• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer
  • Advertise
  • About Craft Brewing Business

Craft Brewing Business

Professional Insight, Unfiltered

Craft Brewing Business Craft Brewing Business
  • News
  • Business & Marketing
  • Packaging & Distribution
  • Equipment & Systems
  • Ingredients & Supplies
  • Webinars & White Papers
  • News
  • Business & Marketing
  • Ingredients & Supplies
  • Packaging & Distribution
  • Equipment
  • Webinars & White Papers
  • COVID-19

National Beer Wholesalers Association addresses the many perils of an AB InBev/SABMiller merger with Congress

December 15, 2015Keith Gribbins

Budweiser Coors Sam Adams Sierra Nevada
Can’t we all just get along?

In the wake of Anheuser-Busch InBev seeking to buy SABMiller for $100 billion and some change, the middle distribution tier of the American alcohol industry has been under severe scrutiny by the consumer, beverage makers, the U.S. government and CBB. How can you not flip the eff out when you read the world’s largest brewer introduced a new incentive program last month that could offer some independent distributors in the United States annual reimbursements of as much as $1.5 million if 98 percent of the beers they sell are AB InBev brands?

Well, it’s reassuring to hear that the real pros in the industry — the National Beer Wholesalers Association — testified on this very subject to Congress, making some very impressive arguments. The below statement was read by NBWA President and CEO Craig Purser. This is his testimony before the Senate Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights. It’s super long, but it is actually an amazing diatribe that any beer professional should read, full of great insights. In fact, it’s the most honest thing we’ve read on Big Beer and alcohol distribution in the United States in a long, long time. We thank the NBWA for sharing.

Chairman Lee, Ranking Member Klobuchar and distinguished members of the Subcommittee, on behalf of the nation’s independent beer distributors (wholesalers) and their 130,000 employees, thank you for the opportunity to testify today.

I am here to discuss the proposed acquisition of SABMiller (SAB) by Anheuser-Busch InBev (ABI) — the number one and number two brewers in the world — as well as the sale of the MillerCoors joint venture to Molson Coors.

I will provide insight into how these two business deals could have competitive implications for the American independent beer distribution system, today’s competitive marketplace and the vast choice and variety of beer available to consumers.

There’s no question that America has entered a new golden age for beer, with unprecedented variety and quality offered by more than 4,000 breweries, compared to less than 50 in the 1980s. Sales by craft brewers grew nearly 18 percent in 2014, representing more than 11 percent of the overall beer market. You would be hard pressed to identify another industry that has experienced the same explosive growth in such a relatively short period of time.

But the true winner is the American consumer, who now enjoys an incredibly broad spectrum of innovative, independently produced beer products for every taste. What makes this consumer choice possible? The evidence points to a robust and competitive system of independent distribution which reduces barriers to market for brewers of all sizes, creates a competitive playing field for brewers of all sizes and keeps pricing competitive for consumers.

A critical issue before this Subcommittee, and the full Judiciary Committee, as you consider these transactions is how to preserve America’s golden age of beer — which is fueled by the independent beer distribution system.

The proposed transactions lead to further industry concentration

Consumer advocates, craft breweries, retailers and independent distributors have expressed concern that ABI’s increased leverage and anticompetitive aspects of the proposed MillerCoors divestiture may reduce access to distribution — reducing choice and raising prices for consumers.

One understandable source of this concern is the sheer magnitude of the two transactions being proposed, which cannot be ignored. ABI, the largest brewer in the world, is attempting to acquire SAB, the second largest. Additionally, in the U.S., Molson Coors has agreed to purchase, from ABI, SABMiller’s 58 percent stake in the MillerCoors joint venture and the global rights to both Miller and Coors legacy brands. Currently, ABI and the MillerCoors joint venture account for nearly 71 percent of beer sold in the U.S.

If the proposed deal closes, 57 percent of the world’s global beer profit would fall within the ABI and SAB combination. By comparison, Heineken, the next largest global competitor, is at 11 percent, and Molson Coors, the largest U.S. competitor to ABI-SABMiller, would be just under 3 percent of that same global profit pool.[1]

The resulting concentration could upset the equilibrium of the current U.S. beer market, which today can be fairly characterized as a “consumer pull” marketplace, where the consumer possesses the power to create market demand for popular beer brands. Through coordination with local retailers and local, independent beer distributors, the market responds to that demand.

The scale and market power being proposed in this merger could lead to a “supplier push” method, where brewers possess the scale and market power to dictate brand choices and beer sales. The most likely way this happens is if the large brewers exert pressure on independent distributors not to carry rival brands and on retailers to design their shelves to disfavor or remove rival brands. Just a few days ago, the Wall Street Journal reported on distributor incentive deals that could greatly disadvantage craft and other brewers.

self distribution craft beer
Since 2012, Anheuser-Busch InBev has purchased 12 independent distributors in nine states, and AB InBev owned distributors are in states that currently represent more than 30 percent of the American beer market.

The role of independent beer distributors in the American marketplace

In particular, these transactions could disrupt a critical component to the success of the industry: the combination of an open and independent distribution system with a state-based regulatory system that has worked so well for so many over the years. The U.S. beer market is thriving because of a robust and competitive system of independent distribution that reduces barriers to entry, reduces brewer and consumer costs, and fosters the explosion of choice and variety desired by consumers.

The Justice Department noted in its most recent beer merger review that, “Effective distribution is important for a brewer to be competitive in the beer industry.”[2] A study by the Boston Consulting Group underscores that the current system of beer distribution in the U.S. is “open, freely competitive and driven by consumer choice.”

In the most general terms, independent beer distributors purchase beer from a variety of breweries and then sell and deliver beer products to local, licensed retail accounts.[3] Getting a new beer to market is something that beer distributors do every day with tremendous success.

In the current marketplace, independent beer distributors build brands by working with their licensed retail customers to meet consumer demand for choice and variety in products ranging from imported beer from around the world to new American craft beers and other malt-based products and ciders.

Beer distributors provide access to capital and scale for brewers and importers as they can purchase larger quantities of product and also offer warehousing, marketing, promotion, sales and delivery of a heavy, climate-sensitive, perishable product. In addition to these economies of scale, beer distributors also invest in labor, transportation, energy, product integrity and take on other relevant responsibilities related to the selling and transporting of beer.

Independent beer distributors also invest considerable time, energy and resources in developing relationships with both large and small “on-premise” retailers (like restaurants and entertainment venues) and “off-premise” retailers (like grocery stores and convenience stores) in their markets. These distributor investments and relationships are an intangible value to brewers of all sizes by allowing them to receive the market attention that is necessary to compete, prosper and grow.

The photographs below illustrate the value of the existing system of beer distribution by highlighting the marked distinction between the consumer choice and variety in the beer industry and the state of affairs in the soft drink industry. As reflected in the “on-premise” soft drink photograph, a consumer in a restaurant usually has access to either Coca-Cola or Pepsi products, but not both, while a beer consumer in a restaurant or bar is typically met with a wide variety of brand choices on tap or on the menu.

The same holds true with an “off-premise” retailer account, where the soft drink aisle reflects Coca-Cola products and Pepsi products, whereas often hundreds of brands are found on the beer aisle. This variety is made possible by the independent sales and logistics work of local distributors.

The result of this open and independent system of distribution has been a beer industry renaissance — the new golden age — where breweries enjoy unrivaled access to market and consumers enjoy unprecedented choice and variety.

Click Next below to read more of the outstanding insights from the NBWA, including the major threats to the system.

Pages: Page 1 Page 2 Page 3
SAB Miller cbb crop Miller 64
Release the lawyers! West coast brewers sue over AB InBev/SABMiller merger
AB InBev logo
AB InBev purchase of SABMiller is finally approved; here are the important modifications
AB InBev’s ‘craft’ brands speak out against BA’s independent seal, hope you’ll drink some of their Kool-Aid already
Beer Voltron Ab Inbev cbb crop
Anheuser-Busch InBev acquires minority stake in RateBeer.com (Dogfish Head asks to be taken off the site)

Reader Interactions

Comments

  1. dickkoopmans says

    December 19, 2015 at 12:10 pm

    RT @BlackburnBrew: NBWA testifies for Congress on AB InBev/SABMiller merger https://t.co/jQ7UDknFlj via @craftbrewingbiz

    Log in to Reply
  2. BlackburnBrew says

    December 18, 2015 at 10:58 pm

    NBWA testifies for Congress on AB InBev/SABMiller merger https://t.co/jQ7UDknFlj via @craftbrewingbiz

    Log in to Reply
  3. KCHopTalk says

    December 18, 2015 at 10:21 pm

    National Beer Wholesalers Association addresses the AB InBev/SABMiller merger with Congress https://t.co/9GfBXh7pdx https://t.co/E6RUpc9KS2

    Log in to Reply
  4. Earnest Harbin says

    December 17, 2015 at 6:06 pm

    Earnest Harbin liked this on Facebook.

    Log in to Reply
  5. Leo Longoria says

    December 17, 2015 at 6:06 pm

    Leo Longoria liked this on Facebook.

    Log in to Reply
  6. WanderingOats says

    December 16, 2015 at 6:16 pm

    NBWA testifies for Congress on AB InBev/SABMiller merger https://t.co/7nmypir9rR

    Log in to Reply
  7. Charlie Reeves says

    December 16, 2015 at 5:51 pm

    Charlie Reeves liked this on Facebook.

    Log in to Reply
  8. Grist Mills says

    December 16, 2015 at 5:51 pm

    Grist Mills liked this on Facebook.

    Log in to Reply
  9. Scott Strain says

    December 16, 2015 at 5:51 pm

    Scott Strain liked this on Facebook.

    Log in to Reply
  10. Andrew Johnson says

    December 16, 2015 at 5:51 pm

    Andrew Johnson liked this on Facebook.

    Log in to Reply
  11. Lou Harper says

    December 16, 2015 at 5:51 pm

    Lou Harper liked this on Facebook.

    Log in to Reply
  12. ArcWest Architects says

    December 16, 2015 at 5:51 pm

    ArcWest Architects liked this on Facebook.

    Log in to Reply
  13. FlyingSaucerFW says

    December 16, 2015 at 2:42 pm

    Interesting insight https://t.co/OnF733Ejw2

    Log in to Reply
  14. Garrett E Pangle says

    December 16, 2015 at 11:58 am

    Would it be possible to boycott the big boys in favor of better local brews?

    Log in to Reply
  15. USbevX says

    December 16, 2015 at 10:47 am

    National #Beer Wholesalers Association addresses the many perils of an AB InBev/SABMiller merger with #Congress https://t.co/xHViRWGHCz

    Log in to Reply
  16. Joel A. Ohmer says

    December 16, 2015 at 9:18 am

    this CANNOT happen

    Log in to Reply
  17. William Lane says

    December 16, 2015 at 5:51 am

    William Lane liked this on Facebook.

    Log in to Reply
  18. Jessica Harris says

    December 16, 2015 at 5:51 am

    Jessica Harris liked this on Facebook.

    Log in to Reply
  19. Ohm Phansuea says

    December 16, 2015 at 5:51 am

    Ohm Phansuea liked this on Facebook.

    Log in to Reply
  20. Jonathan Polanco says

    December 16, 2015 at 5:51 am

    Jonathan Polanco liked this on Facebook.

    Log in to Reply
  21. Bill Hockett says

    December 15, 2015 at 9:37 pm

    Bill Hockett liked this on Facebook.

    Log in to Reply
  22. Serge Lubomudrov says

    December 15, 2015 at 9:37 pm

    Serge Lubomudrov liked this on Facebook.

    Log in to Reply
  23. Sean Bjornstrom says

    December 15, 2015 at 9:37 pm

    Sean Bjornstrom liked this on Facebook.

    Log in to Reply
  24. Wilson Bame says

    December 15, 2015 at 9:37 pm

    Wilson Bame liked this on Facebook.

    Log in to Reply
  25. Ricky Brown says

    December 15, 2015 at 9:37 pm

    Ricky Brown liked this on Facebook.

    Log in to Reply
  26. John Wanner says

    December 15, 2015 at 5:22 pm

    John Wanner liked this on Facebook.

    Log in to Reply
  27. Luke Gordon says

    December 15, 2015 at 5:22 pm

    Luke Gordon liked this on Facebook.

    Log in to Reply
  28. jspeedymorris22 says

    December 15, 2015 at 4:04 pm

    “National Beer Wholesalers Association addresses the many perils of an AB InBev/SABMiller merger with Congress” https://t.co/ni5F5KBuTx

    Log in to Reply
  29. Karli Olsen says

    December 15, 2015 at 3:22 pm

    Karli Olsen liked this on Facebook.

    Log in to Reply
  30. Katie R. Stouffer says

    December 15, 2015 at 3:22 pm

    Katie R. Stouffer liked this on Facebook.

    Log in to Reply
  31. The Girl & The Vine: HOPS says

    December 15, 2015 at 2:21 pm

    The Girl & The Vine: HOPS liked this on Facebook.

    Log in to Reply
  32. crsimp01 says

    December 15, 2015 at 2:03 pm

    NBWA testifies for Congress on AB InBev/SABMiller merger https://t.co/IC6ZMLMDtp via @craftbrewingbiz

    Log in to Reply
  33. StaciAnneMiller says

    December 15, 2015 at 1:55 pm

    NBWA testifies for Congress on AB InBev/SABMiller merger https://t.co/VSUL7q4SU6

    Log in to Reply
  34. Jason Weihbrecht says

    December 15, 2015 at 1:21 pm

    Jason Weihbrecht liked this on Facebook.

    Log in to Reply
  35. LVRGLLC says

    December 15, 2015 at 1:16 pm

    #CraftBeer #CraftBrewing #Beer #BeerBiz National Beer Wholesalers Association addresses the many perils of an A… https://t.co/yUgcTzRxQD

    Log in to Reply
  36. John Chadwick Eby says

    December 15, 2015 at 12:51 pm

    John Chadwick Eby liked this on Facebook.

    Log in to Reply

Leave a Reply Cancel reply

You must be logged in to post a comment.

Primary Sidebar

Latest News

  • The who, what, where, when and how (to register) for Homebrew Con 2023
  • Twenty Tennessee breweries prep 2023 Craft Brewers Conference collab and more beers to know this week
  • Karben4 Brewing to relaunch Ale Asylum brand
  • Caius Farm Brewery opens in Branford, Conn.

Sign up for our newsletter

unsubscribe from list

Most Popular Today

Recent Features

  • Koga-brothers-karben4Karben4 Brewing to relaunch Ale Asylum brand
    March 20, 2023
  • 4 steps to understanding the filtration process in craft beer
    March 20, 2023
  • newbelgium_2023_wildnectar-shopping-basket_family_IMG_2Beyond beer: Examples of craft breweries exploring canned cocktails
    March 16, 2023
  • brooklyn 35 featureBrooklyn Lager turns 35 and more beers to know this week
    March 14, 2023
  • Backwoods Brewing to open a 19-acre resort called Party Acres in the Columbia River gorge this May
    March 13, 2023
  • Distribution update: NYC’s Alewife Brewing now sells in eastern Pennsylvania + news from Maui, Urban South and more
    March 13, 2023

Footer

  • Email Newsletter Sign Up
  • About Craft Brewing Business
  • Contact Us
  • Advertise on Craft Brewing Business
  • Media Kit Download
  • Privacy and Terms

© 2023 · CBB Media LLC