Craft Brewers Fear Merger of Beer Giants

October 16, 2015 – Big Beer’s sales have been slipping, in no small part as a result of the American beer consumer discovering and preferring craft beers. With 3,464 craft breweries now operating in the United States, how does the merger of Anheuser-Busch InBev with SABMiller affect the thriving craft industry?

It’s the distribution system. AB InBev has always been a tough competitor. They strong-arm their distributors not to carry competing product. And while Bud’s Suds have been declining, with Bud Light dropping 13 percent since 2007, they are still a powerhouse and the biggest beer company in the world. If microbreweries can’t find distributors to carry their product, well, the product doesn’t get distributed.

AB InBev appreciates the potential of craft beers, creating their own brands such as Shock Top. They have been on a well-documented buying spree. Their partnerships include Goose Island, Blue Point, 10 Barrel, Elysian and Golden Road. They have minority ownership positions in others such as Redhook Ale, Widmer Brother and Kona Brewing. Their newly acquired craft brands are placed with their distributors to the detriment of independent breweries.

The new giant beer corporation will also be in a position to control pricing, meaning increase pricing. To quote The Wall Street Journal of October 14, “AB InBev has a history of using acquisitions to boost profitability by cutting costs and steering consumers toward more expensive beers.” This was the case in China, according to analysts and it will be the case in Africa, which is seen as a huge growth market.