Europe needs swagger

Heineken CEO 'happy' about rival brewer deal


The chief executive of the world's third largest brewer Heineken told CNBC he was "happy" about the potential takeover of SABMiller by major rival AB InBev.

Despite being faced with a giant challenge from the mega-merger, worth more than $100 billion, the head of the Dutch brewer wasn't worried about a new challenger in Heineken's targeted growth markets, such as Africa.

"Not worried, I'm just happy that some people other than ourselves will continue to invest in Africa," Jean-François van Boxmeer, chief executive of Heineken, told CNBC Friday.

"Africa is, I would say, one of the last frontiers, as well as India, for our industry and we have 25 years of growth (there) to go. Despite some wobbles from time to time in some countries, because you cannot put Africa in one basket, there is growth coming on."

The proposed marriage between SABMiller (which produces over 200 brands of beer worldwide and revenue of $22.3 billion in 2014) and AB InBev (which has a similar number of brands but a larger revenue of $47.1 billion last year) has been seen largely as a way for the latter to tap into SAB's well-established African market, as well as its footprint in Latin America and Asia.

Read More AB InBev/SABMiller reach agreement in principle

Emerging markets are seen as prime potential growth regions for brewers due to the large number of young people, the rise of the middle classes and the increase in disposable income that entails.

Van Boxmeer said that the takeover was "clearly" about AB InBev's (ABI) ambition in Africa. "The intended merger is clearly for ABI to go into Africa as they have been announcing. (Whereas) we have been operating in Africa since the mid-1930s."

The winners and losers from mergers and acquisitions (M&A) weren't always obvious either, he added.

"Every time you do an acquisition, and I will say something blunt, you always overpay. The guy that makes the best business in every M&A is, most of the time, the seller. The buyer has to work hard to make it through."

Size matters

Susana Gonzalez | Bloomberg | Getty Images

He said that while a price war could ensue from the increased competition, the risk was low. For Heineken, the brewer aimed to remain relevant at a local level.

"You can never exclude a price war somewhere but I don't think it's going to be global because you have to realize that our industry is often a local one and it obeys local competitive dynamics," he said.

"I think that when you have markets with long-term high growth the risk of having really destructive price wars is relatively low."

Read More All the beer you drink is owned by one company

Although he refused to comment on the strategy of competitors, he said Heineken's strategy focused on creating premium brands.

"Our strategy is built around geographies and around brands, it's overgeared towards premium propositions. We are smaller but we need to be premium to be economically viable and relevant and thriving," he said, adding that the best example of that was Heineken brand itself, which is sold in 179 countries.

"Size matters but size matters essentially on a local market, not that much globally. That global firepower might seem impressive but what is important is to create size on a local level, that is where success comes from," he added.

- By CNBC's Holly Ellyatt, follow her on Twitter @HollyEllyatt. Follow us on Twitter: @CNBCWorld

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