Brewers Association Worried About Beer Merger’s Implications
The primary trade group for the craft beer world has asked federal authorities to take a close look at the $107 billion deal that will bring together the two largest beer companies in the world. The group says, however, that the impact will be greater abroad than in the United States.
Last week brought the announcement of the beer world’s equivalent of a Coke/Pepsi merger, and it has craft brewers everywhere concerned about the implications.
Anheuser-Busch InBev (ABInBev) announced it had finalized a deal to acquire the assets of SABMiller. The $107 billion deal creates an alcohol-industry giant that controls nearly a third of the world’s taps and six-packs. It’s a big deal, and it came with measures designed to ease regulatory concerns—SABMiller will sell off its majority ownership stake in MillerCoors, which controlled ownership of SABMiller’s American brands, to Molson Coors.
(In a move that suggests that Miller wasn’t really the selling point for ABInBev, the company also plans to hand the global rights to Miller’s brands in emerging markets to Molson Coors. So in the end, it’s likely Budweiser and Miller won’t be produced by the same company. The Coke and Pepsi battle continues.)
But that move may not be enough for the craft beer industry, which has seen much contraction in recent years, due to acquisitions of smaller brewers by international giants. Brewers Association CEO Bob Pease, whose association represents smaller-scale brewers, says that the deal’s concentration of power remains an issue of concern and urged regulators to closely analyze the deal.
“The size and scope of the ABInBev business has many ramifications for the U.S. beer industry, even with the divestiture of the MillerCoors joint venture,” Pease said in a statement last week. “The most obvious is that ABInBev is still by far the largest brewer and beer distributor in the United States. It is vital for the continued success of small brewers that we have access to market with an independent and competitive middle distribution tier.”
The sentiment was echoed by Paul Gatza, the association’s director, in a blog post written when the merger was first hinted at in September. He suggested that while the move is likely to have a larger impact abroad, it could still affect the distribution network of raw materials that brewers rely on and could also harm the public’s relationship with beer.
“There have been an increasing number of craft brewer transactions inside and outside of craft lately,” Gatza noted. “To what degree will this giant merger and other deals, some of which may impact beer drinkers’ relationships to specific brewers, impact perceptions of beer to where it becomes less of an item of personal passion or more of an item of personal passion? Will future transactions in and from the craft space hurt the brand of craft? Time will tell all.”
The ABInBev/SABMiller merger is just one of the many industry shakeups that could create problems for craft brewers. Earlier this year, Rexam and Ball, two of the beer industry’s three primary can suppliers, announced they would be merging, a move that also created concern among craft brewers. Meanwhile, Forbes notes that the third-place can supplier, Crown Holdings, has leaned away from working with craft breweries, claiming that it can’t handle the demand.