You must have read it everywhere, AB InBev, the beer giant with 25% (with the forecast to grab 30%) of the global beer market share, recently made the biggest acquisition ever by agreeing to pay $106 billion for SAB Miller. While its shareholders and investors are thrilled by this smart move, increasing their profit forecast in expectation that the sale pulls through regulatory vetting, it is a move that has more to do with market expansion and quest for brand domination.

No doubt that the acquisition will cement the company’s leadership in Europe and the Americas, the takeover of SAB Miller would give AB InBev, the opportunity to do what it has never done in its 649 years in brewery business: do business in Africa. In its 182 page 2014 Annual report where the company declared an intimidating total revenue of $47 billion, Africa is the only continent missing it is footprint. SAB Miller’s acquisition is the right (perhaps a cheaper alternative) access point into the continent.

With over 300 beer brands in its kitty, the battle-line is drawn between AB InBev, Heineken and Diageo (Guinness). While the two latter competitors are in stressful financial positions, poor profit and weak balance sheets, reliance on commercial papers and medium term debt instruments to fund expansions, AB InBev’s deep pockets would allow it ‘run over’ its competition in some regions. Currently, SAB Miller’s weak competitive position in West Africa completes the puzzle. With 31% of the continent’s population, it is expected that AB Inbev might double its efforts in the region using Nigeria as the bulls-eye target. While SAB Miller’s cumulative investment of $210 million in Intafact Limited Onitsha Brewery, has given it an opportunity to attack Heineken and Guinness from Nigeria’s Eastern region. The takeover by AB InBev is a ‘shot in the arm’ for the company to enter other regions with localised brands.

While the deal might take up to Q3 2016 to click, AB InBev’s competitors in Nigeria would ramp up their regional and multi-brand strategy, we might see more sub-brands and new variants launched from late Q1 2016 to fortify their base. With a slightly higher adspend forecast for the advertising industry in 2016, the market will get a boost in spend from the beer category. The category would likely triple its media spend of N1.2 billion HY 2015 estimate to an annual forecast of N7.7 billion in 2016 FY. Moreover, trade marketing and below-the-line companies should get more busy as many brands flooding the fairly saturated market lock horns not for market share but share of litres.

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