The King of Beers Wants to Push Craft Brews out of Your Supermarket

Thomas Hawk (CC BY-nc 2.0)Thomas Hawk (CC BY-nc 2.0)

Tom Philpott via Mother Jones:

Pity Anheuser-Busch InBev, the Belgian-owned behemoth responsible for such beloved US beers as Budweiser, Bud Light, and Michelob Ultra. When InBev bought US beer giant Anheuser-Busch back in 2008, the company accounted for 49 percent of the US beer market, the Wall Street Journal reported. Since then, its US market share has dipped to 45 percent. Since 2005, sales of its big domestic brands like Bud have dropped 5.7 percent, even as craft-beer sales have rocketed up 173.6 percent. What’s a transnational, industrial-scale maker of flavor-light, marketing-heavy brews to do?

The answer, according to the Journal: use its still-formidable US market heft to squeeze out those fast-growing craft-beer makers. Understanding AB InBev’s maneuver requires a bit of background. After Prohibition, the US government sought to limit the market power of brewers by imposing a three-tiered system on the industry. One set of firms would brew beer; another set would distribute it; and a third would retail it, either in bars or carryout stores. Much of that old regime has broken down—in many states, for example, small brewers can sell directly to the public through brewpubs. But in most states, distributors—the companies that move beer from breweries and stock retail outlets’ shelves and bars’ taps and bottle offerings—can’t be owned directly by brewers.

To get around that restriction, megabrewers have for decades sought more or less exclusive agreements with nominally independent distributors. Today, the US beer market is dominated by AB InBev and rival MillerCoors, which together own about 80 percent of the market. Independent craft brewers account for 11 percent of the US market—and that’s growing rapidly, even though crafts tend to retail for $8 to $10 per six-pack, versus about $6 for conventional beers. Most distributors sell either InBev or MillerCoors brands as their bread and butter, the Journal reports, plus a smattering of independent craft brews. That’s why in supermarket beer coolers these days you’ll typically find a few national craft brews like Sierra Nevada, along with maybe a few local favorites, after you walk past towering stacks of Bud and Miller six-packs.

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