Two conglomerates control
90 percent of the beer market, and that's costing you bucks.
By
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.
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.
Chuck Collins is a senior
scholar at the Institute for Policy Studies and a co-editor of Inequality.org.
He’s the author of the recent book Born on Third Base. Distributed by
OtherWords.org.
