(FORTUNE Magazine) – There's a new No. 1 in the world of beer, and it's a strange brew--part Belgian, part Brazilian, with a Mississippi CEO who has little experience in the business and a leading brand named Stella, not Bud. It's called InBev, and although it traces its roots back to 1366, the company--now the leading purveyor of beer in the world--has existed only since late August.

John Brock, who wears the corporate crown, is an unassuming 56-year-old former Cadbury Schweppes executive who conducts board meetings with a light touch. He dresses in open-collar shirts, and his management style is equally informal--a far cry from hard-charging beer moguls like August Busch III or Freddy Heineken. Indeed, sitting in his office overlooking the cobblestone streets of Leuven, a Flemish university town, he seems a bit out of place. "If anybody had told me that this was going to happen," Brock says of the merger between Belgium's Interbrew, which he has headed since February 2003, and AmBev, the Brazilian beer behemoth, "it would have been hard to believe."

Difficult as it may be for Brock to believe, he now presides over a global beer empire that produces 161 million barrels a year, compared with Anheuser-Busch's 130 million. The U.S. beer giant still generates more revenue from its brewing division ($13.8 billion last year) than InBev, which had pro forma revenue of $11.3 billion in 2003. And Anheuser-Busch owns the world's two biggest-selling beer brands, Bud Light and Budweiser. But InBev has a major presence in far more markets than its U.S. rival. Its top brands in Europe include Belgium's Stella Artois, Beck's of Germany, and Britain's Bass. In Latin America, it owns Skol, the world's No. 3 beer brand, and in North America it has Labatt and Rolling Rock.

The easygoing Brock isn't the type to brag, but he makes it clear he doesn't just want to be the world's biggest brewer. He also wants to be the best. His goal: to raise InBev's pretax margin on sales from 25% today to 30% by 2007, which would put it ahead of Anheuser-Busch. "As we begin to get there," Brock says, "we'll start to talk about ourselves a little more as the best, rather than the biggest."

To reach his target, Brock is counting in large part on AmBev, which retains separate listings in São Paulo and New York and its own management structure. Anheuser-Busch was reportedly interested in making an offer for the Brazilian brewer before Interbrew struck, and it's easy to see why. Last year AmBev had a pretax profit margin of 35% on sales of $2.7 billion. It controls 65% of the Brazilian beer market and almost 80% of Argentina's, with monopoly positions in Paraguay, Uruguay, and Bolivia as well. Sure, Latin America's beer business has been sluggish in recent years. But AmBev has been able to increase its profits by ruthlessly reducing costs. And Latin America's youthful demographics guarantee future growth. Thanks to AmBev, says Marc Leemans, a beverage industry analyst at Bank Degroof in Brussels, "InBev is going to be the fastest-growing international brewer in the world."

How much of a threat does this Belgo-Brazilian alliance pose to Anheuser-Busch? "There's a big psychological resonance for Anheuser-Busch in no longer being able to claim the No. 1 position," says Benj Steinman, editor of Beer Marketer's Insights, an industry newsletter. It's also clear that InBev has stolen a march on the other global beer heavies in the race to build scale: SABMiller, Heineken, and Carlsberg (all with at least 80 million barrels of annual capacity). "With the emergence of InBev, the global competition has heated up," says Tom Pirko, head of BevMark, a Santa Barbara, Calif., beverage industry consultancy.

What complicates the issue is that Big Beer's global battles aren't fought on a single stage or with a single strategy. Anheuser-Busch is dominant in the U.S., the world's most profitable beer market, where it accounts for half of all U.S. beer sales. But last year international sales were responsible for only 2% of its $2.7 billion operating profit from beer. SABMiller, the No. 2 player in the U.S., has almost 20% of the market. Although relatively small in Western Europe, it is strong in Eastern Europe and China and has a monopoly in South Africa, its original home base. Meanwhile Heineken and Carlsberg, the fourth- and fifth-largest global brewers, have mostly avoided big acquisitions in favor of a strategy based on one flagship brand.

InBev alters the game because it has the size and reach to compete with all the big players in many of their core markets. That isn't the same as saying that InBev threatens everyone, everywhere. In China, for instance, it lags well behind SABMiller and Anheuser-Busch. But InBev is ubiquitous, at least when competitors assess their international strategies. "InBev has a lot of opportunities on the world stage," says Pirko. That view is endorsed by investors: Since March, when the deal was announced, the stock price is up 8%.

Yet for InBev to realize those opportunities, the group has to be more than the sum of its diverse parts. Each of InBev's rivals has a dominant corporate culture, based on the values and ambitions of the original founding families. InBev, by contrast, has difficulty describing what it represents. Officially it is neither a merger nor a takeover but a combination of Interbrew and AmBev. That claim is questionable: Under a complex series of share swaps, Interbrew took majority control of AmBev from its Brazilian owners.

Whatever the nature of the union, it is an improbable one. Outside InBev's boardroom in Leuven, the walls are lined with portraits of members of the aristocratic de Spoelberch, de Mevius, and Van Damme brewing dynasties, which date back hundreds of years and which came together to found Interbrew in 1987. AmBev, by contrast, is the creation of three aggressive Brazilian venture capitalists who made fortunes in a range of businesses, from banking to retailing to beer. The three aren't the most obvious types to be found on the hunting estates where the Interbrew families like to discuss business. Jorge Paulo Lemann is a former Brazilian tennis star who has lived in Switzerland since an attempt in 1999 to kidnap his children. Carlos Alberto Sicupira and Marcel Herrmann Telles, his two lieutenants, prefer spearfishing to shooting pheasants. Telles--the main force behind AmBev--has said it took years for the two sets of controlling shareholders to build trust. Even then, Brock and his team labored for six months before finalizing a deal that satisfied both parties. (Neither the Belgian family members nor the Brazilian owners would talk to FORTUNE.)

What Brock delivered was a corporate balancing act. Lemann and his associates have sold their controlling 53% stake in AmBev in return for about 25% of InBev. The Brazilians' stake is locked up in a holding company with the Belgian families' main stake, which collectively amounts to a 56% joint share of the new company. It's a clever arrangement if the two sides--which have an equal number of seats on the board--continue to agree on strategy. But should they fall out, it isn't likely Brock would be able to hold InBev together.

Brock's résumé is solid rather than spectacular. He started his career at Procter & Gamble, then spent 19 years at Cadbury Schweppes, the British confectionery and soft drinks group. In 2000 he was appointed chief operating officer, but he failed to get the CEO job in a succession contest. Enter Interbrew, which hired Brock to succeed Hugo Powell in February 2003. Powell was a high-profile empire builder. But he was criticized by investors for overpaying for Britain's Bass group, especially after regulators ordered Interbrew to sell Bass's flagship Carling brand on antitrust grounds.

Brock is more level-headed, which may be just what InBev needs, given the strong egos of the owners. But in a company that, on the Interbrew side, has run through five CEOs in 15 years, you wouldn't put money on Brock's surviving if the wheels start coming off the global beer wagon.

It's worth asking why the top brewers are so obsessed with globalization. After all, hundreds of local beers with no international potential--from Niksicko of Serbia to Xibeca Damm Classic of Spain--collectively account for about 80% of all beer consumption worldwide. The world's bestselling beer, Bud Light, has barely 3% of the global market, reflecting the industry's fragmentation. "It's unlikely that anyone will ever develop a beer brand that behaves in the same way as Coca-Cola," says Kevin Baker, head of alcoholic-drinks research at Canadean, a beverage industry consultancy in Britain.

But even the most local beers benefit from economies of scale that only big international brewers can provide. Consider the Belgian village of Hoegaarden, 17 miles southeast of Leuven. InBev bought the village brewery in 1989 and still makes the distinctive white Hoegaarden beer according to a recipe perfected over several centuries. But these days the hops no longer come from the fields around Hoegaarden. Instead, it is cheaper for InBev to buy hops in bulk from Australia or the U.S., depending on world market prices.

Hoegaarden is also one of InBev's leading international brands, sold at a premium in bars from London to San Francisco. That illustrates another motive for consolidation. As Brock points out, "Global brands sell at significantly higher prices, and the margins are much better than with local beers." You could say that global beer brands are the brewing industry's Holy Grail. Anheuser-Busch is pushing Budweiser in Britain, even though all evidence suggests the beer is too weak for European palates. SABMiller has been pondering whether Pilsner Urquell, the world's oldest lager, has the legs to travel. The only company that has come close to a true global brand is Heineken, the world's fifth-most- popular beer, which sold 18.8 million barrels last year in more than 120 markets. Even so, it has taken Heineken the better part of a century to reach that point--and about 40% of its sales are still in Europe.

It helps that Belgium has probably the richest beer heritage of any country in the world. In Leuven, a town of about 30,000 people, the bars are stocked with numerous local brews, from "abbey" beers like Duvel and Leffe (so called because they were originally made by monks), to crisper lagers such as Jupiler, to curious concoctions like Belle-Vue, a cherry-flavored beer. Living in a small country, the Belgians know how to sell their beers abroad. And no beer demonstrates that better than Stella Artois, one of InBev's three designated global brews and the 19th-bestselling beer in the world.

Stella was born in Leuven in 1926. But since 1976, when the lager was launched in Britain, the U.K. has been its true commercial home. Britain now accounts for almost two-thirds of the beer's total consumption, and with sales there rising 4.4% in the first half of this year, there's no end in sight to the brand's astonishing growth. In Britain, Stella has capitalized on its cachet as a premium Continental lager worth the extra price. InBev invests heavily to make Stella drinkers in Britain feel they are a cut above the average bloke with his pint. Stella doesn't sponsor grubby soccer teams; instead, its logo can be found at the Queen's Club tennis tournament in London, a classy curtain-raiser for Wimbledon. "Stella is just a beautiful thing in the United Kingdom," says Brock. "It is as strong and emotional a bond as you'll ever see between consumers and their brand."

Sure, Stella is still relatively small by global beer standards--8.2 million barrels last year--but it is growing fast. It has also proved it can cross the Atlantic. In New York, Boston, and Chicago, customers have fallen for the brand's sales pitch: Retail sales in the U.S. have increased more than sevenfold in the past three years.

InBev's second potential global brand is Beck's, which sold 4.3 million barrels last year. Like Stella, Beck's has hefty sales in Europe and an increasing presence in North America and Asia. It is growing even faster than Stella, with global sales up 14.6% for the first six months of the year. Together, the two beers accounted for about 12% of the old Interbrew's total beer volume last year and about 20% of its pretax profit. The Interbrew side of InBev has four other specialty brands aimed principally at Europe and North America: Hoegaarden, Leffe, Bass, and the Czech lager Staropramen.

InBev is clearly ahead of Anheuser-Busch and SABMiller--though behind Heineken--in launching continent-crossing beers. But in one important region, its global strategy looks problematic: North America. The company has some attractive assets in Rolling Rock and Labatt, which has 43% of the Canadian market, just behind Molson. But the challenge in the U.S. is fighting for space in a market dominated by Bud and Miller. "InBev is coming into a market that is like a hornet's nest that has been disturbed," says Pirko. "Anheuser and Miller aren't willing to lose a single case, and they're spending money to ensure nobody else gains share."

Brock's strategy is to avoid the hornets. "With the exception of Rolling Rock in parts of the country," he says, "we're not going head-to-head with Budweiser, Miller, and Coors. That would be suicidal." Instead, Brock is placing his faith in the U.S. premium import market, where margins are higher. But InBev has only about 15% of that market, which accounts for about 12% of all beer sales in the U.S., according to Beer Marketer's Insights. And the sector is dominated by Corona. Last year 7.6 million barrels of Corona and Corona Light were consumed in the U.S., about a third of total beer imports. That's good news for Anheuser-Busch, which owns a 50% stake in the company that makes Corona, Mexico's Grupo Modelo.

InBev's counter to Corona is Brahma, one of AmBev's Brazilian brews. It is not even Brazil's bestselling beer--that would be Skol, which InBev bought from Carlsberg in 1967 but which can't, under terms of the agreement, be sold outside Latin America. Last year 80% of all Brahma was produced for the Brazilian market, and it will be a tough task defining the brand for beer drinkers elsewhere. But Brock is clear about Brahma's main target: "Brahma will go head-to-head with [Corona] around the world."

Brock isn't suggesting that Brahma can overtake Corona. But it will have to lure some customers away from the Mexican leader to have any credibility beyond its regional base. And few experts share InBev's enthusiasm about Brahma's prospects in the U.S. Says Harry Schuhmacher, editor of Beer Business Daily, a trade journal published in San Antonio: "Corona's original popularity stemmed from Americans who vacationed in Mexico. You don't have that built-in equity with Brahma."

As the junior partner in the InBev combination, AmBev will be under pressure if Brahma fails to take off in the U.S. And AmBev also has its work cut out at Labatt. "Labatt completes our dream of becoming a pan-American player," says Carlos Brito, AmBev's 44-year-old co--chief executive. But Canada's beer market, like that of the U.S., is stagnant, with annual sales growth of barely 1%. And Labatt is a distant third in the U.S. import market, behind Corona and Heineken. Brito says he plans to squeeze more profit from Labatt by applying AmBev's tight-fisted business methods. And some investors in Brazil back him to succeed. "AmBev is going to replicate at Labatt what they have been doing in Brazil," says Pedro Damasceno of Dynamo, a Rio de Janeiro asset-management firm that recently bought AmBev shares.

But in the long run, InBev's money and energy might be better spent in the big developing markets of Latin America, Russia, and China, rather than North America. Says Pirko: "If I were Brock, I'd be looking at how to manage InBev's North American assets on an interim basis and thinking about an exit strategy."

You won't hear such talk in Leuven. The corporate buzz is all about the brave new future that beckons for InBev. Symbolically, the company will quit Interbrew's old headquarters in December for a new building on the edge of Leuven. Brock will exchange his proximity to a derelict malthouse for a panorama of the main Stella brewery. To signal this fresh start, a banner has been draped over the building, showing a beer glass being filled. "An empty building is like an empty glass," the banner reads. "We open the tap in December."

Unintentionally, the banner draws attention to InBev's status as a work in progress. It may be king of beers right now, but it doesn't rule the world. And its questionable claim that it is "the only true global brewer" merely highlights all those territories it has yet to conquer. As for its global brands, Stella, Beck's, and Brahma may be great beers, but they're not the real deal. The real deal can be found in some Belgrade bar, where an obstinate fellow would still rather order a Niksicko.