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February 22nd, 2013

100 Bottles of Beer, But Only Two Owners

By Patrick Woodall

Finally, the U.S. Justice Department took some action to slow the rampant consolidation in America’s food system. Well, maybe not food, but close: beer. In January, the Justice Department filed suit to block a merger between the global beer baron that owns Budweiser (Anheuser-Busch InBev) and the largest brewer in Mexico that owns Corona (Grupo Modelo).

But this long overdue action follows decades of Justice’s antitrust cops being asleep at the switch. In 1980, there were 48 big breweries that supplied beer to the whole country and none had more than a quarter of the national market; today there really are only two: Anheuser-Busch InBev and SABMiller.

This consolidation occurred after an eye-popping wave of mergers stretching back to the Reagan administration. The two biggest American brewers were absorbed into the two giants running the industry today during President George W. Bush’s administration.

The beer section now looks a lot like the rest of the grocery store: although there are a lot of brands, most are owned by the big two. AB InBev owns Budweiser, LaBatt, Michelob, Becks, Löwenbräu, Stella Artois, St. Pauli Girl, Bass and a host of others. SABMiller owns Coors, Miller, Blue Moon, Leinenkugel, Pilsner Urquell, Fosters, Grolsch and almost 200 others.

These two companies control 80 percent of sales in the United States, and the 2,000 independent brewers (of the craft beer brands that have not been bought by the big two) control 6 percent of sales. These firms can and have raised prices – since consumers have nowhere to turn, even if they switch brands, their beer dollar is usually still going to AB InBev or SABMiller. And because the beer barons don’t like competitors, they can effectively prevent a lot of independent beers from showing up at the local stores by exerting pressure on wholesalers and distributors.

Sound like the rest of the food system? If the Department of Justice has noticed it’s not good for the beer system, maybe it’s time for them to take a look at the rest of the grocery store.

Beer drinkers have already seen fewer choices and higher prices due to industry consolidation and more mergers will make it worse. The most vibrant part of the beer industry – the thousands of independent, local, craft brewers – are being kept out of retail shelves by monopoly control of the entire supply, distribution and retail system by the big beer barons. And the deal isn’t dead yet: AB InBev has offered to restructure the acquisition to try and make it more palatable to the DOJ, but rearranging the deck chairs on this Titanic merger still gives the company a stranglehold on the beer market. Tell the Attorney General to take a stand against relentless consolidation in the food and beverage industry, and check out our executive director’s book Foodopoly for a more in-depth look at how consolidation has harmed the food system at large.

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