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Posted August 2014

Beer is special still

The anatomy of the AB-InBev-SABMiller takeover rumour

MegaBrew |The AB-InBev-SABMiller combination – whether it happens or not – has already taught us one thing: never before in the brewing industry have the chattering classes, a new and truly global alliance of analysts and business media, been as pushy in bringing a deal about as in this case.

Ever since Bloomberg on 3 March 2014 published a scoop article entitled “AB-InBev need for SABMiller mega-deal grows”, business media the world over have been trying to outdo each other: not in unearthing any indications that such a deal was really imminent but in giving detailed outlines how such a feat could be pulled off. To date, not even the usual suspects among the world’s leading business publications have been able to find a single insider willing to confirm the rumour. However, this has not stopped anybody from adding more oil to the fire.

Given that the difference between a rumour with sparse evidence and a completely baseless rumour is almost undetectable, the ridiculously entertaining gossip that something is up between AB-InBev and SABMiller has spread like crazy over the past five months. As information was passed around, important qualifiers got lost. What started out as: “I'm not sure if this is true, but I heard that…” changed into: “I heard that…” until it finally became: “Did you know that…?” Such was the evolution of the AB-InBev-SABMiller rumour which travelled the world – to Africa, the U.S., the UK, Australia, and most recently to Italy, where the leading centre-left newspaper La Repubblica on 21 July ran a long article saying – in effect – that “il primo gruppo mondiale della birra vuole acquisire il secondo” (“the global number one in beer wants (!) to buy the number two”), as if this were an established fact.

At going to press, this wildfire rumour was still burning brightly, which has made many observers wonder how it could pick up such virulence in the first place. Part of the answer is: it’s to do with beer.

In our more prudish past, newspapers increased their circulation on the principle of “sex sells”. Who cared if the alleged hanky-panky actually took place? The AB-InBev-SABMiller saga has underlined that “beer sells” too, especially if it’s articles on business pages which deal with “fantasies” or wishful thinking (instead of fact). I would have assumed, perhaps unkindly, that few readers of the world’s business pages can actually name the beer brands that both companies own off the top of their heads, unless prompted that AB-InBev owns Budweiser, Bud, Stella Artois, Leffe and 200 more, while SABMiller has Miller, Peroni, Grolsch, Castle plus another 200.

Nonetheless, this would not have deterred anybody from wanting to read about this rumour. To those who drink beer, it is a special product. It’s unlike any other consumer product because it resonates with people’s cherished ideals like localism, tradition, and sociability - as any craft brewer would tell you. That it can also taste nice is an extra boon. What’s more, everybody will claim that beer is something they know and understand, unlike, say, pharmaceuticals or cement. Even so, the paradox remains: Why would the same readers who may care deeply for beer and its authenticity willingly fall for a juicy business rumour, getting perhaps as much enjoyment out of it as older readers did from looking at pneumatic-chested Page Three girls with their impossible hip-to-waist ratio? Is it a sign of our times that no one is interested any more in a real story? Have we all become blasé?

It seems to me what has given the AB-InBev-SABMiller rumour its unique and lasting readership appeal is the seemingly unbeatable combo of “Beer” and “Big Business”. You can imagine that, if this USD 100 billion-plus deal took place, it would have an obvious impact, considering its large scale and financial repercussions, on the large multinational population of shareholders, employees, competitors, regulators, etc in many countries around the world. AB-InBev operates in 25 markets, mainly in the Americas, while SABMiller’s operations are more widely dispersed to over 80 countries. That may help explain why media interest in the rumour has been truly global.

But this still leaves us with the question: how did this rumour get out in the first place?

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