Budweiser Brewing Co. APAC Ltd. (“Budweiser Asia”), made an impressive entrance into the Hong Kong market last week. Budweiser Asia, a unit of Anheuser-Busch InBev (“AB InBev”), debuted in the new market on September 30, 2019, raising $5 billion for the world’s largest brewer in this share sale. (Wang, Wall Street Journal) Budweiser Asia’s performance claims the second-largest initial public offering in the world this year, trailing Uber Technologies Inc., who raised $8.1 billion and listed on the New York Stock Exchange. (Wang, Wall Street Journal)

AB InBev’s success comes after a two-and-a-half-month delay, due largely to trade tension between the U.S. and foreign markets.  (Chiu et al., Wall Street Journal) Nevertheless, the Hong Kong market was able to foster Budweiser Asia’s successful listing, in part, due to stabilizing efforts within Hong Kong. On September 4th, Hong Kong’s leader, Carrie Lam, announced that the government would withdraw an extradition bill. (Zhu, Reuters) Lam’s initiative eased domestic tensions and ripened the market conditions for AB InBev to extend their global presence after months of unrest within the city. (Leung, Time)

While trade tension continues between the United States and China, it appears that investors have remained confident in certain global sectors, such as the consumer staples sector. According to Euan McLeish, a senior research analyst at Sanford C. Bernstein, companies like Budweiser Asia are providing stability in an otherwise turbulent time for global markets. (Wang, Wall Street Journal) In tandem with providing stability, penetration into the Chinese market also paints a hopeful future for AB InBev, because the premium and ultra-premium beer markets in China have been outperforming the corresponding markets across the globe. (Tan et al. CNBC)

AB InBev has huge potential to expand their operations through Japanese and Southeast Asian markets despite already controlling a quarter of global beer production. AB InBev is already the top player in several high-end beer markets in Asia, including China and India, but the company is looking to further expand its influence through regional merger and acquisition opportunities. (Liu, South China Morning Post) Carlos Brito, AB InBev’s Chief Executive, has compared Budweiser Asia’s potential to AB InBev’s Brazilian subsidiary (“AmBev”), which has been infiltrating Latin American markets for the past 20 years. (Abboud, Financial Times) 

After a series of mergers, AB InBev became the world’s largest brewer in 2008, and AmBev played a large role in the parent company’s ability to gain distribution channels across the globe. (Merced, New York Times) AB InBev’s global dominance of beer markets will continue if Brito’s expectations for Budweiser Asia follow AmBev’s precedent. It will be interesting to see the expansion of AB InBev’s global presence and how various regulations will impact this growth.

Although various mergers and acquisitions have brought AB InBev to the top, the company has been limited by monopolies commission requirements in the past. For example, in 1999 AmBev was forced to sell off $98 million of its brewery holdings to satisfy regulatory demands. (Funding Universe) Unsurprisingly, AB InBev’s success has led some to be concerned about the company’s potential to monopolize the beer market. In 2013, The New York Times published an article titled “Are We in Danger of a Beer Monopoly?” that detailed AB InBev’s prevalence and expressed a growing concern about how the company could gain too much market share. (Davidson, New York Times) The article concluded that “Denmark’s Carlsberg, Britain’s SABMiller, and Japan’s Asahi” provided enough competition in emerging, lucrative markets, such as China and India, to prevent a genuine concern regarding an AB InBev monopoly. (Davidson, New York Times)

Fast forward 6 years to present day, and the same giants are running the global beer markets. However, with Budweiser Asia’s successful launch, it seems that AB InBev might be outrunning the rest of the pack. A recent article from The Wall Street Journal stated that AB InBev has “a market value far in excess of Japan’s Asahi Group Holdings Ltd.” And Denmark’s Carlsberg. (Wang, Wall Street Journal) The same companies that were seen as an insurance policy against a beer monopoly in 2013 are apparently falling behind in AB InBev’s race to global beer dominance. While respective market values aren’t entirely indicative of global impact, it’s certainly interesting to think of the future growth that AB InBev might experience from Budweiser Asia’s launch into the Hong Kong market.

Aggressive deal-making and global market penetration have enabled AB InBev to become the largest brewer in the world. Budweiser Asia’s recent, successful initial public offering in the Hong Kong Stock Market is the latest move in the company’s long history of growth and expansion. While the company’s control of various markets is dominant and threatening to other brewers, it provides a certain sense of security to investors. At a time when the United States and China are struggling through tense trade negotiations, AB InBev and other companies in consumer staples sectors are continuing to turn a profit in markets across the world. Although these sectors aren’t necessarily prone to rapid growth, the fact that Budweiser Asia was able to generate $5 billion in a public offering, despite Hong Kong’s civil unrest and global trade tensions, attests to investors’ confidence in global markets.