US DOJ allows Anheuser-Busch$108B SABMiller acquisition, but...

[The NZA]

source

 

When the Department of Justice announced last week that it will allow beer company Anheuser-Busch InBev to proceed with its $108 billion acquisition of rival SABMiller, it may have initially sounded like bad news for the craft beer industry. A merger of the world’s two largest beer companies would surely mean diminished competition, making it harder for the little guys to stay in business.

 

What hurts craft beer hurts California the most. The state has over 680 craft breweries, more than any other state. But many California craft beer advocates are calling the Justice Department’s decision a win for small, independent brewers, because it includes serious restrictions on Anheuser-Busch InBev that will help protect all breweries’ access to markets.

 

“I think the craft brewing industry as a whole should be pleased with the results,” said Tom McCormick, executive director of the California Craft Brewers Association. “There could have been more (restrictions); we think there should have been more. But it was an intelligent decision overall.”

 

Anheuser-Busch InBev first announced its intention to acquire SABMiller last fall. Anticipating antitrust hurdles, it had agreed in November to divest of SABMiller’s stake in MillerCoors, which controls the Miller Lite, Coors Lite and Blue Moon brands in the U.S., selling the stake to Molson Coors, based in Canada, for $12 billion. (Molson Coors had owned 42 percent of MillerCoors in the U.S. already; this gives it full control.)

 

But the Justice Department went even further with its limitations on Anheuser-Busch InBev, indicating that it had listened very closely to craft brewers’ concerns. In addition to the MillerCoors divestiture, the department specified that Anheuser-Busch InBev could no longer offer sales incentives to distributors for selling its products; that it must not sell more than 10 percent of its products through Anheuser-Busch InBev-owned distributors; and that it must now seek approval from the department if it wants to acquire any new brewery, no matter how small.

 

The restrictions on Anheuser-Busch InBev’s distribution channels should have been more stringent, McCormick said; he would have preferred the brewing company to be forbidden from purchasing any independently owned distributors, as opposed to this 10 percent cap. (The U.S.’s three-tier system for alcohol distribution requires that beer be sold from a producer to a wholesaler, or distributor, to a retailer. If Anheuser-Busch InBev, a producer, can control its distributor, then that gives its products a significant competitive advantage in retail.) Given that Anheuser-Busch InBevowns about 10 percent of its distribution, this not likely to shift the status quo.

 

But everyone in craft brewing rejoiced at the termination of the Voluntary Anheuser Busch Incentive for Performance Program, which rewarded independently owned distributors for privileging Anheuser-Busch InBev products. If 98 percent or more of a distributor’s sales were Anheuser-Busch InBev products, they could be eligible for as much as $1.5 million in reimbursements. “I’m hoping that will benefit the distributor as well as the independent brewer,” said Lee Doxtader, co-owner of San Diego Brewing Company.

 

“There are some great restrictions to hopefully prevent consolidation from running wild,” said Jesse Friedman, owner of San Francisco’s Almanac Beer Co. But ultimately, “creating one monopolistic entity with this much power is bad for the industry.”

 

How closely does this merger approximate a monopoly? “We will now have a brewing company that will make 1 in every 3 beers consumed in the world,” McCormick pointed out.

 

One thing is clear: Big Beer is taking craft beer seriously as a threat to its hegemony. If it can’t beat them, it will evidently join them: Witness Anheuser-Busch InBev’s craft-brewery shopping spree in the last few years — Devils Backbone, Elysian, Goose Island, Blue Point. Those acquisitions will be more complicated now that the Justice Department must sign off, but that won’t stop consolidation.

 

all in all, this sounds way better than i'dve thought from just the headline - this is actually kinda cool to see.

[Donatella]

Interesting! Reading this makes me wanna try some new craft beers. I used to love going to Total Wine & More because they sell single bottles of hundreds of craft beers. I'd make my own mix-and-match six pack and I found some really great local beers that way. We should do that soon!

 

[The NZA]

oh wow, i know you mentioned them having your choco-wine but may've missed that part, always down to sample more craft stuff! it's been cool seeing more spots open up locally, i'm assuming it's easier to get a beer license than a liquor one (if that's how it works?)

[Donatella]

oh wow, i know you mentioned them having your choco-wine but may've missed that part, always down to sample more craft stuff! it's been cool seeing more spots open up locally, i'm assuming it's easier to get a beer license than a liquor one (if that's how it works?)

 

Actually Fresh Market was the only place that sold Chocolate Shop wine down here but they don't anymore. Gotta get it online. I should do that sometime. It's the only red wine I've ever liked.

 

And yeah, I worked at a start-up restaurant just out of high school and the owner explained to me that beer and wine licenses are much easier to get than liquor licenses!