• 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

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

Antitrust officials investigating Anheuser-Busch incentive program

May 26, 2016Chris Crowell

Justice Department AB investigation

 

Multiple outlets are now reporting that U.S. antitrust officials are investigating Anheuser-Busch’s distributor incentive programs for violations. And rightfully so. Feel free to click that link for our original post on the incentive program.

The third tier of the beer industry serves an important function in helping brewers disseminate their beers for sale around the country. The key to this tier — and the entire point of it from the beginning — was its independence from alcohol producers. This attribute is literally cited as a reason Prohibition ended. So, it hardly seems like this system should allow distributors to be aligned and sometimes owned by the world’s largest beer conglomerate, one that is specifically buying brands left and right in order to spread out across every tap and shelf in the world. But it does, and it is. We even named this brand Beer Voltron, solely for its ability to combine all of these parts into one, gigantic imposing robot.

Anyway, the next part of this equation is what’s raising eyebrows. A summary from Fortune:

Distributors aligned with AB InBev are contractually required to spend a certain amount each year to advertise AB InBev beers. Those include products of breweries such as Blue Point or Goose Island, which used to be craft brewers, but are now part of AB InBev group.

Under the new incentive plan, AB InBev refunds 75 percent of this money if its beers make up 98 percent of the distributor’s sales, according to documents provided to lawmakers by AB InBev.

The greater the share of rival beers in a distributor’s sales, the less money it receives, according to the document. Even if a distributor raised sales of AB InBev beers, it would still receive less money if craft sales rise faster.

Sounds an awful lot like these incentives have less to do with promoting one company’s beer and more to do with crushing one’s enemies, seeing them driven before you and hearing the lamentation of the women.

But we already know all of this stuff and have found it unfair for a while. Is there any reason to believe the government will agree? It is easy to be cynical, but they are currently hearing perspectives from craft brewers and independent distributors, so we’ll see. Again, from Fortune:

There is a precedent, however, for the Justice Department to put limits on incentive programs. When AB InBev bought Grupo Modelo in 2013, it required the Modelo beers in the United States to be divested and required AB InBev to refrain from offering incentives to distributors that would hurt Modelo for three years.
…
Antitrust experts said paying distributors to suppress craft sales could run afoul of antitrust law. “It’s the large manufacturers that are trying to narrow the channel of distribution that is most cost effective,” said Andrew Gavil, who teaches at the Howard University School of Law. “That’s the big story here.”

Beer Voltron Ab Inbev cbb crop
AB InBev, SABMiller merger approved in U.S. — but there is hope for craft beer
Beer Voltron Ab Inbev cbb crop
Anheuser-Busch buys Devils Backbone Brewing
CANFEST
Quick can supply updates from Crown and Ball corporate calls in Q3
CBB-remote-expo-logo
CBB’s Remote Craft Brewery Expo: All the new products, services you would have seen at BrewEXPO 2020

Reader Interactions

Comments

  1. Jeff Mitchem says

    May 26, 2016 at 10:51 am

    Jeff Mitchem liked this on Facebook.

    Log in to Reply
  2. Joe Alfeo says

    May 26, 2016 at 10:21 am

    Joe Alfeo liked this on Facebook.

    Log in to Reply
  3. OhioBeerCounsel says

    May 26, 2016 at 10:12 am

    RT @CraftBrewingBiz: Antitrust officials investigating the Anheuser-Busch incentive program https://t.co/EQUbp3APNb

    Log in to Reply

Trackbacks

  1. How is this legal? Bud Light to give away beer from promotional fridges when the Cleveland Browns win says:
    August 15, 2018 at 10:02 am

    […] quality decision-making, and its owner would never knowingly break a law, and that Anheuser-Busch would never try to skirt around distribution regulations, but this just doesn’t smell right. Can a distributor install branded fridges around town and […]

    Log in to Reply

Leave a Reply Cancel reply

You must be logged in to post a comment.

Primary Sidebar

Latest News

  • Craftpeak launches Square integration within its digital storefront
  • Why (and how) Cabarrus Brewing will stick with online sales post-lockdown
  • Marketing Idea of the Week: CraftHaus Brewery’s scratch ‘n sniff cans
  • Portland Cider Co. donates $12,500 to Hunger-Free Schools

Sign up for our newsletter

unsubscribe from list

Most Popular Today

Recent Features

  • libdib online beer distributorWhy (and how) Cabarrus Brewing will stick with online sales post-lockdown
    February 25, 2021
  • craft beer consumer tastesCraft Beer Consumer Habits in February 2021: Are on-site attitudes changing?
    February 24, 2021
  • No and low alcohol beer grew 30+ percent last year, now enjoy some big haps in the NA beer sector
    February 23, 2021
  • How to Seduce a Distributor: The importance of branding, common misconceptions and automatic disqualifiers
    February 22, 2021
  • I would totally sit in a hot tub of hops and drink chill pints at this new beer spa in Denver
    February 18, 2021
  • truly hard seltzer‘Truly’ crushing it: Boston Beer nets over $1.7 billion in 2020 revenue
    February 18, 2021

Footer

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

© 2021 · CBB Media LLC

Continue ...

sponsored by