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The Beer Companies Behind Budweiser and Miller Lite Are Merging. There’s No Need for Regulators to Get Involved.

America's beer market is as competitive as it's ever been.

credit: Ethan Prater / Foter / CC BYcredit: Ethan Prater / Foter / CC BYThe most unpleasant thing about the just-announced plan to merge the world’s two biggest beer-makers, Anneuser-Busch Inbev (Budweiser, Bud Light, Corona) and SABMiller (Miller Lite), in a $100 billion deal, is not the thought of mixing two foul-tasting watery light beers together (although, eww), but the idea that the deal will, once approved by British regulators, will, as USA Today reports, "likely prompt intense anti-trust reviews in both the U.S. and the European Union."

It’s true that, if the sale goes through, it would be an extraordinarily large merger: the biggest beer deal ever, and among the five largest acquisitions in history. The deal would result in the newly merged BudMiller* controlling eight of the world’s 10 biggest beer brands, or about 30 percent of the global beer market.

But size alone is no reason for the government to pry into a deal like this. The fact is that the U.S. beer market is incredibly competitive these days. If you’ve been buying beer at a local grocer for the last decade or two, you’ve probably watched as the aisles fill up with an ever larger number of brands and tastes and styles. At bars, taps that were once filled exclusively by Bud and Miller and now packed with regional variants and obscure tastes from across the country.

If you love beer (I love beer), this is a great time to be alive. And the biggest reason why is the craft and microbrew explosion, which over the last few decades has gone from basically having no market presence to representing about 10 percent of the U.S. beer market, with roughly $100 billion in sales. In the space of a handful of presidential terms, America went from housing about 50 small breweries to more than 2,500.

The current boom started in the 1980s following the end of homebrew ban left over from prohibition. (Thanks, as always, to Jimmy Carter willingness to deregulate.) Which means that Big Beer got big thanks in part to an assist from the government.

The corporate beer brands still do big volume, but they have faltered in a world of intense competition. And the next generation of beer drinkers just isn’t interested. Brands like Budweiser have had a difficult time attracting young drinkers, with about 44 percent of 21-27 year old drinkers saying they’ve never tried the stuff. Craft beer and other newfangled options (some made by big beer makers), meanwhile, have made for a nearly 9 percent decline in shipments, according to The Wall Street Journal. 

As a result, corporate beer marketers have resorted to hilariously inept measures to promote their offerings as pseudo-craft beers. Leaked marketing documents from Anneuser-Busch, for example, pitched the company's mediocre Shock Top as one of its sub-brand's "big bet in the battle against Micro Craft," a beer designed with a “flavoursome taste to drive Shock Top penetration with Experience Maximizers in the ‘Reward Myself’ need state." Shockingly, this company is having a hard time attracting young drinkers. 

Anyway, that’s what this merger is about. Anneuser-Busch wants to buy SABMiller because big beer brands are struggling to compete and bring in new, young customers in wonderfully diverse, incredibly competitive market for beer, and figure the only way to hold their ground is to join forces.  

The Big Two may perform better together, but I suspect that the post-merger landscape would look a lot like the current one, with corporate beer continuing to sell a lot of volume while microbrewers that make a product that actually tastes good continue to eat into their sales. A corporate merger isn't going to make Bud Light taste any better. Either way, there’s no reason for regulators to get involved in a market as obviously competitive and innovative (and tasty) as this one.

(*I just made this name up.)

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  • Fist of Etiquette||

    Anneuser-Busch wants to buy SABMiller because big beer brands are struggling to compete and bring in new, young customers in wonderfully diverse, incredibly competitive market for beer...

    Sounds like what suits would come up with to remedy the situation, rather than fixing their noxious products.

  • Florida Man||

    Right. I'm guessing it would be cheaper to bring in some young Brewers from Asheville and improve your product, than buying a company with the same faults as your own.

  • kinnath||

    This is about international beer distribution networks. It is not about making quality products.

  • Rhywun||

    Yeah, these are just holding companies, right? I mean, it's not the same "company" making Corona and Hoegaarden, or Labatts and Boddingtons.

  • kinnath||

    As I recall, one company has a good network in Africa and the other in China. Combining gives both corporations access to important emerging markets.

  • CatoTheChipper||

    That would be Miller in Africa and Bud in China.

    I know it's hard to imagine, but Chinese Budweiser is even worse than the American swill.

  • ||

    Like suits who spent an entire weekend at an offsite retreat drinking Bud Light after Bud Light.

    That's the kind of thinking that leads to.

  • Plàya Manhattan.||

    Gross.

  • stupac8908||

    Does anyone remember Budweiser's 2015 Superbowl ad?

    https://www.youtube.com/watch?v=siHU_9ec94c

    I feel like nothing they do could exemplify their disdain for competition, innovation, and flavor more than that ad does.

  • ||

    Well, what if they leveraged their ties to the beer distribution process to shutdown competition? That would exemplify some disdain.

  • Lee G||

    If the distribution networks weren't mandated by law, it wouldn't be an issue.

  • Lee G||

    Shorter version: As one of the only survivors of America's Great Beer Depression, Anheuser is proud to serve you the highest quality piss water you became accustomed to when you couldn't get anything else.

  • Anomalous||

    No wonder the Pudwater market share is shrinking.

  • CatoTheChipper||

    American lager is a legitimate variety of beer, and some people prefer it. Bud is hardly the best example of the variety but, as a homebrewer, I certainly respect the macrobrewer's ability to turn out a consistent product year after year on such a massive scale. Bud is, essentially, the McDonalds of beer. Bud is swill, but if it's ice-cold on a sweltering day, it can be a refreshing brew; just like a quarter-pounder and fries can satisfy the appetite of a really hungry person if there are only a few other options. Of course, this foregoing does not apply "lite beer" which is hardly more a genuine beer than a "veggie burger" is a genuine burger.

  • Je suis Woodchipper||

    who?

  • sarcasmic||

    Made a spiced pumpkin beer this weekend that may be one of my best brews ever. Though it was a total pain in the ass. Fucking pumpkin caused the worst stuck sparge I've ever dealt with, despite a pound of rice hulls.

  • Je suis Woodchipper||

    I thought the pumpkin was always added during secondary fermentation. Care to share a basic outline of your recipe?

  • sarcasmic||

    Sure. I mashed five pounds of pumpkin with seven pounds Marris Otter, some Special B, and assorted other dark grains. After about an hour at one fifty, an iodine test confirmed complete conversion. I added one and a quarter ounce Tettenang for sixty, and another quarter for ten. At ten I also added some freshly ground cinnamon, cloves, and cardamom. Used US-05 ale yeast, and it's fermenting at about sixty four degrees. I plan to dry hop with another quarter ounce in the secondary before kegging.

  • Je suis Woodchipper||

    Sounds ambitious with all those spices. I like the noble addition. Good luck.

  • sarcasmic||

    Let's see. I believe I used two cinnamon sticks, ten cloves, and the contents of ten cardamom pods, which I ground with a mortar and pestle. The aroma was very nice and balanced. Reminded me of when my wife gets her yearly pumpkin chai latte from Starbucks. Otherwise it was modeled after an ale I made a few years back that was one of my best ever. I've got high hopes for this brew.

  • Je suis Woodchipper||

    Did you use canned pumpkin or carve out a fresh one?

  • sarcasmic||

    Canned. Made sure the ingredient list was one word long. It tastes just as good, without the cleanup.

  • crab_apple||

    Reason homebrew meetup? I'm making about 100 gallons of wine and cider (real cider, not the sugary garbage from a six pack) this fall.

  • Amazed||

    It's not the breweries we have to worry about controlling a market here in the US, it's the state's schemes of protecting monopolies of distributorships. They're the real bogeyman. Them and the states themselves controlling prices and availability.

  • NoVAHockey||

    I used to work with a guy who lobbied for Anheuser-Busch. He would only drink their products. I think he convinced himself it was worth it.

  • Drake||

    I played golf with an Anneuser-Busch sales guy a while back. He kept complaining how they only advertise the cheap stuff and never market some of their better specialty / higher-end brews. I kept agreeing as long as he was handing out Michelob Honey Lager and AmberBock.

  • Lee G||

    That's where the margins and volume are. That's why they do it.

  • Drake||

    Not my volume. But I do see people at the liquor store buying swill like Bud and Coors Lite in large quantities.

  • Riven||

    I'm so pleased they're merging--hopefully it will be easier to ignore both now.

  • Hugh Akston||

    You had trouble ignoring them before?

  • Tundra, well-chilled.||

    Nah, it's pretty easy. I agree with Riven, though, it is nice to have a good chunk of the world's shittiest beers under the same umbrella. It appeals to my OCD tendencies.

  • Riven||

    Ok, I didn't really. We have a pretty decent selection of microbrews available almost everywhere nowadays.

    We're coming into porter and stout season, so I'm looking forward to trying some new beers.

  • ||

    "We have a pretty decent selection of microbrews available almost everywhere nowadays."

    Sure, if you haven't had really good beer and so've a basis of comparison. If you have done, then there are still large areas where there's very few decent beers available. Oregon, for instance, which suffers not only from a lack of availability of good beers of traditional character but also suffers from a sort of hophead insanity on part of native brewers, who seem to think that beer is just a sort of alcoholic hops tisan. It's further mystifying that a lot of beers is made in Oregon using stale hops, for which there is no excuse in that state.

  • Riven||

    There is one brewery here that has a heavy emphasis on their IPAs, but they've also got a decent porter and Irish red. Their stout is...watery. I think we can all agree that stouts are at least meant to be a substantial beer.

    So for that I just go to a different brewery. I think there's at least five in easy driving distance (~20 miles)

  • Heroic Mulatto||

    When I want my alcohol to have a bitter high note and floral middle and base notes, I drink a gin and tonic, like a civilized person.

  • Swiss Servator||

    *salutes, hands G&T to HM, offers to have servants polish monocle and wax walking stick*

  • Plàya Manhattan.||

    You can take your British Colonialism and shove it.
    IPAs or GTFO.

  • sarcasmic||

    You can take your British Colonialism and shove it.
    IPAs or GTFO.

    My sarcometer just broke. Thanks.

  • CatoTheChipper||

    Yeah. That was a pretty good comment.

  • ||

    What the fuck is "Anneuser-Busch"? From the comments, it appears that this name is not unfamiliar to other folks, but it seems unlikely that the name could exist alongside Anheuser-Busch. At the same time, it seems crasy to imagine it to be a misspelling or typing error, as H and N would sound very different in this position, Anheuser-Busch should be well enough known that everyone can pronounce it (some spelling error might be imaginable, but not the replacement of H with N), and it's replicated several times in the comments here. I am mystified.

  • Loki||

    At the same time, it seems crasy to imagine it to be a misspelling or typing error

    I'm not familiar with this word, "crasy". It seems unlikely that the word could exist alongside crazy. Z and S would sound very different in this position, crazy should be well enough known that everyone can pronounce it (some spelling error might be imaginable, but not the replacement of Z with S). I am mystified...

  • Swiss Servator||

    *standing ovation*

  • Plàya Manhattan.||

  • Almanian's Rusty Woodchipper||

    nice

  • Another Phil||

    joe'z memorial law of teh internets

  • Swiss Servator||

    corporate beer continuing to sell a lot of volume while microbrewers that make a product that actually tastes good continue to eat into their sales.

    And microbrewers are....autonomous collectives? Kibbutzim? 501(c)(3)'s?

  • Heroic Mulatto||

    And microbrewers are....

    Communities of cenobitic monastics??

  • Swiss Servator||

    Mmmm...Belgian Monastaries....

    *beer drool*

  • Plàya Manhattan.||

    Artist's Rendering.

    You need to deadlift more.

  • Swiss Servator||

    But I am a follower of the Uncle Warty Deadlift for Great Justice program!

  • robc||

    Companies not corporations.

    I am a llc, hence not a corporation.

  • Loki||

    “flavoursome taste to drive Shock Top penetration with Experience Maximizers in the ‘Reward Myself’ need state."

    That couldn't possibly be a real quote from their marketing material. It sounds like something out of a Simpson's episode mocking stereotypical marketing word salad.

  • Lee G||

    Young marketing executives hooked on lingo will generate that sort of ridiculousness.

  • ||

    That's what happens when you try to shift a paradigm without a clutch.

  • Swiss Servator||

    I hear gibberish like this in my field - businesspeake ain't pretty.

  • ||

    Oh it's not just yours. I saw saw gibberish jargon at the bank and investments all the time.

  • Loki||

    Yeah, it's all just buzzwords that dumb people use to sound important. The fact that so few executives are able to see that is telling.

  • Je suis Woodchipper||

    needs more synergy.

  • NoVAHockey||

    when do you add the synergy to the wort?

  • robc||

    After fermentation, like dry hopping.

  • Almanian's Rusty Woodchipper||

    I still like pretty much any lager. Esp Tennants and McEwen's. But Labatt Blue and Foster's do just fine.

    As little as I drink any more, I'm lost in the rounding - down there 5 or 6 decimal places anyway.

  • Anomalous||

    "Lager" is "regal" spelled backwards.

  • robc||

    I should have a schwarzbier out within the week, speaking of lagers.

  • ||

    THEY HAVE TO GET INVOLVED.

    To protect the people; the children.

    And income inequality.

    And roads.

  • robc||

    I paid my first quarterly federal beer excise tax yesterday.

    Fuck all yall, I own you now. Or something.

  • kinnath||

    Congratulations for making it to the big time.

  • robc||

    My tax paid barrels are still single digits, not sure that qualifies as big time.

  • kinnath||

    Ok. Congrats on making it to pro (even if it is singe digit barrels).

  • crab_apple||

    How bad was the TTB registration process? Asking for a friend.

  • robc||

    Its easy just takes forever. Well, easyish. About an inch thick I sent to them.

  • crab_apple||

    Cool, thanks. I'm not sure if/when I might pursue that but I am doing about 100 of wine and cider this fall.

  • crab_apple||

    Damnit, 100 gallons.

  • Rt. Hon. Judge Woodrow Chipper||

    robc, these are excise taxes on the barrels, correct? That tax has been around for 150 years, I'm not even sure Prohibition ended it.

  • robc||

    On the volume. $7 per bbl up to 60k bbls, $18 after that. But the discount only applies if total is under 2MM.

    So the marginal tax on the two millionth barrel in a year is over $600k.

  • Chip the Chipper||

    IF the fucking Feds, states, and local governments got out of the way of craft breweries, then this wouldn't even matter

  • Rt. Hon. Judge Woodrow Chipper||

    Brands like Budweiser have had a difficult time attracting young drinkers, with about 44 percent of 21-27 year old drinkers saying they’ve never tried the stuff

    Liars.

  • Rhywun||

    Keggers don't count.

  • Stilgar||

    Separate from the SABMiller agreement, U.S. regulators already are said to be investigating allegations that AB InBev-owned distributors have restricted the flow of craft beers. AB InBev recently confirmed that federal regulators are looking at pending acquisitions of two California distributors.

    This is stardard op by Budweiser who historically has played nasty with distributors. No, its not the size of the merger that matters. It is the behavior of the parties involved. Without distribution, your craft brew revolution hits a very abrupt wall.

  • Eric L||

    This merger is not about cheap beer in the US - its about beer and the distribution networks in the emerging markets. Here in the US, SABMiller is in a joint venture (JV) with MolsonCoors. That JV owns the rights to Miller here in the US. Most likely US regulators will require SABMiller to sell off its 50% of the JV. MolsonCoors has already lined-up the financing to buy the remaining part of that JV.

    What most articles (at non-finance sites) do not mention is that SABMiller and ABInBev each own bottlers for Coke and Pepsi throughout the emerging markets. With this merger ABInBev will now control the bottling and distribution of Coke products in most of Africa. The distribution network is the hidden gem amongst all of this cheap swill.

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