Next time you reach for a cold beer on a hot summer day, you’ll have some uninvited drinking buddies: the beer barons.
Two conglomerates now control 90 percent of U.S. beer production. They use their power to raise prices, squeeze out small brewers, and limit your choices at the corner store.
This comes despite a thriving craft brewery culture.
Today there are over 5,300 community-based craft breweries in the U.S. — up from just 82 in the early 1980s. This innovative sector has strengthened local economies with new jobs while expanding variety for beer drinkers.
Unfortunately, the growth of independent breweries is slowing, in part because of intense consolidation in the industry and the failure of antitrust regulators to protect smaller companies.
Beer merger-mania started in 2008 with the marriage of Molson Coors and SABMiller, creating MillerCoors. Five months later, the Justice Department approved the merger of Anheuser Busch with InBev, creating AB InBev. By 2009, 90 percent of U.S. beer production was controlled by these two giants.
In October, regulators approved the merger of SABMiller and AB InBev, creating a beer Godzilla that controls a third of the global beer market. (Just to confuse us all, as part of the merger SAB Miller divested its stake in MillerCoors back to Molson Coors.)
The impact of these mergers has been the elimination of 5,000 U.S. jobs and higher beer prices. After several decades of steady price declines, the cost of beer immediately spiked 6 percent, with drinkers paying an additional $2 billion a year.
The beer barons also lean on wholesalers to squeeze shelf space and promotions for independent beers.
In 1980, there were 4,600 wholesalers, and most markets had four or five competing vendors. Now in most markets, 90 percent of the beer is controlled by the distributors connected to AB InBev and Molson Coors.
Jim Koch, founder of Sam Adams, observed, “These distributors are free to favor their primary suppliers over independent craft brewers when it comes to promotion, visibility, shelf space and marketing support.”
In other words, you can’t see other beer choices at your local store.
Moreover, unlike local brewers who pay their taxes, these two global beer conglomerates aggressively use offshore tax havens to dodge paying their fair share.
As Koch writes, “American breweries create beers for their local regions. They invest in their communities. They employ local workers. And they pay taxes — local, state and federal.” The independent beer sector “doesn’t outsource these well-paying American jobs.”
Over a century ago, Congress enacted the Sherman Anti-Trust Act of 1890 and the Clayton Anti-Trust Act of 1914 to break up monopolies like Standard Oil and prevent mergers that reduce competition.
But since the late 1980s, government action has been ineffective and weak — and not just on beer. Thanks to mega-mergers, a handful of corporate giants now dominate cell phone and internet service, banking, prescription drugs, agricultural seeds, and air travel, among many other things.
During his campaign, Donald Trump complained about mergers that put “too much concentration of power in the hands of a few.”
But unfortunately, it doesn’t look like he’ll be draining the beer swamp. Trump’s nominee to run the Justice Department’s antitrust activities, Makan Delrahim, has a long history of lobbying in favor of corporate mergers.
Senator Elizabeth Warren, on the other hand, recently put Delrahim’s nomination on hold. Trump’s pick will “put the interests of giant corporations ahead of the American people,” she warned.
Beer drinkers and consumers need a voice in Washington who will protect Main Street businesses and consumers from corporate consolidation. From our internet to our beer, we need more than Antitrust Lite.
Teaser photo credit: By Visitor7 – Own work, CC BY-SA 3.0, https://commons.wikimedia.org/w/index.php?curid=25660866