Asahi and Carlton & United Breweries merger raises red flags for watchdog

Asahi and Carlton & United Breweries merger raises red flags for watchdog

Asahi's proposed acquisition of Belgium-owned, Melbourne-based Carlton & United Breweries (CUB) is under the Australian Competition and Consumer Commission's (ACCC) microscope.

The watchdog says it has preliminary concerns about the proposed merger, with the preliminary view that the acquisition would reduce competition in the Australian cider and beer markets.

"The proposed acquisition would combine the two largest suppliers of cider in a highly concentrated market," says ACCC Chair Rod Sims.

"A combined Asahi-CUB would control the Somersby, Strongbow, Mercury and Bulmers cider brands, which account for about two thirds of cider sales. We are concerned that the proposed acquisition may lead to higher cider prices."

The watchdog says Asahi has attempted to argue that the cider and beer markets are one and the same, but that is disputed by the ACCC who says beer drinkers do not readily switch to cider and vice versa.

As for the beer market, the ACCC says Asahi currently acts as a competitive force to the major Australian players in the sector.

"While Asahi is currently a relatively small brewer in Australia, accounting for approximately 3.5 per cent of beer sales here, our preliminary view is that Asahi may act as a competitive constraint on the two largest beer brewers, CUB and Lion, and has the potential to be an even bigger threat in future," says Sims.

CUB is currently owned by Belgium-based multinational brewing company Anheuser Busch InBev SA/NV. AB InBev acquired CUB from SABMiller in October 2016.

Asahi is a major beer player in Australia. It is the second largest supplier of premium international beers in Australia, with brands including Asahi Super Dry, Peroni, Mountain Goat, Cricketers Arms, and Two Suns.

If the deal were to go ahead Asahi would add CUB's massive suite of beer brands to its own portfolio, including Great Northern, Victoria Bitter, Carlton Draught, Carlton Dry, Cascade Premium, Pure Blonde, Matilda Bay, Fat Yak, Melbourne Bitter, Crown Lager, Pirate Life, 4 Pines, Foster's, Reschs and the recently acquired Balter.

As for cider brands Asahi supplies Somersby to Australia under a licence from Carlsberg, while CUB owns Strongbow, Mercury, Bonamy's, Little Green, Spring Cider Co, Dirty Granny, Pure Blonde Cider.

"Our preliminary view is that having Asahi in the market as a competitor to the big two brewers may help to keep a lid on beer prices. This competitive presence, and the threat of Asahi growing more in the future, would be lost if this deal goes ahead," says Sims.

The ACCC's final decision on the acquisition is scheduled to be handed down on 19 March 2020.

Never miss a news update, subscribe here. Follow us on Facebook, LinkedIn, Instagram and Twitter.

Business News Australia

Help us deliver quality journalism to you.
As a free and independent news site providing daily updates
during a period of unprecedented challenges for businesses everywhere
we call on your support

Four ways businesses can use artificial intelligence to triumph in 2022
Partner Content
The last two years have delivered major disruption to the technology industry and broad...
PROS
Advertisement

Related Stories

All smiles: Dental Boutique founders named 2021 Melbourne Young Entrepreneurs of the Year

All smiles: Dental Boutique founders named 2021 Melbourne Young Entrepreneurs of the Year

As founders of Dental Boutique, Dr Reuben Sim and Dr May Chan have ...

Robbie Williams biopic to be filmed in Victoria

Robbie Williams biopic to be filmed in Victoria

Victoria will soon be home to the new Robbie Williams biopic Better...

Aussie Broadband launches $344m bid for Over The Wire

Aussie Broadband launches $344m bid for Over The Wire

One of Brisbane’s Top Companies Over The Wire (ASX: OTW) has ...

Afterpay postpones vote on takeover as Square takes on a new name

Afterpay postpones vote on takeover as Square takes on a new name

Delays from the Bank of Spain in approving a multi-billion takeover...