“I worry that yet another major shift in the beer landscape is upon us — and this time, American consumers will be the losers”

After years of 15 percent growth, the craft sector is down to the single digits. Part of that is to be expected in a maturing part of any market — but it’s also a result of a pushback by a handful of gargantuan global brewers, aided by slack government antitrust oversight. I worry that yet another major shift in the beer landscape is upon us — and this time, American consumers will be the losers.

We have seen a dramatic consolidation in our industry in recent years. It started in 2008 when the Department of Justice approved the creation of a duopoly in the beer industry by greenlighting a joint venture between Molson Coors and SABMiller (creating MillerCoors) and, five months later, the merger of Anheuser Busch and InBev.

Overnight, about 90 percent of domestic beer production was in the hands of two foreign-owned brewing giants. (The consolidation continued in 2016, when regulators approved the merger of SABMiller and AB InBev; SABMiller sold back its stake in MillerCoors, creating a new duopoly between Molson Coors and AB InBev.)

The immediate result was a 6 percent increase in beer prices and the end of a decades-long decline in real beer prices. Drinkers began paying almost $2 billion a year more for their beer. At least 5,000 Americans lost their jobs, and cost cutting followed, saving the new owners an estimated $2 billion. That money goes to those two foreign conglomerates that have been able to reduce their tax bills and move much of their profits offshore.

This brewer’s duopoly has led to a second consolidation: wholesalers, the crucial intermediaries who distribute our beers to retailers. In 1980, there were 4,600 wholesalers in the country, and most markets had four or five competing wholesalers. Today, fewer than 3,000 remain, and in most local markets over 90 percent of the beer is controlled by distributors for these same two companies — one of which is dependent on AB InBev for most of its volume, and the other on Miller Coors.

These distributors are free to favor their primary suppliers over independent craft brewers when it comes to promotion, visibility, shelf space and marketing support. Laws passed in the 1970s to protect small “mom and pop” wholesalers from the big brewers are now obsolete and have the unintended consequence of creating an unfavorable balance of power — unfavorable to craft brewers and people who enjoy their beers.

Jim Koch, “Is It Last Call For Craft Beer?”, The New York Times (8 April 2017), A23.