SABMiller agrees to buy Meantime Brewing Company

<p>The craft beer market is growing quickly in the UK.</p>

SABMiller, the world's second-largest brewing company has agreed to buy London-based brand Meantime Brewing Company.

The deal gives SABMiller an opportunity to get into the craft beer market, which is the "fastest-growing segment of the UK beer market," the company explained in a statement. Plans include expanding the beer's market in the UK and possibly exporting it to Europe.

Meantime is a 15-year old company based in Greenwich. It was founded in 1999 by brewer Alastair Hook and its range includes London lager, London pale ale and London porter. It operates a modern brewery and has two pubs: the Old Brewery Bar and the Greenwich Union.

"We love local variety and carefully nurture our 200 local and heritage beers," said Sue Clark, managing director at SABMiller Europe.

In 2014, volumes of beer sales at Meantime grew by 58 per cent. SABMiller says this outpaced the UK beer market's one per cent growth. The Guardian explains that this is because "Britain is in the midst of a craft brewing craze".

Despite pubs closing down at a rate of 30 a week in the UK, the number of breweries has increased by 10 per cent over each of the past two years. There are now more than 1,200 across the country – the most since the 1940s.

The acquisition of Meantime is expected to be completed next month (June, 2015) – the value of the deal has not been disclosed.

Speaking about the deal, Meantime chief executive Nick Miller said: "[SABMiller] sees the opportunity and believes in the longevity of modern craft beer in the UK.

SABMiller's portfolio already includes brands like Coors, Fosters, Bulmers, Carling, Miller and Peroni. This morning the company opened on the London Stock Exchange at 3,618, up from the previous close of 3,600.

Andrew Holland, drinks analyst at Societe Generale, told the BBC that until recently, SABMiller has had only a small presence in the UK and he says this has actually been an asset, as competition is high and profitability low in the UK.

"In the context of SABMiller, [this acquisition] is immaterial," Mr Holland said.

"The UK is less than one per cent of the business," he added.

However, by moving into the specialist market, the company could find some new opportunities. "If they could find something similar, I wouldn't rule [another acquisition] out," he said.

Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.