The beer giant merger nears completion, and craft beer brewers wait to see how it will affect distribution.
When it comes to the matter of beer, the question arises: “Why can’t we all just get along?”
Apparently, the battle over marketing and producing quality beer has become such big business that control of the industry has become a major battleground.
There are two major players among the beer conglomerates – AB InBev of Belgium and SAB Miller of South Africa and Britain. These two brewing giants are the midst of a merger, the value of which is estimated at $100 billion and is being argued by antitrust authorities in both Europe and the United States. The merger would give the new company about 30 percent of the global beer market by volume, as both brewing giants pursue newer markets in Africa.
Last week, the European Union gained antitrust approval for the merger. On Tuesday, South Africa’s Competition Committee agreed, on the stipulation that no South African employees of either company would lose their job, and the new company would provide a $63 million investment in South African agriculture.
But that leaves 70 percent of the world beer market available to the little guys, which in terms of beer production is known as “craft beers’’, independent breweries that focus on flavor, varieties and regional markets. While InBev and SAB Miller own 70 percent of the U.S. beer market, craft beer output grew 12.8 percent in 2015.
AB InBev, in particular, has been buying some of the nation’s best-known craft beer brands, using influence over distribution to force the craft beer brands to consider selling. AB InBev has acquired Four Peaks from Arizona and the Golden Road brewery in Los Angeles, while SAB Miller has bought up Saint Archer in San Diego. Heineken, the No. 3 brewer in the world, purchased Laquintas Brewing Co. in California.
Meanwhile, a Senate Judiciary Committee has held hearings on the proposed deal so that small breweries could express their dismay. At the hearing, Brewers Association Chief Executive Bob Pease noted that AB InBev owns distributors in 15 states, and is one of the biggest wholesalers in nine other states. Kentucky recently passed legislation to prevent AB InBev from getting distribution operation ownership rights in that state.
The large breweries are able to offer significant incentives to wholesalers to increase the percentage of products the wholesaler offers to come from the AB plans.
According to the Brewers Association, two new craft breweries are opening daily in the United States. These beers do battle for shelf space as grocery stores expand their beer departments and existing liquor stores try to offer as wide a variety as they can in the space they have available.
Kent McDill is a staff writer for Millionaire Corner. McDill spent 30 years as a sports writer, working for United Press International and the Daily Herald of Arlington Heights, Ill. From 1988-1999, he covered the Chicago Bulls for the Daily Herald, traveling with them every day through the nine-month season. He also covered the Bulls for UPI from 1985-88, and currently covers the team for www.nba.com. He has written two books on the Bulls, including the new title “100 Things Bulls Fans Should Know And Do Before They Die’, published by Triumph Books. In August 2013, his new book “100 Things Bears Fans Should Know And Do Before They Die” gets published.
In 2008, he resigned from the Herald and became a freelance writer. The Herald hired him to write business features and speeches for the Daily Herald Business Conferences and Awards presentations.
McDill also writes a monthly parenting column for the Herald’s Suburban Parent magazine.
McDill is the father of four children, and an active fan of soccer, Jimmy Buffett and all things Disney.