When Anheuser-Busch InBev moved to take full control of the Mexican beer maker Modelo, it thought the deal would be a cinch.
The biggest brewer in the world already controlled Modelo with a 50 percent stake, and sealing its ownership would do little to change the competitive landscape.
But U.S. antitrust regulators balked, fearing that the enlarged company would raise the price of popular brands such as Corona. Only after a year of negotiations and promises to complete painful divestitures did Anheuser-Busch InBev win approval for the $20 billion deal last year.
Now, as the global beer business braces for another round of potential consolidation, that episode casts a long shadow over the empire-building aspirations of the remaining brewing behemoths.
Over the weekend, Heineken rejected a takeover offer from SABMiller, the second-largest beer company in the world. Though that deal might never happen, SABMiller’s attempt to expand through a big acquisition could produce another round of deal making.
“There is definitely room for more megadeals,” said Marc Levit of the Demeter Group, an advisory firm that focuses on the beverages industry. “It makes a lot of sense for those looking for international growth and inevitably will happen.”
The next round of beer deals may not be as easy as the last one. After decades of consolidation, many obstacles face brewers who want to expand through megadeals.
Regulators are wary of big companies getting bigger. Anheuser currently controls about 21 percent of the global beer market share. Were SABMiller to acquire Heineken, it too would command about 21 percent. And most of the remaining targets, like Heineken, are controlled by families that appear reluctant to sell.
Despite these challenges, however, analysts believe both Anheuser and SABMiller will try to forge ahead with deals in the months and years ahead.
“With interest rates at historical lows and slowing organic growth trends in many markets, we believe the conditions are ripe for an increase in M&A,” Simon Hales, a beverage analyst with Barclays, said of the beer industry in a note this summer.
The brewing titans looking to get bigger are also grappling with changing consumer habits in some of their main, more mature markets, such as the U.S.
“It’s the aging of America, and as we become older, we become wine drinkers,” said Harry Balzer, a longtime observer of eating trends and vice president at the NPD Group.
The biggest and most powerful merger would be a potential combination of Anheuser and SABMiller. Though Anheuser has considered the deal in the past, it is not working on a bid for SABMiller now, according to people briefed on the company’s plans.
But whatever regulatory hurdles Anheuser faced in clearing its deal for Modelo would be small compared with the resistance it would face in trying to take over SABMiller.
At the very least, Anheuser, which makes Budweiser and Bud Light, would be expected to divest itself of Miller Lite, the second-largest light beer brand in the U.S., behind Bud Light. And with overlap in Europe and other markets, Anheuser would most likely have to sell billions of dollars’ worth of regional brands too.
Daunting as that may sound, Anheuser has a record of extracting startling profits from companies it acquires. Controlled by the Brazilian group behind 3G Capital — which also controls Heinz and Burger King — Anheuser has a reputation for efficient cost-cutting, and analysts believe that even after selling brands such as Miller Lite, Anheuser could make a deal work.
Should a combination of Anheuser and SABMiller occur, it would create a company probably valued at more than $200 billion. It would also provide an opportunity for other buyers, most notably Molson Coors, to snatch up lucrative brands like Miller Lite.
That could provide Molson Coors, which is valued at about $13 billion, an opportunity to grow. Carlsberg, another midsize independent brewer, could be well positioned to acquire any divestitures in Europe.
But Molson Coors and Carlsberg are unlikely to be targets for SABMiller or Anheuser. Like Heineken, they are controlled by founding families that appear to not be interested in selling right now.
“If someone wants to keep something in the family, there’s nothing the public markets can do to change that,” Levit of the Demeter Group said.
In the event Anheuser does not move to acquire SABMiller, another sort of megadeal could occur. SABMiller has stumbled in recent quarters, and on Monday analysts said the attempt to acquire Heineken might have put the company in play.
Diageo, the big spirits producer behind brands like Johnnie Walker whiskey and Smirnoff vodka, already produces Guinness, and executives at the company have said they would be open to expanding further into the beer business and could emerge as a possible suitor.
The one segment of the beer business that is flourishing is craft beers, sales of which grew almost 20 percent last year. Craft beers still account for a very small portion of beer sales, but they offer consumers the novelty they crave, coming in a wide array of flavors that often are seasonal or available for limited times.
“Craft beer has become the wine movement of the beer industry,” Balzer of NPD Group said. “They even show up as pairing with food on menus like wine.”
Joe Thompson, president of the Independent Beverage Group, a consulting firm, said that merger activity perhaps had absorbed too much corporate attention over the last several years.
The big brewers, he said, “focused their energy on creating value and cutting costs and kind of took their eye off volume.”
Internationally, though, there is still room for the mainstream brands to grow, even as they lose share in the U.S.
And it is against this backdrop — a thirst for growth, changing consumer habits, and regulatory constraints — that the big brewers, including Anheuser and SABMiller, will be plotting their next moves.
“It’s become a global chess board,” Thompson said.