Racheal Lee
Aug 7, 2012

Heineken-APB deal would drive internationalisation of local beer brands

SINGAPORE - With the shareholding battle for Fraser & Neave’s (F&N) stake in Asia Pacific Breweries (APB) tipping in Heineken's favor, industry experts said the expected deal would result in increased international exposure for local brands such as Tiger Beer.


Heineken has offered to acquire the 40 per cent stake for S$5.1 billion (US$4.11 billion), and the F&N board has reportedly decided to recommend that shareholders accept the offer.

Graham Hitchmough, regional director, ASEAN, at The Brand Union Singapore, said the takeover would result in renewed efforts and focus on “internationalising” local brands, as such efforts have met with a degree of success in the recent years.

“Having the full-weight of Heineken's marketing and distribution effort behind these brands might further enhance their profile and appeal in the competitive premium markets of Europe,” he told Campaign Asia-Pacific.

The acquisition would give Amsterdam-based Heineken 82 per cent of APB, and it will now launch an offer for the rest of the company. Prior to the move, it already owned a 42 per cent stake.

Jan Van Loon, deputy managing director of Oracle Added Value Shanghai, said it is a win-win partnership for local brands and Heineken, and that local brands can become stronger brands. However, he doesn’t expect to see significant changes for consumers in the short term.

Hitchmough noted that the takeover reflects the ongoing carve-up of the global beer market by the top three industry players, namely AB InBev, SABMiller and Heineken. These giant players are increasingly looking to extend their reach and share in the emergent markets of Asia and Latin America to bolster flagging sales in Europe and the US, he added.

“As a result of such deals, supply chains and marketing strategies will become more aligned across the breweries' key brand portfolio, and this is likely to result, in time, in a greater homogenization of the marketplace, with the breweries using their marketing clout to push their brands into both on and off-trade,” he said.

The change is likely to put pressure on independent, local beers and breweries, who will find it harder to get their product into mainstream outlets. "This in turn might lead to the appearance of more specialist micro and specialist breweries as an alternative to the international players,” Hitchmough said.

Raymond Ng, joint managing director at Added Value Saffron Hill, noted that Heineken might start looking at other business relationships within the region and even globally, especially the distribution-centric ones.

“In terms of their brand strategy, I think it will be pretty much status quo,” he told Campaign Asia-Pacific. “They have good teams in place and they have been very smart in their marketing so far. So, they don’t need to change anything drastically. In fact, you might see an even stronger company moving forward as the relationship between APB and Heineken might be a lot clearer and closer now.”

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