Last week week, while in Indianapolis, Indiana attending a conference, I got a call from Rick Armon. Rick is a journalist with the Akron Beacon Journal. He was reaching out to me to get my thoughts on ABInBev’s recently proposed $104 billion purchase of SAB Miller. Rick is no ordinary journalist. He is a beer enthusiast, has been a homebrewer for over ten years, and writes about the beer industry for the Beacon Journal. He is also the author of Ohio Breweries, a book that documents some of the wonderful breweries that we have in the state of Ohio. Like myself Rick also has a beer blog. In my line of work I get calls from journalists every now and then. Usually it is to comment on the latest census numbers (Toledo’s population is down again) or something happening in the local economy. But this was the first time I had been called upon to share my thoughts on a breaking beer story, so to speak.

If it goes through the acquisition of SABMiller by ABInBev will create a beer behemoth of gigantic proportions. The merged entity will be responsible for three out of ten beers brewed on a worldwide basis, will have a portfolio of over four hundred beer brands, a worldwide workforce of 224,000, and global sales of $55 billion. Deals of this magnitude and scope are complex, include a certain level of uncertainty, and are driven by multiple motivations. One of the uncertainties surrounding the proposed merger is how it will play out with respect to U.S. anti-trust regulations – if it is found to be in violation then MillerCoors may well be sold and will not, therefore, be part of the merged entity.

So what is behind ABInBev’s acquisition of SABMiller? While the acquisition provides a variety of benefits to ABInBev in my conversation with Rick Armon I emphasized the importance of the African beer market and the role that it may play in the acquisition. The global map of beer consumption is a patchwork comprising pockets of both growth and decline. In some regions, such as North America and Europe, beer sales (depending upon the specific time frame you look at) are either decreasing or are, at best, stagnant. In the United States, for example, Americans consumed 3.4% less beer in 2014 than they did in 2008. North America and Europe represent what are termed mature beer markets whose prospects for growth are limited. In other regions, this is not the case – beer sales are on the rise. Africa is one such region. Indeed, with respect to beer, The Economist describes Africa as the world’s “fastest-growing and most promising market.” When the potential acquisition of SABMiller was announced an representative of ABInBev noted that “Africa, as a continent, has hugely attractive markets with increasing GDPs, a growing middle class and expanding economic opportunities.” During the period 2013-18 beer sales in Africa were predicted to increase by 6% per year.  SABMiller has a considerable presence in Africa, controlling 82% of this vast continent’s beer market. It owns breweries in fifteen African countries and has a stake in breweries in twenty-one other countries through an alliance with the French drinks firm Castel. ABInBev, in sharp contrast, has no brewing capacity in Africa. In making the acquisition ABInBev will instantly acquire SABMiller’s production capacity, distribution channels, and experience and expertise in navigating African markets.

Brewing and selling beer in Africa can be logistically challenging. Africa’s generally primitive transportation infrastructure and its associated bureaucratic red tape which make getting beer from the brewery to the customer something a logistical nightmare. A writer for The Economist describes a four day journey on a delivery truck loaded with Guinness as it navigated Cameroon’s decrepit road system. The journey, which should have taken 20 hours (including an overnight stop) involved navigating forty-seven road-block check-points. Not surprisingly in remote areas of Africa it is not unusual for stores and taverns to run out of beer as they await the next delivery.

The African brewing industry can also be negatively affected by the unexpected. During the 2014 Ebola crisis that impacted a handful of west African countries Heineken was forced to curtail production at its brewery in Freetown, Sierra Leone as it was forced to send staff home as part of a city-wide attempt to halt further spread of the virus. On occasion it is the beer itself that can be dangerous to one’s health. In January 2015 over 70 people attending a funeral in Mozambique died after consuming homebrewed beer.

Growth of the African beer market is also having some unintended consequences. As demand for commercially produced beer has grown the number of local farmers growing sorghum, cassava, and other crops for the brewing industry had increasing. For example, the number of farmers in Uganda currently contracted to grow sorghum was SABMiller stands at around 20,000, up from 10,000 less than five years ago. This is driving up the prices of a number of crops that are a staple part of the African diet.

While some suggest caution over Africa’s economic prospects a 2015 report by the Organization for Economic Co-operation and Development (OECD) and the African Development Bank Group is considerably more bullish about the continent’s economic future. If the optimism expressed in this report proves accurate then ABInBev’s acquisition of SABMiller could prove to be a shrewd piece of business.