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Monopolized U.S. Beer Market Threatens Diversity, Local Control

Discussion in 'Beer News' started by Jason, Dec 13, 2012.

  1. Jason

    Jason Founder (1,330) Massachusetts Aug 23, 1996 Staff Member

    Washington, DC (December 2012) - Two giant companies — Anheuser-Busch Inbev and MillerCoors — control nearly 90 percent of the U.S. beer market. A few retailers, such as Costco, increasingly dominate beer and wine sales across entire regions, such as Washington state.This intense concentration of power threatens the ability of American communities to regulate the sale of alcohol and to reduce the variety and quality of beer in America’s marketplaces, according to a report released today by the New America Foundation’s Markets, Enterprise, and Resiliency Initiative.

    The report explains how the “three-tiered system” of alcohol regulation was designed by lawmakers to preserve local control over the industry and to promote individual self control.The report also details how the giant international beer corporations and mega retailers are taking actions that threaten to upend a system designed with great care – at the end of Prohibition 80 years ago – to balance the interests of the consumer, the brewer and distiller, and the community.

    The report documents how:

    • a sweeping series of mergers in the beer industry has shrunk the number of major breweries in the United States from 48 in 1980 to two today.

    • big brewers use their power to encourage consolidation among distributors, and to discourage these distributors from carrying competitors’ products.

    • giant retailers like Costco are reshaping state level beer markets in ways that undermine local control and erode traditional protections against uncontrolled discount pricing.

    Read the full report, “A King of Beer? Concentration of Power Over America’s Beer Market is Bad for Consumers. It Also Threatens Constitutional and Moral Balances."

    For more information or to schedule an interview, please contact Clara Hogan.

    About the New America Foundation
    New America Foundation is a nonprofit, nonpartisan public policy institute that invests in new thinkers and new ideas to address the next generation of challenges facing the United States.

    About the Markets, Enterprise, and Resiliency Initiative
    MERI promotes political, industrial, economic, and environmental resilience. The program documents and clarifies the dangers of extreme consolidation in America’s political economy, and discusses ways to reestablish it on a more stable and fair foundation.

    ###
     
  2. Very interesting and in-depth article. As a guy who is just graduating with a marketing degree and looking to work for a wholesaler/distributor and eventually a brewery, it opens my eyes to a few things going on in the industry. It is interesting how important the three-tier system is to our beer industry, but how seemingly corrupt it still is. Though regulated, the beer industry is still being monopolized and the consumer is still hurting, as they were pre-prohibition. I wish the government was able to do more to stop these acquisitions from ABI and MC, but I think the real problem lies in the lobbyists who basically fund a lot of the politicians campaigns. It'll be interesting to see what happens in the future.
     
  3. Why is it that every article about beer contains a different percentage of market control by BMC? I've seen everywhere from 75% - this one @ 90%. What gives?
     
  4. FUNKPhD

    FUNKPhD Advocate (505) Texas Apr 13, 2010

    That's how monopolies work? :rolleyes:
     
  5. The difference is that one figure is their total US beer market share, which is now around 75% for AB (47%) and MC (28.4%) (which also includes the imports they bring in, most of which are brewed/owned by their 3 parent co's - ABInBev, SABMiller and MolsonCoors).

    The 90% refers to the percentage of US beer production those two brew in the US.

    The 14% of the US market that is now imported brands being the major difference between the two figures.
     
  6. Monopoly? I want the car.
     
  7. Ahhh. Thanx.
     
  8. What it still boils down to is breweries being able to get their beer on trucks. With the growing share craft beer has hopefully this will inspire more distributers to build there business by distributing a large portfolio of craft beer rather then relying on the bulk of their business coming from BMC because then its too easy to leverage the distributor in to carrying one of their new lines and dropping a craft
     
  9. Craft breweries are still having difficulty getting their beer distributed?

    You sure this article isn't from 2004?
     
  10. frazbri

    frazbri Advocate (600) Ohio Oct 29, 2003

    That's another chilling look at the plans of ABI. Bully your distributors, squeeze out those whose goals don't perfectly align with ABI, manipulate legislation to gain greater control of the market. These are reasons many of us fear ABInbev and MillerCoors.
     
  11. You should go for the thimble. You can drink more beer out of it.
     
    WebGuyMike likes this.
  12. JediMatt

    JediMatt Aficionado (210) Iowa Jun 18, 2010

    Scary stuff.
     
  13. Of the 48 brewing companies in the US in 1980 (debatable whether one would call all of them "major"- but the non-microbrewing-era ones), a dozen others besides AB and MC still exist:
    1. Anchor
    2. City (successor to Heileman, also runs former Latrobe plant)
    3. Cold Spring
    4. Matt (at the time the West End Brewing Co.)
    5. Minhas (formerly Huber)
    6. Genesee
    7. Schell
    8. Spoetzl
    9. Stevens Point
    10. Straub
    11. The Lion
    12. Yuengling
     
  14. Kudos for posting this Jason. I hope that all BA's come check this thread out.
     
  15. aubuc1

    aubuc1 Savant (370) Florida Dec 19, 2007

    I think this shows the folly in creating legislation to solve commercial problems. There is always a work around, but the legislation just gives an advantage to those closest to the beaurocrats. The three tier system does not work and is unneccessary legislative garbage. If it benefited smaller breweries to have someone truck/ship their beer, let them choose to do so.
     
  16. Yeah, I don't get this. If it were true, wouldn't we see a shrinking number of craft breweries? Instead, we see just the opposite: a growing number of craft brewers and distribution across the US. Every time I go to Total Wine, they have new beers from breweries across the country.

    Maybe this article is focusing only on breweries that brew only Adjunct Lagers, like Yuengling, Coors, Bud, etc?

    Another misused word. If it's a monopoly, that means there's only one company making the product. Mono = one.
     
    Beerandraiderfan likes this.
  17. Better
     
  18. ah but poly = many. where is your god now?

    jim koch credited the three-tier system as a major reason sam adams was able to survive and thrive. i'm sure jesskidden has the exact quote...

     
  19. mcc1654

    mcc1654 Savant (355) Illinois Mar 20, 2011

    This is why we have antitrust laws. Now if only they were enforced.
     
  20. benart

    benart Aficionado (135) Delaware Dec 20, 2008

    for clarification... only 10 of those are still American owned, most have changed hands numerous times & the rest are contract brewers at best, where the beers that actually bear the name are terrible facsimiles of what they were & only 2 or 3 are actually independently owned.
     
  21. This is not why we have anti-trust laws. Concerted action type of price fixing is. They are enforced, but this scenario does not fall under said legislation.

    Anti trust lawsuits don't occur when the big boys are losing ground by double digits annually to the smaller competitors (one could easily argue that craft and BMC aren't even competitors). The invisible hand is handling this alleged problem better than the government could.
     
  22. mcc1654

    mcc1654 Savant (355) Illinois Mar 20, 2011

    Price fixing isn't the only practice antitrust laws deal with and I'm certain you know this.
     
  23. Sure. Rather than guess, what is the "this" you were speaking of the in regards to why we have anti trust laws?
     
  24. DelMontiac

    DelMontiac Advocate (630) Oklahoma Oct 22, 2010

    Financial strength is a hell of a weapon. "Cocaine rich comes quick and that's why the small dicks have it all." - Mike Cooley
     

  25. I think statements like this are very indicative of people that really don't know what's going on in the beer distribution business. I'm not picking on you specifically but as a person that works for a very large ABI distributor, I probably spend more time dealing with local brewers distribution crap than I do ABI crap. At the very least its an equal amount. Small breweries are ignorant of things that make our job easier such as proper days to release limited edition products, then do so and become irate if we can't deliver 10,000 accounts first thing Wednesday morning when most gocery stores are closed for receiving that day.

    Granted I can only speak for my company, but we are a huge distributor and we spend a disproportionate amount of time on non-ABI products compared to sales volume. As much as we may talk about good beer on here, the sales numbers are still heavy BMC yet whenever a relatively minor issue arises with a craft brewery we distribute, it is treated with utmost urgency. Don't forget that brewers such as SN have reps in the market there to hold us accountable for how we do all the while doing a terrible job themselves.

    Example: SN reps goes into the store I'm currently working in. While I'm doing inventory and getting ready to make the order for the next day, he sneaks in, notices the SN 12s were out of stock and immediately notifies one of our craft brand manager folks. In the process, said rep walks past 3 SN displays that needed servicing ( estate, narwhal, celebration 6ers), shoots his BS email and leaves never asking why is it that the store is having a pricing issues for those 12s that have prevented them from being delivered for the last 4 deliveries.

    TLDR: ABI distributors don't hate craft beer. It's very profitable in fact, and profit is a very motivating factor.
     
  26. mactrail

    mactrail Champion (785) Washington Mar 24, 2009

    Another statistic: BA website has reviews of 82,614 different beers worldwide. I think a rational conclusion is that there is an explosion of diversity and creativity by small and large businesses at the local level. And it's increasing, even as a couple of industrial giants pursue domination of the popular light lager category.
     
  27. I'm no expert and have only been an observer of the beer industry for the past 5 years. Here in the Chicago area so many local breweries have been started and/ or increased their market share since then. I've never seen more space at my local grocery store dedicated to Two Brothers, Revolution, Metropolitan, Finch's, Wild Onion, and other local breweries. In the short time since I started drinking craft Stone, Smuttynose, Firestone Walker, Oskar Blues, all expanded their distribution to include the Chicago area. Binny's has 29 giant liquor stores in the area that carry a crazy amounts of craft beer and there are local bottle shops popping up everywhere. There are small brewpubs, and craft beer focused bars and restaurants opening everywhere I look. I read an article just the other day that said there are more breweries in the US now than at any time in past 125 years. The fact that these aren't "Major" seems like a good thing to me. Sure craft doesn't have a huge share of the market but at this rate it just seems like a matter of time. Craft beer is currently expaning faster than anytime since prohibition ended.
     
    YogiBeer likes this.
  28. YogiBeer

    YogiBeer Savant (485) Illinois May 10, 2012

    Budweiser and miller can do whatever they want, I still wont ever drink their product. I could get into some long rant about economics or what have you, but I would somersault through a minefield to get to a good beer, as opposed to staying on the side that has unlimited Macro products.
     
    SammyJaxxxx likes this.
  29. I listed the active breweries that can be traced back to 1980, in response to the claim that of the "...48 in 1980" there are "two today" in the OP article.

    Since the "two" are obviously AB and MC, using the above added criteria not specified in the quote (changing hands, independently owned, terrible facsimile beers, not American owned) then there are none? ;)
     
    benart likes this.
  30. JediMatt

    JediMatt Aficionado (210) Iowa Jun 18, 2010

    Nice story, but it doesn't really have anything to do with the post you quoted. Namely, ABI bullying some of its distributors and squeezing the ones that don't perfectly align with their goals and practices.
     
    SammyJaxxxx likes this.
  31. frazbri

    frazbri Advocate (600) Ohio Oct 29, 2003

    I didn't mean to imply that the distributors were the problem. The great selection we enjoy now didn't appear by magic. My fears come from the words and actions of ABInbev's CEO, Mr. Brito. His vision of a fully aligned network doesn't include beers made by independent breweries. If that comes to fruition, we'll look back and consider today the golden age of beer.
     
  32. Apparently you didn't get the part where I said ABI squeezes us to get things accomplished the same as craft breweries, ABI is just better at formulating a gameplan and laying that out as oppose to craft brewers that pop in out of nowhere then bitch if things didn't go exactly as planned. People may think craft brewers are all doing it for the love of the job, loving craft beer doesn't pay the mortgage.
     
  33. ON a side note, the biggest concern people should have is when ABI distributors get put in positions of power at the distributor level. I've seen it happen several times here and there is a clear conflict of interest with what we do for ABI and the obligations we have the non-ABI brands.

    Us folks that just sell beer don't really care what it is we are selling, all the same really. It's when brewery guy is in charge, those people have an agenda and it shows.
     
    frazbri likes this.
  34. rlcoffey

    rlcoffey Savant (490) Kentucky Apr 20, 2004

    Yep, he said that. Im not convinced he is right. Saying 3-tier doesnt work probably isnt exactly right either, but it isnt optimal. I would say that, like most regulations, it solves 1 problem, that may or may not need solving, while causing 2 others.
     

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