Today brought scary news. Anheuser-Busch InBev and SABMiller, the two biggest beer producers in the world, have agreed on terms for a gigantic deal to merge both companies. The merger is set to create a beer behemoth responsible for one in three beers sold worldwide.
The final AB InBev offer is worth more than $110 billion. Key actor in the deal making and major profiteer is the tobacco industry giant Altria, which is SABMiller’s biggest shareholder, owning a 27% stake. Altria, the manufacturer of Marlboro cigarettes and formerly known as Philip Morris Companies, is predicted to receive seats on the board of directors of the new beer behemoth.
The Financial Times reports that if completed, the deal — including debt — would be the third largest M&A transaction in history, overtaking AOL’s purchase of Time Warner in 2000.
This deal has to be viewed as a major threat to global health and sustainable development
In IOGT International we are deeply concerned about the mega merger. We are deeply concerned for a number of reasons.
- The merger would mean substantial gain in power and influence.
- The merger would create a behemoth of a beer producer, dominating large parts of the world, including developing countries.
- The merger means ever more aggressive practices to make the blockbuster deal profitable.
- The merger is a serious threat to global health and sustainable development.
In our press release today, we make the case that the merger marks another aggressive step by Big Alcohol to target emerging markets in Africa and Asia.
The troika of two Big Alcohol giants plus the Big Tobacco giant Altria spells trouble for people in developing countries and for the newly adopted Agenda2030.
The track record of Big Tobacco is well documented and well know. And AB InBev and SABMiller have each similarly scary track records of unethical practices putting profit over Human Rights.
Alcohol kills 3.3 million people worldwide, every year. It is the fifth leading cause of death and disability worldwide and a major risk factor for global epidemics of gender-based violence, infectious diseases like HIV/ AIDS and tuberculosis as well as for non-communicable diseases like cancer, heart disease and diabetes.
Market concentration spells trouble
We are concerned because this type of market concentration increases the political power of a few companies to conduct aggressive lobbying to pre-empt, block or overturn public health policy making that would threaten their profits.
Market concentration is usually the trend towards a decrease in the number of companies that produce a specific commodity or service, the result being that remaining corporations become bigger, more influential and powerful, dominating bigger shares of the market and often driving smaller competitors out of business.
The alcohol industry has witnessed a tremendous market concentration since the late 1970s. Between 1979 and 2006, the ten largest global beer producers more than doubled their share of the global market, from 28% to 70%.
The consequence of this type of market concentration in the alcohol industry has created Big Alcohol – where decisions about what to produce, how to market products and who to target with corporate communication is left in the hands of very few major corporations, their executives and shareholders. At the same time, the power of governments to shape markets and protect consumers is diminishing.
For example, ActionAid has exposed SABMiller for its unethical tax schemes in Sub-Saharan Africa. ActionAid estimates that SABMiller’s tax dodging schemes may have lost governments in developing countries as much as $30 million, which is enough to put a quarter of a million children in school.
SABMiller has also been exposed to employ aggressive tactics in lobbying against a public health bill to ban alcohol advertising in South Africa.
AB InBev is under investigation by tax authorities in Europe for a tax agreement that ”allowed” AB InBev to transfer 140 million euros of profit from around the world over three years to a Belgian company that exists only on paper.
AB InBev is also infamous for its love affair with corruption-riddled Fifa, football’s world governing body. Budweiser, an AB InBev product, is a long-time sponsor of the Fifa World Cup. In aggressive lobbying, Fifa and AB InBev forced Brazil to abandon legislation to prevent and reduce alcohol-related violence around football matches, only to allow alcohol being sold inside World Cup stadiums.
Concerns about aggressive corporate practices and far-reaching influence
We are deeply concerned about this mega merger because this type of market concentration means ever more spending on marketing (and the exposure of children and youth to that marketing), allows substantial investments in buying ever more lobbying consultancy services; purchasing favourable research that sow doubt about alcohol’s harmful effects; creating make-believe corporate social responsibility initiatives that cover up the industry’s unethical conduct; this type of market power means huge influence on consumer choices and on the environment that our children and youth grow up in.
This blockbuster deal between AB InBev and SABMiller spells trouble. The new entity will be able to afford the most advanced technological, marketing and research and development expertise – to design appealing and addictive products, and to market them to children, youth, minority groups and in developing communities and countries. The new entity will be able to out-compete smaller companies using cheaper prices.
Targeting developing countries, putting profits over human rights
Sub-Saharan Africa and South-East Asia have clearly been identified as “emerging markets” by the alcohol industry. For AB InBev, for example, markets in North America and Europe are largely saturated while in Africa, there’s a huge young population and a huge population of people who do not consume alcohol. Children, youth and adults who are not using alcohol living in societies with few regulations and even less enforcement are the golden opportunity to lock in life-long customers.
We are concerned with the fact that this mega merger will mean a very real and substantial threat to sustainable development in low- and middle income countries and vulnerable communities. The negative impact of alcohol on individuals, families, communities and society at large outweighs the economic contribution of the alcohol trade. Alcohol is quite simply an obstacle to development.
The mega-merger and the frenzy of activity that is set to follow will only benefit a few shareholder and executives. It’s quite telling that Altria, a Big Tobacco behemoth, is pushing for the merger. Big Tobacco has a track record of unethical conduct and merciless pursuit of profits in low- and middle income countries.
We are deeply worried that more children and youth will be exposed to alcohol marketing; that the merger is likely to lead to even more industry activity in the “emerging markets” and that the competition for these markets causes the use of ever more unethical tactics; and we are deeply worried about the fact that more people will be enticed to start using alcohol. The more alcohol is used in a society, the bigger the burden of alcohol-related harm. And countries in low- and middle income countries really are unprepared for dealing with even more alcohol harm.
World leaders have agreed 17 visionary Sustainable Development Goals. Alcohol is an obstacle to achieving 11 out of those 17 new SDGs and the alcohol industry poses paramount obstacles to achieving these goals.
This blockbuster deal continues the trend of market concentration in the alcohol industry and signals aggressive tactics in the coming months and years to make it profitable for a few top executives and shareholders, while millions of people, families and communities will suffer from harm caused by the alcohol industry.