The Beer wars are heating up, and going intercontinental. On the domestic front, the dueling political ads are certainly entertaining. SABMiller's success in obtaining an injunction that Anheuser-Busch cease using the term "South African Breweries" - shortened to SAB after South African Breweries purchased Miller from Phillip Morris in 2002 - is rather comical itself. It hasn't stopped the Clydesdale from telling the donkey that the Miller candidate is ineligible to run for president since he's from South Africa.
The gloves are off in China too, where phase one of the contest between the two giants is coming to a close. This story in the Economist ($) offers a glimpse into SABMiller's fight plan. They are apparently poised to sell their stake in China's Harbin Brewery to Anheuser-Busch after failing to persuade the company to collude with a chief competitor:
America's Anheuser-Busch, launched a $720m counter-offer for Harbin earlier this week that was recommended by Harbin's management. SAB's relationship with Harbin has soured since the London-headquartered brewer bought a 29% stake in the Chinese group last year. SAB failed to persuade Harbin to end a fierce price war with its rival in the north-east, China Resources Breweries (CRB)—which is 49% owned by SAB.
What's in store for phase two? More price wars! Now that Bud will be running Harbin, low prices at CRB make sense to SAB.
According to insiders, SAB will use the proceeds from selling its stake to Anheuser to help CRB undercut Harbin's already dirt-cheap prices.
That doesn't strike me as a profitable investment of the proceeds, but it does make for an interesting fight.