Fear The Uberbeer: How One Goliath May Soon Control 1/3 Of The World's Suds
It was a dark time for the microbrews...
It's rare for news of corporate mergers to really make headlines, but a big one happened recently: Anheuser-Busch InBev announced their plans to purchase SABMiller for over $100 billion dollars.
These are the two biggest of the Big Beer umbrella corporations, and if their powers combine, they'll control more than 1/3 of all beers made in the world. And, depending on how you count it, that'll include somewhere between 75-80% of beer sold in the US.
This would be among the largest corporate acquisitions in history.
The Uberbeer: What We Know So Far
Even though they were supposed to have been made public a week ago, the exact details of the merger haven't been released yet. Chances are, this is due to the near-universal outrage that's been generated since the plan was first announced.
The two players involved, AB InBev and SABMiller, are both conglomerates holding huge numbers of individual beer brands. This includes a growing number of microbreweries they've been buying over the last decade or so, as well as pretty much every major mass-market beer out there aside from Heineken and Guinness.
There isn't even room in this blog to list all the brands they own, but to hit some of the highlights, AB InBev owns:
- Budweiser / Bud Light
- Busch / Busch Light
- Corona (outside the US)
- Elysian Brewing
- Goose Island
- Natural Light
- Rolling Rock
- Stella Artois
- Wild Series
And SABMiller has:
- Castle Lager
- Henry Weinhard
- Miller / Miller Light / MGD / etc
- Olde English
- And a whole buncha soft drinks too...
In short, this will give them a stranglehold on beer in the US, and in many other places in the world. They'll also effectively own the beer market in a number of developing areas, most notably Africa.
The potential impact of this on the market is hard to overstate. Just for starters, the pricing power they'll command at that point is immense. It seems virtually inevitable that beer prices would go up, given how little competition would be left. Also, while such actions are illegal in many areas, it could also easily enable anti-competitive behavior meant to push the remaining brands off store shelves.
And then there's the hops shortage, which we talked about awhile back. One of the main concerns regarding hops is that the big brewers were getting preferential treatment, to the point that in a year or two, smaller breweries may not be able to get enough hops to keep up production.
The mega-merger created here would give them so much power over hops orders that they could effectively strangle the microbrews by denying them a key ingredient.
(This could make us a bit nervous too, since we use hops in our products.)
A New Hope...?
The only good news here is that anti-trust regulators in the US aren't terribly keen on the plan, which could throw a major wrench in the works. The problem is that when asked how they plan to stop the merger, the response was: "We haven't figured that out yet."
It seems more likely that the company would be forced to sell off some of its US holdings. This has happened before, when AB InBev purchased Grupo Modelo in 2013. They were forced to sell the rights to a number of brands, including US distribution of Corona.
In short, this has beer-lovers around the world worried, and for good reason. We're hoping the deal falls through, but right now, all bets are off.