The document provides a strategic analysis of AB InBev, focusing on its competitive strategy, industry dynamics, and financial performance, emphasizing its position as the largest FMCG company post-SABMiller acquisition. It outlines the challenges and opportunities in the beer market, illustrating the company’s strengths in cost advantage and differentiation strategies. Recommendations suggest strengthening bottling agreements, pursuing M&A opportunities, and expanding into the spirits market to enhance growth and competitive advantage.

1. Strategic Company &
Market Analysis
2017 Master in
Management
IE Business School
Competitive Strategy

2. Company Analysis
Strategic Situation Analysis
Strategy Recommendations
Company Overview
Industry Analysis
AGENDA
01
02
03
04
05

3. Company Overview
Business
Segments
 International & Global Brands
and Local Champions
 Bottling agreements with Coke
& PepsiCo
Beer and Soft Drinks
Comparison
 According to EBITDA
after acquisition of
SABMiller
Largest FMCG
Financial
Results
 Annual sales: USD 46.3bn
 After-tax profits: USD 2.7bn
 EBIT margin: 27.04%
2016 Numbers
Industry Characterized by M&A
Alcoholic Beverage
Industry
Beer
Segment
 Overall revenue of
33.38bn in 2015
 AB InBev owns over
500 beer brands
Market Share
Company
Structure
 Headquarters: Leuven Belgium
 Formed 2008, through merger
of breweries from Belgium,
the U.S., and Brazil
AB InBev

4. Industry Analysis

5. Porter’s 5 Forces
Static Industry Analysis
Threat of New
Entrants
moderate
Threat of
Substitutes
moderate - strong
Buyer Bargaining
Power
moderate
Supplier
Bargaining Power
weak - moderate
Rivalry Among
Existing Competitors
strong

6.  High profitability
of beer market
 Distinct niches
 Endogenous &
exogenous entry
barriers
 21% of local
market: craft
breweries
Porter’s 5 Forces
Static Industry Analysis
Existing
Rivalry
Threat of
Entry
Buyer
Power
Supplier
Power
Threat of
Substitutes

7.  Minimal
switching costs
 Wine (most
relevant)
 Premium craft
beer
 Light or alcohol-
free beer
 Cannabis
Porter’s 5 Forces
Static Industry Analysis
Existing
Rivalry
Threat of
Entry
Buyer
Power
Supplier
Power
Threat of
Substitutes

8.  Scattered end-
consumers
 Low threat of
home production
 Reliance on
retailers as
channel to market
 Declining demand
Porter’s 5 Forces
Static Industry Analysis
Existing
Rivalry
Threat of
Entry
Buyer
Power
Supplier
Power
Threat of
Substitutes

9. Heavy reliance
on external
suppliers (water,
grain, hop)
Resources
become scarcer
Need for high
quality
Porter’s 5 Forces
Static Industry Analysis
Existing
Rivalry
Threat of
Entry
Buyer
Power
Supplier
Power
Threat of
Substitutes

10.  Highly
concentrated
(CT: 2.22)
 4 giants control
50% of market
 Pred. HHI after
merger = 2.500
Porter’s 5 Forces
Static Industry Analysis
Existing
Rivalry
Threat of
Entry
Buyer
Power
Supplier
Power
Threat of
Substitutes

11. INDUSTRY
DYNAMICS

12. SEGMENTATION
Through Strategic Group Matrix
BroadNarrow
NarrowBroad
Product Portfolio
CustomerSegment

13. THE COMPETITIVE
ADVANTAGE

14. COMPETITIVE ADVANTAGE
Low-Cost Strategy and Differentiation in Niches
 Low-cost strategy through reducing average cost curve
 Leveraging on large economies of scale and learning
 Aggressive cost saving strategies throughout company
 Acquisition of competitors further increases advantage
 Successful value capture: ROS of 27.5% (industry average: 12%)
Cost Advantage
 Value creation: acquisition of smaller, specialized breweries
 Increased market reach and developed new customer base
 Differentiation through intangible sources (marketing, clear
value proposition, leveraging brand equity)
Differentiation Advantage

15. Strategic Situation Analysis
The SAB Miller Acquisition

16. SABMiller Acquisition
As Solution to Several Challenges
Fierce Battle for
Market Share
 Becoming largest
FMCG company by
EBITDA
 Enhanced competitive
advantage
Stagnating Markets
 Opened markets in
developing countries
 Expanded distribution
channels
Threat of Substitutes
 Threat reduced by
increased portfolio
 Diversification if
different markets
 Clear identification of declining performance and improvable position
 In line with company’s strategy and M&A pattern
 Clear perception of anticipating future market developments

17. STRATEGY
RECOMMENDATIONS

18. Strategic Recommendations
for AB InBev
Bottling
Agreements
Strengthen position in
beverage industry as
soft-drink producer Attentiveness to
M&A Opportunities
Expand portfolio and
foster growthProtect Competitive
Advantage
 Acquire upstream
suppliers to control
vertical value chain
 Expand secrecy
around production
process
 Adaption through
bottle rebranding
Brown-Forman
Corporation
 Due diligence
analysis of possible
acquisition
 Venture into spirits
market

19. Strategic Company &
Market Analysis
2017 Master in
Management
IE Business School
Competitive Strategy