"Are We in Danger of a Beer Monopoly?"

Hello Everyone,

More interesting reading from the New York Times:

http://www.nytimes.com/2013/03/03/magaz ... gewanted=1

How’s this for a teaser:

“So I was surprised to learn that the Justice Department is worried that Anheuser-Busch InBev, the conglomerate that owns Bud, is on the cusp of becoming an abusive monopoly … analysis suggests that the firm, regardless of who is running it, will inevitably break the law.”

Break the law? Like the lawsuit claiming that they are labeling the beer to be 5% but it’s not?

http://www.cnbc.com/id/100497711/Watere ... hol_Levels

AB InBev <-> Groupo Modelo is an interesting case. Big beer competing on a global stage has some very different competitors, especially in India and China. Mr. Davidson keenly points out that the anti-monopoly laws in both countries look less like antitrust (consumer protection) and more like economic nationalism (corporate protection). The FTC and DoJ are looking at the pricing strategies and market dynamics within the American beer market; AB has always been very aggressive with pricing management.

So this leaves the DoJ/FTC (and the EU/UK regulators as well) in a pickle: do you protect the global market and keep rising nationalist (or nationalist-esque in the case of India) firms in check by approving the Groupo Modelo deal, or do you protect your consumers and put your market at risk?

This very problem is repeating itself across other industries (technology especially) and there isn’t a an absolutely right answer. An analogue of this situation is playing out in between Huawei and Cisco as they pick off small companies and attempt to cross-sell products in various global markets, especially in Africa as mobile networks explode there.



I think we’ve got two different beer markets to consider.

What with the number of breweries in the USA being at a 125-year high, I doubt AB-InBev or MillerCoors have all that much control over pricing in the craft beer market. On the other hand, with the number of mass-market breweries at an all time low there’s no doubt in my mind that the price on mass-market beer is higher than it should be.

I’m sure it’s bad for the market overall. But from a purely selfish perspective I’m not too worried about that situation. My suspicion is that a smaller price gap between BMC beer and craft beer means that craft beer sells better. Which means that craft brewers have some extra room to drop their prices and make up the difference on volume. Cheaper beer for me, more profit for them - assuming that is how it works out, it doesn’t seem like such a raw deal.