brewer of such brands Sol and Dos Equis. This is a great move to Heineken who buys a foothold into the Central and South American markets where most of Femsa’s sales come from.

Without going through the lengthy list of mergers and acquisitions in the beer market, this deal emphasizes the consolidation of the global beer industry over the past 10 years in the hands of three dominant players: Heineken, SABMiller and AB-InBev. In many ways, consolidation in mature industries like this makes good business sense and benefits the consumers who get more reliable quality around the world.

The beer industry is unique because the brand position that is rooted in being independent and local is so powerful to beer drinkers. That is not to say that being the local brewery is enough to build a brand on, but it can be a strong platform if it is done well. And the ongoing consolidation in the beer market means fewer and fewer brands can credibly play in this space, even  if they attempt to be the ‘World’s Local Brewer’ as InBev claimed before acquiring Anheuser-Busch.

As smaller breweries are brought under the flag of the big guys they lose a lot of the character that once made them unique. Looking at the Canadian market, Keith’s is becoming more bland and generic by the day, Creemore has ditched their unique packaging and Sleeman’s is attempting brand extension after brand extension. It is the truly independent and local players that are benefiting from less competition for the position they are seeking, such as Moosehead, Mill St. and Steamwhistle (who is arguably the best in this space). I would expect to see more micro and regional brewers enjoy success as they can more easily occupy this compelling brand position.

What do you think? Have you seen similar trends in other markets?


Written by benwisebranding

January 13, 2010 at 6:55 pm

Posted in Beer

Tagged with , , , ,