Just when you thought there couldn’t possibly be any more breweries for AB InBev to acquire, the beer giant is now going after rival SABMiller. So the company that already owns Budweiser, Bud Light, Stella Artois, and Corona is now gunning for Miller, Coors, Peroni, and Blue Moon, to name a few. Needless to say, the move has gotten the attention of the Senate antitrust subcommittee. But is the merger simply a power play or a matter of survival?
The concern from members of Congress (especially those from states with a strong craft-brewing presence) is understandable. AB InBev currently sells 16 brands in 25 countries, generating revenue in 2014 of $47 billion. Six of the top 10 most valued brands belong to them. The merger, worth at least $104 billion, would result in AB InBev having a 30 percent share of the beer market worldwide. (It already has a 45 percent market share in the United States.)
At last month’s hearing of the Senate Subcommittee on Antitrust, Competition Policy, and Consumer Rights, Delaware senator Chris Coons asked AB InBev CEO Carlos Brito about worries that his company would swallow up various craft entities while wielding enormous influence over distribution and making more shelf space for the larger brands. Brito assured the senator (whose state is home to craft brewers Dogfish Head, Twin Lakes, and 16 Mile) that the wholesaler and distribution system is fragmented enough to allow competition. “Thirty-five states out of the 50 permit or allow some sort of self-distribution of beer,” the Brazilian CEO pointed out. “And other than that, in any market you go, you have at least two, or three, or four wholesalers, one being ours. So there are many options to distribute. And wholesalers, let me tell you, 94 percent of our wholesalers carry competitive brands.”
It’s uncertain if this allayed the fears of the senator, who later remarked, “Nobody wants to take a seat at a bar and discover their only choices are between Bud and Miller.”
Fair enough. But when was the last time you went to a bar and ordered a Budweiser? For the first time in many years, I had a bottle of the King of Beers (found in my in-laws’ refrigerator alongside St. Pauli Girl and Beck’s). It was downright refreshing, albeit light. This, of course, is not the way to make beer these days. It wasn’t malty, yeasty, hoppy, dark, and bitter. It’s no IPA. Critics might say it’s watered down. But it worked for me. The problem is, it really is getting harder to find plain old Budweiser at a bar.
As Tripp Mickle wrote in the Wall Street Journal, “The self-proclaimed King of Beers is more of an afterthought among young consumers at … bars across the U.S.: Some 44 percent of 21- to 27-year-old drinkers today have never tried Budweiser, according to the brand’s parent company.” Sales of Budweiser have been in decline now for 25 years. In 1988, it peaked at 50-million barrels. Today it hovers around 16 million barrels. (Mickle visited a Greensboro, N.C., pub that carried 69 beers on tap. Only one of them was Budweiser, and it has since been removed.)
The AB InBev-SABMiller merger is, without question, massive. But from Brito’s standpoint, there must be an element of merging as a matter of survival. There are now approximately more than 4,000 breweries in the United States and statistically there are two new ones opening every day. In addition, the merger is likely to result in the selling off of major brands to get passed antitrust restrictions, including Miller and Coors itself, which would go to Molson Coors. (When AB InBev took over Grupo Modelo, for instance, it was forced to sell off its U.S. rights over Corona to New York-based Constellation Brands, making the latter the nation’s third-largest beer company.)
In short, this mega-merger, if it is even approved, will not be so clear cut. Sure, it will be yet another feather in Carlos Brito’s cap (as opposed to his ploy to promote Bud Light Lime-a-Rita, ahem). But will it get more people to be watchin’ the game, havin’ a Bud? Probably not.
(Frankly, the best promo I’ve seen for Budweiser lately comes at the end of this scene from Silver Linings Playbook.)
