15th May 2015 12:14
LONDON (Alliance News) - FTSE 100-listed brewer SABMiller PLC on Friday said it has struck a deal to buy Greenwich, London-based independent brewer Meantime Brewing Co for an undisclosed amount, marking a push by the brewing giant into the fast-growing craft beers segment.
Meantime was founded in 1999 and now offers a range of beers sold in pubs across the UK, including London Lager, Yakima Red, London Porter and Meantime Pale Ale. SABMiller said it intends to grow sales of Meantime beers nationally and explore export opportunities in the European market.
SABMiller, which makes Grolsch, Peroni and Coors beers, added the deal gives it an entry point into the craft brewing market, the fastest-growing segment in the beer market in the UK. Beer sales at Meantime grew by 58% in 2014, substantially ahead of the 1% volume growth delivered by the wider UK beer sector over the same period and making it one of the fastest-growing modern craft breweries in the country, SABMiller said.
The acquisition also includes Meantime's retail sites, including the Tasting Rooms and brewery shop in Greenwich, the Greenwich Union pub, the pop-up Beerbox pub, and the Brewery Fresh tank beer concept, which has been rolled out to 26 pubs in the UK. SABMiller's Pilsner Urquell brand also has rolled out an unpasteurised beer campaign to pubs in London.
The acquisition will see Meantime open a pilot brewery which will become a European innovation and new product development hub for SABMiller.
The deal comes after the Anglo-South African brewer said on Wednesday that lager volumes in its financial year to the end of March were flat, with growth in Africa and Latin America offset by lower volumes in China and North America. Analysts said the outlook for SABMiller in 2016 looks lacklustre, with good prospects in its African market offset by the backdrop of increasing competition in Latin America, a key market, and tough conditions in North America and Europe.
Against a sluggish performance for established beer companies, craft brewing has exploded in the last few years, with a report from the Brewers Association, a US trade body, showing that craft beer volume in the US rose by 18% in 2014 and that the segment now accounts for one in ten beers sold in that country.
Jonathan Buxton, partner and head of consumer at Cavendish Corporate Finance, said: "Craft beer looks set to achieve the same success in the UK as it has in the USA, so the acquisition of the UK?s biggest craft brewer makes a lot of sense."
The company has been working to offset slowing lager volume growth by expanding its soft drinks bottling business, where revenue rose by 8% in 2015. In November last year, the group took steps to further strengthen the soft drinks bottling arm in Southern and Eastern Africa when it said it would combine its operations in the country with those of US soft drinks giant The Coca-Cola Co, creating a business which will account for around 40% of all Coca-Cola drinks volumes in Africa. SABMiller has a 57% stake in the new company.
"Meantime has been at the forefront of the modern craft beer movement in the UK and brews an outstanding range of beers across a variety of styles. At SABMiller we love local variety, and carefully nurture our 200 local and heritage beers. Meantime, born in a city with a rich beer heritage, will be a special new addition to the SABMiller family," said SABMiller Europe Managing Director Sue Clark.
"I can say from personal experience, that SABMiller is a great company to be joining forces with. They see the opportunity, and believe in the longevity, of modern craft beer in the UK," said Nick Miller, Meantime's chief executive.
"We are all excited about the opportunity to continue growing Meantime. We are also thrilled and flattered that SABMiller has given us a remit to innovate. This is a massive compliment and acknowledges our position as pioneers in modern craft beer," Miller added.
Mike van Dulken, the head of research at Accendo Markets, said the deal should allow SABMiller to capitalise on the growing craft beer market in the UK and said Meantime's growth prospects should be boosted substantially by SABMiller's scale. "The variety of styles added to SAB?s extensive local and heritage beer menu should serve it well, while its experience will help with Meantime?s strategic goal of making beer attractive to a wider clientele, including the fairer sex," he adds.
Peter Ward, a dealer at London Capital Group, said that, from SABMiller's perspective, the deal is about strengthening its portfolio amid falling sales in some European markets. "In M&A terms Meantime is far from a mega deal and the resurgence in more traditional beer making, and its transfer into the mainstream has been heralded for some time. But SABMiller's move marks a bigger step whereby a niche brand now has the marketing power and business acumen of a global giant behind it," Ward adds.
Shares in SABMiller were up 1.0% to 3,635.50 pence on Friday.
By Sam Unsted; [email protected]; @SamUAtAlliance
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