The news yesterday was that Czech regulators have given a big green light to Heineken’s takeover of the four Drinks Union breweries (Zlatopramen, Louny, Velké Březno and Kutná Hora). According to Reuters, the Czech anti-monopoly office has no problem whatsoever with the deal.
There’s a great quote at the end of the story: “The office came to the conclusion that the merger will not result into a substantial breach of competition given a relatively low market share of both competitors and the existence of significant competitors.”
In other words, “Since SABMiller already has 49% of the market, what difference does it make?”
Perhaps not much, at least for now. And some have said that Heineken helped, rather than hurt, Starobrno in its takeover there. (I noticed better logos and a redecorated brewery taproom.) But Ron Pattinson noted that Heineken is unlikely to aim for a small share of any market it enters, predicting that the Dutch would shoot for something closer to 30 or 40%.
There are only a few ways to get there from here, and all of them involve buying whole groups of Czech breweries. I know of one great small brewery in sale negotiations at the moment, but that by itself wouldn’t get Heineken even another 2% of the market.
Think K Brewery Group, with its shares in Platan, Svijany, Černá Hora and Rohozec, and which is listed in the commercial register as a real-estate agency. Or PMS Přerov, whose three breweries (Litovel, Zubr and Holba) together brew about 900,000 hectoliters annually, giving the group around 5% of the domestic market.
In any case, more takeovers are coming. If the anti-monopoly office doesn’t have a problem with them now, will they possibly take a stand against them later?