ALCOHOLIC DRINKS

ASIA: The Chinese beer market is huge but far from homogeneous.

China became the largest beer market by volume in 2003 and is expected to show future growth of c.10% per annum; per capita consumption is, however, still low compared to that in Europe and the USA. InBev have forecast that "In the coming 10 years, half of the world's demand for beer will come from China."

It is important to note that the Chinese market is not national but an aggregation of local markets with specific regional variations and preferences. This is reflected in the dominance of local brewers some of whom are protected by anti-competitive legislation preventing the sale of non-locally brewed beers.

Although the vast majority of global players are represented, primarily through production and distribution joint-ventures, premium international brands represent only 3% of the market.

INSURANCE

EUROPE: MiFID offers both opportunities and burdens.

The Market in Financial Instruments Directive (MiFID), to be implemented in November 2007, aims to create a single market for financial services in Europe. Amongst its myriad aims are the creation of genuinely competitive and consistently well regulated markets for financial services throughout the EU.

Although implementation raises significant IT and Compliance burdens it will be important to focus equally on the business opportunities that are offered.

The EU Commission and national regulators envisage that most benefit will accrue to the prime movers. The predicted advantages are the ability to distribute products into other national markets and the uniform regulatory landscape and its concomitant reduction in the costs and difficulties of doing business in non-native markets. However, there is a feeling that it will be hard for retail-focussed institutions to gain significant advantages in the short-term as existing distribution channels will continue to predominate.

M&A ACTIVITY

BRIC: BRIC corporations to significantly increase their impact on global M&A activity

In a PwC study of 1,410 CEOs released earlier this year, nearly 71% indicated that they planned to expand operations in BRIC countries over the next three years.

What is becoming very evident is the increase in high-profile cross-border acquisitions by BRIC domiciled corporations.

In December 2004 Lenovo (China) announced the $1.75bn acquisition of IBM's PC division. Two other significant Chinese acquisitions of US entities failed - CNOOC's offer for Unocal and Haier's offer for Maytag.

Aecelor attempted a white-knight merger with Russian steelmaker Severstal to fend-off the attentions of Mittal Steel. Severstal, together with fellow Russian steelmaker Evraz, Brazil's CSN and Gerdau and Tata Steel of India have all been proposed as potential acquirers of Anglo-Dutch Corus.

The board of Canadian Inco recently recommended that shareholders accept the $17bn offer from Brazilian Companhia Vale do Rio Doce.

These are by no means the only deals, successful or otherwise, to have emerged and I would suggest that it is a phenomenon that will have an increasing impact on global M&A statistics.