In today’s day and age it seems that mergers and acquisitions are the norm in most businesses, and the brewing industry is not immune to this. In fact one of the largest mergers in recent times in any industry was just announced. AB InBev (Anheuser-Busch InBev) has come to terms with SAB Miller (South African Brewing Miller) to purchase the company for an astounding $108 billion dollars. To give you an idea of how big the resulting company will be, they will control 1-in-every-3 beers drunk on this planet… not country, but planet. Not only that, but they also will be one of the largest soft drink distributors on the globe. It staggers the mind to think about it.
There will be numerous regulatory hurdles to cross over before the deal is finalized. The first one will be that Molson Coors based in Denver will purchase the entire SAB Miller book in the United States for $12 billion. That will leave the playing field here the same, as it was with two behemoths, instead of three, controlling almost 70% of the beer market at last glance. Toss in Constellation Brands (Corona & Modelo), and Heineken (Heineken, Dos Equis & Tecate), with another 10% of the market between them and four companies control over 80% of the entire United States market.
Why should you care you ask? It’s all fizzy yellow piss water right? Well not so fast. Between these four mega-brewers their clout is so large that they dominate the hops markets, grain markets, bottle and can suppliers, and most distribution channels. When they speak everyone listens. Due to their size and clout the mega-brewers control most of the cooler setups in grocery stores across the country. Go into most groceries and what do you see? Smaller beer coolers loaded with brands controlled by the big guys, just like the soda aisle is split between Pepsi and Coke, there is not much room for smaller brands to squeeze in. In Colorado we are insulated from this due to our unique liquor laws that has given rise to a robust liquor store market.
Yeah, but who cares, I only drink craft beer anyway, and those guys are going to kill big beer one day soon right? Well yes craft beer has seen enormous growth in the U.S. cutting into the big guys’ turf, in 2014 it finally reached 11% of market share, but that still is quite small overall. Does it scare the big guys? It certainly is making them nervous and is prompting a change in their overall strategy. By consolidating the market it enables the mega-brewers to exert even more control over the direction beer drinking is heading, and access to some of your favorite brands.
After years of speculation about what to do about the rise of the crafts it seems that the big brewers are buying into the industry on top of creating their own faux crafts. AB InBev has purchased five independent craft breweries recently, Heineken, Constellation, and Molson Coors have also started snapping up breweries. All indications are that this is just the beginning of a full on frenzy, where the market will end up is open. Maybe it will actually help craft beer by ensuring a wider market for their beer since it will start showing up in more groceries across the country. Or maybe it could stifle the growth of the industry since it will be harder for fledgling crafts and established brands access to markets. Who knows? But, that being said here is an updated list outlining every craft that is either owned fully or partially by one of the big brewers. Some might surprise you.
AB InBev:
RedHook Brewing (32% share)
Kona Brewing (32% share)
Widmer Brothers Brewing (32% share)
Fordham and Dominion Brewing (40% share)
Miller Coors
Heineken
Lagunitas Brewing (50% share)
Constellation
Duvel Moortgat
Firestone Walker Brewing Company
North American Breweries—corporate entity owned by Florida Ice and Farm
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