The global takeover frenzy hit a new high on Wednesday, with the news this morning that beer giant AB InBev has made a play for SABMiller. Already, antitrust experts around the globe are tut-tutting that too much of the world’s beer market could come under one umbrella should the deal go through, with an estimated 30% of global market share coming under the control of AB InBev, according to Euromonitor.
But another, possibly more worrisome question comes to mind. If this deal is approved, leaving any forced divestitures aside for the moment, exactly how much of the world’s food and beverage consumption will be concentrated in the hands of three men?
Brazilian private equity firm 3G—named for the three main partners, Brazilians Jorge Paolo Lemann, Carlos Alberto Sicupira, and Marcel Herrmann Telles—is behind the move for SABMiller, as it was for the rollup of AB InBev, which, in addition to Anheuser Busch, controls brands like Budweiser, Stella Artois, and Corona already. But 3G has also, in the past five years, taken private—and then, in some cases, public—several other large food companies (some in partnership with Warren Buffett) including Heinz (2013), Kraft (2015), Burger King (2010), and Tim Horton’s (2014). Together, estimated revenue for the six companies is around $100 billion, with an estimated combined market cap of $350 billion. That would make it one of the largest combination of food and beverage products in the world—much larger than $65 billion-in-revenues PepsiCo, for example. Says Tom Pirko, director of Bevmark, which advises the food and beverage industry: “Are these guys taking over the world? Well, sure.”
To be sure, 3G doesn’t control 100% of these companies, so you cannot think of them as a single corporate entity. But 3G is the most powerful group at each of those companies—more so than any common shareholder, to be sure. It has the wherewithal to do what it wishes, which, so far, seems to be cutting costs and consolidating production. (See, for example, our article Squeezing Heinz or this, from Coins2Day, on 3G exec Carlos Brito).
In an era when consumers are moving away from big food, 3G continues to grow bigger. Scale, it seems, is 3G’s antidote to consumers’ rejection of big brands. But what does it mean for choice?