From Burma to MyanmarA Reintroduction of AB InBev’s Stella Artois

JA C O B R USO FF

1

Introduction

• Anheuser-Bush InBev� (NYSE: BUD, Euronext:

ABI)� Founded in 2008

• Stella Artois� Belgian Pilsner� Introduced in 1926

• Myanmar (Burma)� Transition to Democracy

(2011-Present)� Evolving Economy

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Myanmar (Burma)• Population: 56,320,206 • GDP / Capita: $4,700

(170th in the world)• Socialist Military

Dictatorship (1962-2011)� Global economic sanctions

and embargos

• Transition to Democracy� Multi-party elections� Economic liberalization

• Currency: Myanmar Kyat (MMK)� 1247.65 Kyat per USD 3

Political Risk• Civil Unrest / Conflict� Ethnic and religious tension

leading to civil war and terrorism

� Kachin and Rakhine states• Possible return to a

military state and subsequent expropriation

Currency Risk• Trade deficit• Inflation• Low natural gas prices� 37% of total exports� Source of investment

Anheuser-Busch InBev• “Bringing people together for a

better world”• Largest Brewing Company in

the World� 20% of global share� 30% if AB InBev SAB Miller

M&A goes through� Top 5 Consumer Goods Companies

• Focused Branding• Distributes Products in over 110

Countries• Emerging Markets make up 53%

of AB InBev’s total revenue in 2014 4

31.1% 28.7% 26.4%

30.3% 28.0% 27.3%

9.4% 8.7% 8.0%

13.0% 11.2% 9.7%

14.3% 15.4% 18.0%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2012 2013 2014

AB InBev Volume by Region (% of Total)

Global Export & Holding Companies

Asia Pacific

Europe

Latin America South

Latin America North

MexicoNorth America

Historical Entry Strategies

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Distribution Channels

• Brewery to customer (Belgium)

• Wholesalers to customers� Legal reasons (USA & Canada)� Historic market practice (China & Russia)

• Third-party distributor (Brazil & Mexico)

2015

Acquisition HistoryMergers & Acquisitions

Joint-Ventures

Equity Based Partnerships

Cooperative Export Model

Licensing

Entry Strategy For Myanmar• Acquire Mandaly Brewery to immediately gain 4% of the market share� Approximately 150 Million USD � Assuming continued 4% market share, and current

growth of market, the acquisition would generate 150 million in revenue by year 5

� Use plant to start brewing Stella Artois� Gaining more market share

• Construct a larger more advanced plant outside of Yangon within the first year• Combining AB InBev’s industry knowledge and economy of scale with Mandalay Brewery’s local know-how

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Myanmar Beer Market• Market Size� 265 million USD market in 2013� 80% of adults in Myanmar drink beer

• Market Growth� Projected to grow to 675 million USD in 2018

� A CAGR of 16.9%

• Market Needs� A pilsner� A premium international beer brand

• Market Trends� Growth of foreign beverage companies� Coca-Cola now controls 50% of the

carbonated beverage market, before 2012 the drink was only available if smuggled 7

0.001.002.003.004.005.006.007.008.009.00

0100200300400500600700800900

1000

2013 2014 2015 2016 2017 2018 2019 2020

Myanmar Beer Industry (Million USD) Liters per Capita

Year1(2016)

Year2(2017)

Year3(2018)

Year4(2019)

Year5(2020)

EstimatedMarketSize(AnnualRevenueMillionUS$)

464.38 559.87 674.99 813.79 981.13

EstimatedMarketShare

4% 5% 6% 8% 10%

EstimatedRevenue(MillionUSD)

18.58 27.99 40.50 65.10 98.11

Understanding AB InBev’s Edge

Strengths-Economy of Scale Advantage-Brand Recognition-History of distribution channel design

Weaknesses-Government Presence in Beer Industry-Low income per capita-Large marketing required

Opportunities-High projected annual growth rates in the market-Early entrance

Threats-Downward currency pressure-Political risk (military government, human rights violations)-Expropriation

SWOT

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Competitor Analysis• Myanmar Brewery Limited

� 45% owned by the Government� 55% owned by Kirin Holdings after buying

shares from F&N for 560 million USD

• Dagon Beverage Company� Joint-venture between the State, Myanmar

Golden Star Company and Bermuda Brewinvest

• Mandalay Brewery� Founded in 1859

• Heineken� 2015 60 million USD investment

• Carlsberg� 2015 70 million USD joint-venture

• Chang (2013)

9

83

413

2013 Market Share

Myanmar Brewery LimitedMandalay BreweryDagon Beverage Company Limited

International Market Entrants

(Thailand) (Netherlands) (Denmark) (Japan)

Customer Analysis• Beer makes up 82% of alcohol

consumption in Myanmar� Most of which is consumed at

“Beer Stations” during European soccer matches

� Or in cities, purchased for home consumption from small stores

• Males make up a vast portion of the Myanmar beer market� Men who drink consume roughly

10.3 times more then women who drink

• Tourists� Restaurants, resorts, and newly

emerging nightlife� Increase in tourism 10

791505 816369 10589952044307

3081412

7000000

2010 2011 2012 2013 2014 2020 (Projected)

Annual Tourism in Myanmar

Marketing Mix• Price� Average domestic draught (.5 lt) $1.00 � Average imported bottle (.3 lt.) $1.3-2.50

• Promotion� Electronic Billboard� Soccer partnership (Man U)� Cap Rewards� Marketing to Women

• Place� Domestic Consumers (Yangoon and

Mandalay)� International Consumers

� Hotels, restaurants, clubs, tourist sights, etc.

• Product� Stella Artois bottles and kegs 11

Conclusion• Myanmar is economically liberalizing and politically democratizing at a fast rate� Political and currency risks still remain

• State owned joint-ventures control a large majority of the market� High marketing costs required in order to gain market share

• Logistical constraints• A largely untapped international beer market with projected exponential market growth• Acquisition of Mandalay Brewery and construction of a new plant will have immediate impact on AB InBev’s top-line and local market success.

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Questions

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