Mega-merger? How About No?
Tear your mind and attention away from IPAs and imperial stouts and kettle sours for a moment, and consider the mega-merger of mega-brewers that’s currently being evaluated by the U.S. Department of Justice. Consider the names that are involved, directly and indirectly: Anheuser-Busch InBev (AB InBev). SABMiller. MolsonCoors. These are already products of the mergers of the world’s largest breweries, and now AB InBev has decided to buy SABMiller (“merge with,” “acquire,” whatever) while MolsonCoors picks up the substantial leftovers.
I would submit that this is not just a bad idea for the American beer industry and the American beer drinker, it is a bad idea for the world beer marketplace.
Wrap your brain around it. Just try. This deal will create a single company that brews and sells 30 percent of the entire world’s supply of beer—brands like Budweiser, Bud Light, Stella Artois, Corona, Castle, Modelo Especial, Brahma, Skol, Harbin, Pilsner Urquell—sales that will bring in $48 billion in annual revenue, and include the growing number of regional breweries that AB InBev has been buying to get into the higher end of the market (it set up a managing division for those brands called “The High End”).
One company. Thirty percent of world beer sales. About half of world beer profits.
The heads of both companies want this so badly that they’re making deals to sell off major brands to satisfy anti-monopoly concerns of the countries where they do business: Peroni, Grolsch, SABMiller’s 49 percent of Snow, the giant Chinese brand. They’ve even decided to sell the Miller brands—Miller, Miller Lite, MGD, Blue Moon—to MolsonCoors. Did you see that? SABMiller … is selling Miller so it can be bought by the makers of Budweiser.
Again … one company. $48 billion in revenue. Power enough to warp the marketplace.
We’ve been watching this coming ever since Pabst lost its brewery, since Guinness became part of Diageo, since Stroh’s went under, since Ballantine fell, since Bass sold Bass. Anheuser-Busch reached 50 percent organically as regionals closed and Miller floundered, then fell back as imports and new breweries took an increasing share. This would put it back in the driver’s seat.
Don’t say ‘So what?’, either. This is about much more than who’s making the light lager that you probably don’t drink. This is about the most acquisitive brewer in the history of the world getting the biggest checkbook ever. This is about a company that has historically used the strategy of controlling and purchasing the wholesale tier of the industry now getting much more influence and potential control of that sector, while also gaining a lot more spending money for lawyers and lobbying.
Still not convinced? How about some history? In the 1970s, there were the so-called Big Six brewers in the United Kingdom: Allied (Tetley and Ind Coope), Bass, Courage, Scottish & Newcastle, Whitbread and Watney’s. Storied names, the largest breweries in the U.K. In 1985 they made 78 percent of the beer sold. They were household names and they employed thousands. The beers they made, say what you will about them, were at the least more interesting than Bud Light.
Thanks to consolidation and acquisition, every single one of them is gone. The British government was complicit in this. They allowed the sales, they encouraged them. Now most beer sales in the U.K. are foreign-owned brands, in one of the historic homes of brewing. Not to be a chauvinist, but is that what any country would really want to see? Not me, folks.
So I have to address the Department of Justice, as they consider the consequences of this deal, and AB InBev and SABMiller make relatively minor tweaks to their holdings as concessions to the idea of competition. The question I want to ask, as a beer drinker, as a consumer, as a citizen, is this: why not just say “no” to this whole deal? How about you make the common sense decision any normal person would, and say that any merger that creates a single company with a third of the global sales, half of the American sales, of a large commodity—beer—is simply out of the question?
This is not a necessity, or in any way a good idea. This is simply a desire, a desire driven by greed and hubris and monomania. Jobs will be lost, not created. Prices will go up, not down. Competition will be crippled, choices constrained. This is not speculation, it’s what we saw in the wake of the AB InBev merger, and there is no reason to believe it would be any different in this round of agglomeration.
There are American senators and representatives who have these same concerns; they’re right, and this is a valid issue. We don’t need this. We don’t have to allow this. It’s past time for the pendulum to start swinging back.
Lew Bryson’s been drinking non-mainstream beer since 1981 and writing about it since 1994. He lives in the Philadelphia suburbs.