One Company Will Soon Control Half of the U.S. Beer Market

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Alexander Zemlianichenko JR / Bloomberg via Getty Images

By next year, beer bought in the U.S. may be more likely to come from a single company than from all the rest combined. That could be bad news for America’s beer drinkers — potentially higher prices for some of the U.S.’s most popular brews and possibly even fewer mainstream brands — if regulatory agencies don’t get involved first.

Last week, Belgium-based beverage conglomerate Anheuser-Busch InBev announced plans to buy Grupo Modelo, the Mexican brewer behind Corona, Pacifico, Negra Modelo and nine other beer brands. For several years AB InBev has owned a 50% stake in the brewer but is now buying up the other half, an acquisition the beer conglomerate has been eyeing for several years.

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AB InBev has already cornered 47.7% of the market, a figure that is proudly highlighted on Anheuser-Busch’s home page, and the $20 billion buyout of Grupo Modelo, which has an estimated 6% of the U.S. market, would push AB InBev’s share to well over half of all U.S. beer sales.

That’s why Grupo Modelo is selling its 50% stake in Crown Imports – which exports and markets the Corona brands to the U.S. – to Constellation Brands. The move is designed to prevent antitrust challenges to the AB InBev-Grupo Modelo acquisition. But that move may not be enough to assuage claims of a U.S. beer monopoly.

“In Mexico, they shouldn’t have any issues approving the deal,” says BTG Pactual analyst Rafael Shin. “But in the U.S., it will be a different story.” The move is set to be finalized early next year.

Belgium-based InBev emerged into U.S. beer-drinkers’ consciousness around 2008, when it bought the all-American of American breweries – Anheuser Busch, the St. Louis-based maker of Budweiser and Bud Light.

It’s now the world’s largest brewer, controlling about a quarter of the global beer market with its 200 brands. According to Bloomberg News, the combined annual revenue for AB InBev and Grupo Modelo will hover around $47 billion and and together the complanies will employ some 150,000 workers. The volume of beer produced by the companies would increase from 300 million to 350 million barrels annually with the deal, which would also make the company bigger than SABMiller and Heineken — AB InBev’s two closest competitors — combined.

For the average American beer drinker, the growth of InBev could be bad news. Competition within the beer industry is slowly eroding, and anytime there’s less competition, higher prices are likely to follow.

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AB InBev could also decide that it ultimately wants to own fewer brands so it can reduce its marketing costs, and that could give customers fewer mainstream beer options.

The Crown Imports divestiture will help AB InBev make the case that it isn’t cornering all sectors of the market, but if regulatory agencies try to block the deal, it could decide to sell off one or more of its brands.

AB InBev has even attempted to acquire some microbreweries, like its acquisition of Chicago-based Goose Island Beer Co. last year. Even though craft breweries have exploded in popularity over the last several years, they only account for about 6% of U.S. beer sales by volume and 9% by dollars – and are unlikely to ever challenge AB InBev’s dominance in the U.S.

15 comments
Michael Driver
Michael Driver

Those "mainstream beers" aren't worth drinking. Craft, microbrews, or homebrews for me.

aschwab84
aschwab84

I hope the prices go up for crap beer.  No concern to me.  I will be enjoying a good beer while AB tries to buy all of the big competitors.  I guess I am one of the 6%....

bzelbub
bzelbub

Thank God for craft beers.

Jon Cann
Jon Cann

The concentration of wealth brought on by corporate tax cuts.  Corporate law clearly trumps Constitutional law.  The corporation is how people get around Constitutional limits to their power.

Tommy3134
Tommy3134

No one complains about a Mexican owning most if not all of the US cement businesses, so what is the big deal about this?

MACV
MACV

I've said it many, many times.  The Democrats break up the monopolies and the Republicans put them back together!

Tommy3134
Tommy3134

Reagan was the first president to allow huge acquisitions and mergers!!! He helped get us in the mess we are in.

Namec Nassianer
Namec Nassianer

You  are both correct.

Reagan was a massive deregulator, resulting in the mortgage crisis among other things.

Reagan also was big on union-killing (he fired air traffic controllers en masse).  Although unions can be a pain, they are (or were) the only voice the non-executive level worker had. 

It is a suspicious coincidence that as union membership dropped, executive salaries and compensation skyrocketed.

Mmmmbeer
Mmmmbeer

It's ok when numerous foreign owned beers are forced together for pure profit's sake.  They are all bleeding a slow death.  The ONLY segment of the beer market that is growing is craft beer.  People are demanding flavorful beers.  Craft brewers cannot make enough beer these days due to extreme demand.  The future of beer is interesting flavors not depending on funny commercials or picture perfect scenery on a beach.  

drabidea
drabidea

What do I care. If the prices go up more people will buy microbrews and realize they are worth the extra money.

HUGO BETANCES
HUGO BETANCES

SALUDOS DESDE REP.DOM PARECE SER QUE LA CERVECERIA BRASILEÑA VA A TENER DENTRO DE UNOS AÑOS EL CONTROL DE EL NEGOCIO DE LA CERVEZA EN EL MUNDO ENTERO

Mike259
Mike259

Not unusual. McCormick already owns most of the US retail spice market and move agressively to eliminate any potential competitors.

Pam C
Pam C

Try Penzey's spices.  You'll never go back to mass-produced big-market spices.