Global beer wars!
It's hard work growing an economy, and at the end of the day, the only way to unwind after all that hard work is to throw back an icy cold, watered-down, macrobrew. That is exactly why the world's biggest beer companies are focusing resources on emerging economies. All right, there may be some other reasons as well, but the important part is that these big companies are making moves.
As the world's largest energy companies continue to make discoveries off the eastern coast of Africa, they will soon have several choices of refreshment after a long day of drilling.
Diageoa and SAB Miller have both closed deals in East Africa and are poised to duke it out over market share in Uganda, Kenya, and Tanzania. Diageo has invested $1 billion in Africa over the last four years. The company's Kenyan subsidiary, East African Breweries, recorded a first-half profit increase of 17%. Sales for the unit were up 36%.
SAB Miller invested $80 million to build a new beer plant and double the capacity of its Nile Brewing subsidiary. It has also invested $1.75 billion in Africa over the last four years.
Many companies are making an effort to expand their presence in Eastern Europe before this summer's Euro 2012 soccer tournament in June, and Anheuser Busch InBev is no exception. The company plans to open six to 10 new locations for its Belgian Beer Cafe franchise in Poland, where half of the games will be played.
Anheuser Busch also has its eye on a pricey Czech lager. Competition is stiff for StarBev, the brewer of Staropramen, as SABMiller, Heineken, and MolsonCoors are expected to look at the $3 billion operation as well.
An interesting point here is that Anheuser Busch actually used to own StarBev and sold it to CVC Capital Partners in 2009. The potentially lucrative developing economies in Eastern Europe may prove to be a strong enough siren song for the beverage giant to repurchase the company.
Though China's economy is huge compared to the examples above, it will continue to grow at breakneck pace. As a result, Anheuser Busch is competing with the likes of SAB Miller, Tsingtao, and China Resources Enterprise to purchase Chinese company Kingway Brewery Holdings.
Kingway is the third-largest player in Guangdong province, one of the wealthiest in China. The brand holds a 15% market share there, and the unit is expected to sell for $550 million.
China is the world's largest beer consumer, but I like the East African play the best. There isn't as much competition, and those economies could really take off as energy investments pour into the region in the next five years.
This article originally appeared onDailyfinance.com.