I don’t usually post so quickly one after the other, but just after I posted my look at the AB InBev deal to buy Mexico’s Modelo, and the cynical strategy of growth through acquisition in general, I came across this story from Time magazine, courtesy of The Beer In Me.
While Time has the facts and figures right, it misses badly when casting its gaze at the overall picture. I especially like this part:
For the average American beer drinker, the growth of InBev could be bad news. Competition within the beer industry is slowly eroding, and anytime there’s less competition, higher prices are likely to follow.
AB InBev could also decide that it ultimately wants to own fewer brands so it can reduce its marketing costs, and that could give customers fewer mainstream beer options.
While it’s true that the craft beer market share is still very small relative to that of AB InBev, it is a complete fallacy to say that, with over 2,000 operating breweries in the country, competition is “slowly eroding.” Even the claim that AB InBev could reduce “mainstream beer options” by cutting smaller labels is rubbish, since hardly a day goes by that I don’t receive news of news, so-called “popularly-priced” beers hitting store shelves.
The fact remains that when this deal is finalized — and it will be finalized, make no mistake, despite what Time suggests — AB InBev will simply continue to do what they’re been doing since 2008, which is rationalize and raise prices. Which ultimately will make it all that easier for the average beer drinker to make the shift to Sam Adams, or Yuengling, or New Belgium, or Sierra Nevada, or…
Of course, the smarter ones among us…already have!
I could be wrong, but I think in 10 years will see North American markets divided about 4 ways, one each for light beer, price beer (high adjunct, popularly priced beer), macro interpretations of craft beer, and true small-to-mid-scale production.
Gary
Stephen, totally agree. I saw this same piece and had very similar thoughts. I wonder if US regulators read beer blogs?