A merger between Anheuser-Busch InBev and SABMiller would create a single company that brews and sells 30 percent of the entire world’s supply of beer. (Photo by Jon Page)
Tear your mind and attention away from IPAs and imperial stouts and kettle sours for a moment, and consider the mega-merger of mega-brewers that’s currently being evaluated by the U.S. Department of Justice. Consider the names that are involved, directly and indirectly: Anheuser-Busch InBev (AB InBev). SABMiller. MolsonCoors. These are already products of the mergers of the world’s largest breweries, and now AB InBev has decided to buy SABMiller (“merge with,” “acquire,” whatever) while MolsonCoors picks up the substantial leftovers.
I would submit that this is not just a bad idea for the American beer industry and the American beer drinker, it is a bad idea for the world beer marketplace.
Wrap your brain around it. Just try. This deal will create a single company that brews and sells 30 percent of the entire world’s supply of beer—brands like Budweiser, Bud Light, Stella Artois, Corona, Castle, Modelo Especial, Brahma, Skol, Harbin, Pilsner Urquell—sales that will bring in $48 billion in annual revenue, and include the growing number of regional breweries that AB InBev has been buying to get into the higher end of the market (it set up a managing division for those brands called “The High End”).
One company. Thirty percent of world beer sales. About half of world beer profits.
The heads of both companies want this so badly that they’re making deals to sell off major brands to satisfy anti-monopoly concerns of the countries where they do business: Peroni, Grolsch, SABMiller’s 49 percent of Snow, the giant Chinese brand. They’ve even decided to sell the Miller brands—Miller, Miller Lite, MGD, Blue Moon—to MolsonCoors. Did you see that? SABMiller … is selling Miller so it can be bought by the makers of Budweiser.
Again … one company. $48 billion in revenue. Power enough to warp the marketplace.
We’ve been watching this coming ever since Pabst lost its brewery, since Guinness became part of Diageo, since Stroh’s went under, since Ballantine fell, since Bass sold Bass. Anheuser-Busch reached 50 percent organically as regionals closed and Miller floundered, then fell back as imports and new breweries took an increasing share. This would put it back in the driver’s seat.
Don’t say ‘So what?’, either. This is about much more than who’s making the light lager that you probably don’t drink. This is about the most acquisitive brewer in the history of the world getting the biggest checkbook ever. This is about a company that has historically used the strategy of controlling and purchasing the wholesale tier of the industry now getting much more influence and potential control of that sector, while also gaining a lot more spending money for lawyers and lobbying.
Still not convinced? How about some history? In the 1970s, there were the so-called Big Six brewers in the United Kingdom: Allied (Tetley and Ind Coope), Bass, Courage, Scottish & Newcastle, Whitbread and Watney’s. Storied names, the largest breweries in the U.K. In 1985 they made 78 percent of the beer sold. They were household names and they employed thousands. The beers they made, say what you will about them, were at the least more interesting than Bud Light.
Thanks to consolidation and acquisition, every single one of them is gone. The British government was complicit in this. They allowed the sales, they encouraged them. Now most beer sales in the U.K. are foreign-owned brands, in one of the historic homes of brewing. Not to be a chauvinist, but is that what any country would really want to see? Not me, folks.
So I have to address the Department of Justice, as they consider the consequences of this deal, and AB InBev and SABMiller make relatively minor tweaks to their holdings as concessions to the idea of competition. The question I want to ask, as a beer drinker, as a consumer, as a citizen, is this: why not just say “no” to this whole deal? How about you make the common sense decision any normal person would, and say that any merger that creates a single company with a third of the global sales, half of the American sales, of a large commodity—beer—is simply out of the question?
This is not a necessity, or in any way a good idea. This is simply a desire, a desire driven by greed and hubris and monomania. Jobs will be lost, not created. Prices will go up, not down. Competition will be crippled, choices constrained. This is not speculation, it’s what we saw in the wake of the AB InBev merger, and there is no reason to believe it would be any different in this round of agglomeration.
There are American senators and representatives who have these same concerns; they’re right, and this is a valid issue. We don’t need this. We don’t have to allow this. It’s past time for the pendulum to start swinging back.
Lew Bryson’s been drinking non-mainstream beer since 1981 and writing about it since 1994. He lives in the Philadelphia suburbs.
RELATED: Government Clears Path for AB InBev’s Purchase of SABMiller
A similar thing to what happened in the UK happened in Mexico. Cuauhtémoc Moctezuma (Tecate, XX, Bohemia, Carta Blanca, Sol, etc) and Modelo (Modelo, Corona, Pacifica, etc) control practically ALL of the mexican market, but they are now owned by Heineken and AB inBev, respectively.
So two companies control most of the market instead of one. What is the difference in the long run?
Competition is the difference. One company controlling it is gonna drive up prices and leople will lose there jobs. That’s why we have laws against monopolies.
ABI has given me many very principled reasons not to drink what they sell. Quality is a priority for this beer drinker, not quantity. Their craft acquisitions are shameful and only serve to prove that ABI does not brew good beer, despite what their patronizing little billboard ads say. I can brew better in my kitchen than they can in mass-production.
Kenny, the large breweries make extremely high quality beer, it just isn’t intense enough in flavor for you. For people who enjoy light American lagers there are no breweries doing it better than Bud, Miller, and Coors. Don’t mistake quality for intensity of flavor, they are two different things. I’m glad you can brew beer in your kitchen that you enjoy more. I doubt it’s better in “quality” though. It’s semantics but it’s an important distinction to make. Keep making & enjoying any beer you choose but be careful mistaking personal taste for quality.
I’m going to side with Kenny on this one. If your definition of quality is consistency, then yes they consistently brew beer of the same quality, but if quality is defined by the quality of the ingredients, then sadly no. By your definition, Swisher Sweets makes the same high quality product as a high end cigar and that simply isn’t the case
Another economic illiterate beseeching the government to use force to impose their preferences on others. Great.
Hmmm. Your reply hasn’t convinced me, Jeremiah. The author’s piece is an attempt to force his preferences on others, which you say is bad. But allowing large multinational Brewers to force their preferences on the market is…OK?
Jeremiah, the U.S. antitrust laws are there for a reason, and they’ve been in place for over 100 years. Those laws are why SABMiller is selling Miller Lite; they’re trying to comply with the laws. All I’m asking is that the Justice Department see a broader picture when they apply the laws.
In no shape, form, or fashion is this good for the general public or our economy. Socialism is in front or us and we need to make a stand.
I agree with the article but Constellation Brands own Corona and Modelo.
Yes but ab has 50 percent share hold in that company
Incorrect Jay. AB owns the brands 100% in Mexico. Constellation owns the brands 100% in the U.S. AB has no say what Constellation does in the U.S.
That is why I stopped reading half way through. Kevin is right on this subject.
That’s correct, Kevin. ABIB owns the brands/brewers outright, but Constellation is the sole US importer. The point is the money; ABIB gets the bucks that contribute to that half of the world’s beer profits. It isn’t just about the US market, it’s about the size, and the money, and the influence in the global beer market.
> Constellation is the world leader in premium wine, the number one beer importer and the number three beer company in the U.S. Up until 2013, its beer business was known as Crown Imports, which was a joint venture between Constellation Brands and Grupo Modelo, the original producers of Corona Extra, Corona Light, Modelo Especial, Negra Modelo, Pacifico and Victoria). Crown was the exclusive importer of these beer brands into the U.S. But Anheuser-Busch Inbev acquired Grupo Modelo, the Department of Justice required them to relinquish the U.s. rights because ABI already had a significant share of the U.S. market, This allowed Constellation Brands to acquire the rights to these brands in the U.S. in perpetuity. As part of the deal, Constellation had to become a full-fledged brewer and acquired Grupo Modelo’s newest, most state-of-the-art brewery in Nava, Coahuila, Mexico in order to do so. <
VERY well put, Lew. Since the whole AB-InBev buyout first came to light, I have maintained this would only be bad for any brewery bought up by them, and we have seen it come true, repeatedly!
Your discussion about the UK brings to mind a quote by Frank Zappa: “You can’t be a real country unless you have a beer and an airline…but at the very least you need a beer.
Nice beers lager
I lived in South Africa during the 80s, and enjoyed a couple of SAB products then. I thought the legendary Castle Lager was just “OK”, but I found their local version of Amstel superior to the real Amstel when I tried the latter years later. I returned to the UK, years went by, and then I heard that South African Breweries had gone multinational, buying Peroni … Miller … Foster’s … and now AB? Yikes.
The Brit story is is that now we have 4 main Brewers – still lots of competition and the majority of the beer we drink is still brewed in the UK. It’s just we historically drank more ale, then in the 60s-90s lager was the order of the day and now finally ale is back on the menu.
We drink more Stella than the Belgians and more Fosters than the Aussies. But they are both brewed here so who cares about that. The mega-merge won’t affect the UK market – SAB are comparatively small and Peroni their biggest brand will get sold to a DIFFFERENT brewer altogether from the 3 main rivals of ABI. This is good competition practice and is being managed well. We are lucky to have such a competitive marketplace with access to thousands of brands.
The way I see it is that this deal is basically to get Bud into Africa anyway. The fact that they are ignoring China is telling.
Hell No, Don’t Let It Go — Bigger won’t make it better. A-B has become an extremely large bureaucracy — like our Federal Government — where we’re just a number with a source of revenue — and treated with complete indifference. Let’s save the craft beers — as they help our communities and satisfy our tastes.
This merger is full of terrible ideas and only helps the executives of the two companies. I hat is the logic behind it and who stands to benifit from it. The consumer gets it in the rear with poor selection and higher prices. Look at what is happening in the barley and hops markets.
The mega biggies can control the markets and grab mass quantities of crop production in the short term and dry up competition. After they squish the craft industry they lower the prices paid to the farmer.
Emotionally this is probably an easy merger to oppose, but realistically what are the legal grounds? These are two non-U.S. companies to begin with and they seem more than willing to satisfy any US legal requirements by selling off brands. No question there are big business stakes here that will impact the industry at every level, though.
And there’s an emotional upside to me – Molson-Coors will acquire the Miller brand. I kind of prefer that to the SAB ownership.
I’d like to see the government get out of the business of business.
Why not treat alcohol like other agricultural products? Why all the excise taxes? Why the dictatorial control over distribution? The three tier set up is a farce.
Do away with the forced drinking age of 21. You are apparently smart enough to vote for the people who decide monopolies, and can go to war, at 18 years of age,but lack the maturity to drink responsibly. And the feds do not have the authority to enforce this age limit.
The big corporations prefer more government regulation, because they can afford it and better steer it with their lobbyists than can smaller ones.
Laissez-faire is a far better option. Rid the market of regulation and you have competition.
When craft beer was less than one percent of the market, AB wanted it all. They told their distributors that “loyalty” was the key to the business and the distributors were not considered “loyal” if they carried anything except AB products. In light of risking the loss of the Bud brands, the distributors would not carry craft beer– driving more than several out of the early craft beer movement. Distribution is key in the three tiered system. I agree wholeheartedly with the author— NO MONOPOLIES. If AB did it before, they will do it again. Source: Acetilli, Audacity of Hops
Well, it happened. Guess we’ll see what comes out of it. I wonder if this is what it’s going to feel like after election day in November?
Crap. That last question was only too prophetic.