Monopolizing America: Big Beer Takes Over

Forget about kicking back and enjoying an American beer; a massive wave of consolidation is transforming the industry.

According to a recent report by the Marin Institute, a California-based alcohol industry watchdog, a rush of buyouts and mergers in the last years of the Bush Administration has left two overseas giants in control of 80 percent of American beer consumption.

“How beer is marketed and sold in this country will never be the same,” said Charisse Lebron, corporate responsibility & advocacy manager at the Marin Institute. “Anheuser-Busch InBev and MillerCoors, controlled by parent companies SABMiller and Molson Coors Brewing Company, are all that really matter in the U.S.”

America is the world’s most profitable beer market, yet the U.S. has lost what was once a competitive industry. As recently as 2004, ten companies fought over world consumption; today Belgium-based InBev (Anheuser-Busch InBev) controls 25 percent of the world’s beer market. SABMiller, the second largest brewer with 15 percent of the market, is a London-based conglomerate that formed when South African Breweries acquired U.S.-owned Miller in 2002.

From 1947 to 1995, the number of large brewers in the U.S. fell 90 percent. As recently as 2003, American-owned Anheuser-Busch was the world’s largest beer company, with 12 breweries in the U.S. and 15 overseas, producing the world’s most popular beers: Bud Light and Budweiser. In 2004, the world’s third and fifth largest brewers, Belgian Interbrew and Brazilian AmBev, merged to create the world’s largest beer producer, AmBev.

In the buyout frenzy of 2008, AmBev bought Anheuser-Busch for $52 billion to become InBev and control the popular beers: Budweiser, Michelob, Stella Artois and Bass. Yearly sales for InBev topped $40 billion in 2008, surpassing SABMiller-Miller Lite, Miller Draft, Henry Weinhard’s-with $21 billion in revenue.

Today InBev is a behemoth with 151 beverage plants and 120,000 employees worldwide. The new company sells four of the top ten beers in the world, produces the first or second most popular beers in over 20 markets and ships beer to over a hundred countries.

In 2007, to better compete with InBev, SABMiller announced a joint venture with Molson Coors, the world’s fifth largest beer producer. Headquartered in Chicago, the newly formed MillerCoors is controlled by its parent companies, London-based SABMiller and Canada-Colorado-based Molson Coors, which reported gross profits of 70 percent in March 2009. SABMiller corporate leadership forms half of MillerCoors’ board and receives 58 percent of the profits.

Although microbreweries are growing in popularity-there were 1,300 in 2006-they represent a mere ten percent of total beer sales. There’s no way they can compete with the giants, who dominate the market.

Approved in record times by President Bush’s Federal Trade Commission, these beer mergers have a number of drawbacks. Charisse Lebron, author of the Beer Duopoly Report, predicts that American shareholders will have difficulty attending annual meetings overseas. Less shareholder involvement could lead to lower environmental and labor standards, while InBev and MillerCoors replace local beer distributorships with direct distribution from the brewery. The current three-tier system of alcohol sales and distribution was established 75 years ago to prevent aggressive sales tactics and give states oversight of alcohol.

“We advocate for the distributors because they are community based, have been around a long time, and are attuned and accountable to consumers and regulators,” Lebron said.

An even more troubling problem arises over taxes, especially with government facing reduced tax revenues. Federal alcohol excise taxes haven’t been raised since 1991 and, adjusted for inflation, have lost 40 percent of their value. State taxes are similar: Wisconsin hasn’t raised its alcohol tax to keep up with inflation since 1969 and has lost 83 percent of its value. Maryland’s alcohol excise tax was set in 1972 at 9 cents a gallon, but would be 38 cents a gallon if it were adjusted for inflation.

“Increasing taxes is the number one most effective way to reduce underage drinking and overall harm,” said Lebron. “The beer companies know that and are fighting it, despite the fact that alcohol harm in California alone amounts to $38 billion a year. In the U.S., it’s over $200 billion a year. Industries that cause harm, such as alcohol and tobacco, should be financially responsible for some portion of that harm.”

The beer duopoly is spending large amounts to prevent tax increases. The Marin Institute estimates that in 2009 alone the beer lobby defeated bills to raise alcohol taxes in 14 states that cost taxpayers $2.6 billion in revenue. If alcohol taxes were adjusted for inflation nationwide, it would add $6 billion to tax coffers. Beer producers spend lavishly to defeat tax bills: On the national level, InBev spent over $1.5 million in 2008. Additionally, InBev, MillerCoors, and its parent companies, spent almost $6 million lobbying state and local governments. They threaten state legislatures with closed breweries and lost jobs if taxes rise.

Americans are discovering that companies that once served their interest now determine their lives. Although some continue to support unregulated “free enterprise,” others find that powerful monopolies now determine government policy. It’s time to limit political contributions and control lobbying.

Don Monkerud is an California-based writer who follows cultural, social and political issues. He can be reached at: monkerud@cruzio.com. Copyright © 2011 Read other articles by Don.

13 comments on this article so far ...

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  1. Anat Baron said on November 26th, 2009 at 10:16am #

    Some factual inaccuracies:
    Inerbrew and AmBev formed InBev. This merged company bought Anheuser-Busch and so the largest brewer in the world is called Anheuser-Busch InBev.
    There are 1500 independent breweries in America and they make up less than 5% of the US beer market.
    Big two =80%
    Imports = 15%
    rest are craft breweries and brewpubs
    My film BEER WARS shows how the three tier system and the beer lobby limit consumer choice. beerwarsmovie.com

  2. beerdude said on November 26th, 2009 at 7:59pm #

    It would have been nice to have heard from someone on the other side of the fence from known alcohol haters at the Marin Group. Perhaps the Beer Institute or the NBWA?

  3. Annie Ladysmith said on November 26th, 2009 at 11:41pm #

    Guys with beer bellies are totally gross. Why do Americans love beer? Is it the burping and the farting that are so very adolescent but appeal so very much to the American male? Is it the macho football watching were they get programed (brainwashed) into the gulping of beer? Do they think this is somehow appealing to the opposite sex? I’ll tell you what’s NOT APPEALLING…YOUR FREAKIN” FATASS BEER GUTS!!!

  4. Suthiano said on November 27th, 2009 at 12:32am #

    beer is appealing because it is highly addictive and also promoted with the most powerful images.

    as the article touches on, the beer industry is in the hands of an elite few. Just consider Canada: the 3 biggest beers are Molson (John Molson, Freemason), Labbats (John Labbat, Freemason), and Keiths (Alexander Keith, Freemason)…

    I’ve witnessed arguments between Canadians and Aussies about Fosters vs Canadian… both claim having originated the premise for the “I am” commercials. The debate was limited to chat rooms, and neither company filed copyright infringement cases, so perhaps the conclusion is that there was no “competition” in using the format… maybe we shouldn’t be concerned with “primacy” as much as impulses and relationships?

    …but of course I’,m not credible.

  5. Don Monkerud said on November 27th, 2009 at 10:20am #

    Of course beer is promoted but it’s brand name promotion. I’ve always assumed beer is popular because it’s cheap. Discovered that in Turkey last year–another religious country where lots of people drink.

  6. hmmm said on November 27th, 2009 at 12:52pm #

    so those atavistic assholes who vote republican (most beer drinkers, i.e., people watching rich-men’s sports and being swayed by macho cowboys drinking beer and smoking cigs in multi-million dollar commercials) will get a taste of their own medicine. higher prices, gouging, rotten product, rudeness, etc. this is way cool.

  7. Steve Beck said on November 27th, 2009 at 8:19pm #

    I hope readers understand that the Marin Institute isn’t truly an “alcohol industry watchdog.” It’s a neo-prohibitionist organization. For more about Marin, people might want to visit: http://alcoholfacts.org/MarinInstitute.html

  8. kalidas said on November 28th, 2009 at 10:15am #

    Hey, there’s always apple cider!

  9. Clay Barham said on November 28th, 2009 at 11:28am #

    Obama said, community interests are more important than are individual interests, and since community has neither brain nor heart, it falls to the few governing elite to govern. His belief that the “State or the Government is the embodiment of all that is good and beneficial and that the individuals are wretched underlings, exclusively intent upon inflicting harm upon one another and badly in need of a guardian,” should be unchallenged. (Von Mises) No one must question him or his beliefs in the sacred task of governance, and his fellow supporters are as fanatical as the Muslims who would conquer the world. He, and his modern Democrats, is far from the libertarian Democrats of the 19th century, from Jefferson to Cleveland, who believed in individual freedom, the resulting free market, small government and America’s prosperity, as cited in THE CHANGING FACE OF DEMOCRATS on Amazon and claysamerica.com.

  10. bozh said on November 28th, 2009 at 12:09pm #

    clay, i agree
    People exist. And in my fervent opinion, they function best when they live and work in an interdependent way.
    This wld mean that a prez wld listen to a fisher and fisher, et al, to a prez. It means that a pol or prez wld value the fisher just as a fisher wld value a prez or pol.
    It means also one wld never work for anyone. A manager of a plant or store wld work for a worker and in turn worker wld work for manager of the plant.
    It means that every last human being wld have the right to work and to own his or her work. It actually means that all means of production shld be owned by each citizen.
    It means total eradicaton of any dependency on any human being.
    In schooling children, interdependence wld ban once and for all time rating children as A,B, C, etc.
    The notion that children are bad, unruly, unmotivated on which judgments on children rests- both praise or condemnation- appears extremely vitiating to all of us or most of us; exception being some psychopathic people!
    The statement of “no child left behind“ in an dependent way means that that some children wld be left behind as long as u rate them.
    That to me appears as adding insult to injury! It is a naked ploy to divide people and rule over them. That`s all folks!

  11. Lew Bryson said on November 29th, 2009 at 5:04pm #

    It always amazes me that “liberal,” “progressive” types want to increase beer taxes by simply jacking up the percentages (to “keep up with inflation”), while ignoring the fact that beer taxes are among the least progressive taxes going. Excise taxes fall most heavily on the poor. Great public policy, eh? The Marin Institute wants to raise beer taxes (on everyone, not just problem drinkers) as a form of incremental prohibition; progressives — apparently — want to raise beer taxes just to raise government revenues — by heavily taxing the poor — to pay for programs…for the poor. Good thinking!

    Lebron’s argument that raising beer taxes will lower overconsumption is like arguing that raising highway tolls and gasoline taxes will cut back on speeding and reckless driving; it ignores that most of the people on the road are driving within safe parameters, and makes it more expensive for everyone. This kind of taxation by blunt instrument is not effective; it is hypocritical.

    I’ll be honest, by the way: I am a beer drinker, and I make my living writing about beer and spirits. I do not advocate overconsumption, I argue against it. I also argue against beer taxes; they are inherently unfair, and they are an ineffective tool against alcoholism and dangerous drinking.

  12. B99 said on November 29th, 2009 at 6:26pm #

    annie – Where are you from that they don’t drink beer?

  13. Mulga Mumblebrain said on November 30th, 2009 at 12:20am #

    Mass marketed American beer is rubbish. I think that you ought to concentrate on home-brewing and supporting small breweries that make a decent drop. And B99, annie is from that planet where there are thirty women for every Chinese man-you know the place.