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[XiaNaphryz]

http://www.sfchronicle.com/business...ould-help-California-8411279.php?t=3272c4d615

When the Department of Justice announced last week that it will allow beer company Anheuser-Busch InBev to proceed with its $108 billion acquisition of rival SABMiller, it may have initially sounded like bad news for the craft beer industry. A merger of the world’s two largest beer companies would surely mean diminished competition, making it harder for the little guys to stay in business.

What hurts craft beer hurts California the most. The state has over 680 craft breweries, more than any other state. But many California craft beer advocates are calling the Justice Department’s decision a win for small, independent brewers, because it includes serious restrictions on Anheuser-Busch InBev that will help protect all breweries’ access to markets.

“I think the craft brewing industry as a whole should be pleased with the results,” said Tom McCormick, executive director of the California Craft Brewers Association. “There could have been more (restrictions); we think there should have been more. But it was an intelligent decision overall.”

Anheuser-Busch InBev first announced its intention to acquire SABMiller last fall. Anticipating antitrust hurdles, it had agreed in November to divest of SABMiller’s stake in MillerCoors, which controls the Miller Lite, Coors Lite and Blue Moon brands in the U.S., selling the stake to Molson Coors, based in Canada, for $12 billion. (Molson Coors had owned 42 percent of MillerCoors in the U.S. already; this gives it full control.)

But the Justice Department went even further with its limitations on Anheuser-Busch InBev, indicating that it had listened very closely to craft brewers’ concerns. In addition to the MillerCoors divestiture, the department specified that Anheuser-Busch InBev could no longer offer sales incentives to distributors for selling its products; that it must not sell more than 10 percent of its products through Anheuser-Busch InBev-owned distributors; and that it must now seek approval from the department if it wants to acquire any new brewery, no matter how small.

The restrictions on Anheuser-Busch InBev’s distribution channels should have been more stringent, McCormick said; he would have preferred the brewing company to be forbidden from purchasing any independently owned distributors, as opposed to this 10 percent cap. (The U.S.’s three-tier system for alcohol distribution requires that beer be sold from a producer to a wholesaler, or distributor, to a retailer. If Anheuser-Busch InBev, a producer, can control its distributor, then that gives its products a significant competitive advantage in retail.) Given that Anheuser-Busch InBevowns about 10 percent of its distribution, this not likely to shift the status quo.

But everyone in craft brewing rejoiced at the termination of the Voluntary Anheuser Busch Incentive for Performance Program, which rewarded independently owned distributors for privileging Anheuser-Busch InBev products. If 98 percent or more of a distributor’s sales were Anheuser-Busch InBev products, they could be eligible for as much as $1.5 million in reimbursements. “I’m hoping that will benefit the distributor as well as the independent brewer,” said Lee Doxtader, co-owner of San Diego Brewing Company.

“There are some great restrictions to hopefully prevent consolidation from running wild,” said Jesse Friedman, owner of San Francisco’s Almanac Beer Co. But ultimately, “creating one monopolistic entity with this much power is bad for the industry.”

How closely does this merger approximate a monopoly? “We will now have a brewing company that will make 1 in every 3 beers consumed in the world,” McCormick pointed out.

One thing is clear: Big Beer is taking craft beer seriously as a threat to its hegemony. If it can’t beat them, it will evidently join them: Witness Anheuser-Busch InBev’s craft-brewery shopping spree in the last few years — Devils Backbone, Elysian, Goose Island, Blue Point. Those acquisitions will be more complicated now that the Justice Department must sign off, but that won’t stop consolidation.

 

[RumblingRosco]

Surprisingly reasonable, thanks to what seen like important caveats implemented by the DOJ. I read the title and had an initial "aw damn" reaction, but feel better after reading through some of the article.

 

[mentallyinept]

But the Justice Department went even further with its limitations on Anheuser-Busch InBev, indicating that it had listened very closely to craft brewers’ concerns. In addition to the MillerCoors divestiture, the department specified that Anheuser-Busch InBev could no longer offer sales incentives to distributors for selling its products; that it must not sell more than 10 percent of its products through Anheuser-Busch InBev-owned distributors; and that it must now seek approval from the department if it wants to acquire any new brewery, no matter how small.

Wow, this is about as good as anyone could have hoped for.

 

[Mindlog]

Good balance of concessions to one of the few industries keeping America great.

 

[Kill3r7]

Wow, this is about as good as anyone could have hoped for.

Or you know for the deal not to be allowed.

 

[Malvolio]

Not a fan even with the restrictions. On the bright side, I can now avoid 90% of the shitty beers available by boycotting one company.

 

[B-Dubs]

Good job DoJ.

 

[Scipio]

Not a fan even with the restrictions. On the bright side, I can now avoid 90% of the shitty beers available by boycotting one company.

You're missing out on dat Belgian beer.

 

[Malvolio]

You're missing out on dat Belgian beer.

I certainly am, but plenty of local breweries make fine Belgians.

 

[Eusis]

Or you know for the deal not to be allowed.

This is definitely the consolation prize.

Although, stopping that fucking anti competitive incentive program might make it worth it if it was seriously working, but I can see InBev wanting to keep trying shit along those lines. So slapping on those penalties without a merger allowed would be best.

 

[StoOgE]

Oh snap,

They bought Blue Point?

Maybe I can get Toasted Lager down here in Texas now that I don't live in NYC

 

[mentallyinept]

Or you know for the deal not to be allowed.

That was never going to happen.

 

[StoOgE]

Surprisingly reasonable, thanks to what seen like important caveats implemented by the DOJ. I read the title and had an initial "aw damn" reaction, but feel better after reading through some of the article.

I mean, the thing is they don't own Coors which is a major player in the Western US.

But the reality is this "monopoly" is a consolidation of mass market lite beer companies that have been losing sales drastically. If this slows their aquisition of craft beer companies that will actually be better for consumers, because that is where the market is moving.

This is a good "have your dying industry, leave the newly forming one be"

 

[Kill3r7]

That was never going to happen.

InBev effectively will control the majority of the US beer market and 30% of the world beer market. They will now own 4 of the 5 most valuable beer brands in the world
(8/10 in the US). What could possibly go wrong?

 

[mnannola]

Anheuser-Busch InBev first announced its intention to acquire SABMiller last fall. Anticipating antitrust hurdles, it had agreed in November to divest of SABMiller’s stake in MillerCoors, which controls the Miller Lite, Coors Lite and Blue Moon brands in the U.S., selling the stake to Molson Coors, based in Canada, for $12 billion. (Molson Coors had owned 42 percent of MillerCoors in the U.S. already; this gives it full control.)

I'm probably reading this wrong, but if they aren't buying Miller lite or Coors lite brands, what exactly are they buying?

 

[Kill3r7]

I'm probably reading this wrong, but if they aren't buying Miller lite or Coors lite brands, what exactly are they buying?

The emerging third world market/Africa.

 

[mentallyinept]

InBev effectively will control the majority of the US beer market and 30% of the world beer market. They will now own 4 of the 5 most valuable beer brands in the world
(8/10 in the US). What could possibly go wrong?

I'm not saying it's good that the deal went though, only that this was the best possible outcome of this situation, because the deal had 0% chance of being stopped.

 

[BronsonLee]

CANADA NOW HAS THE MARKET CORNERED ON SHIT BEER

 

[backflip10019]

CANADA NOW HAS THE MARKET CORNERED ON SHIT BEER

Hey man, Molson ain't half bad.

 

[BronsonLee]

Hey man, Molson ain't half bad.

They own every single portion of Miller Lite and Coors Lite now tho

The scales are tipped

 

[Kill3r7]

I'm not saying it's good that the deal went though, only that this was the best possible outcome of this situation, because the deal had 0% chance of being stopped.

You are right, the DOJ got the best outcome possible but it would be nice for a change if the government stepped up and occasionally opted to protect the little guy.

 

[mentallyinept]

You are right, the DOJ got the best outcome possible but it would be nice for a change if the government stepped up and occasionally opted to protect the little guy.

Agreed.

 

[spiderman123]

As long as they offer something better than this rat piss

 

[To Far Away Times]

So AB InBev has Miller and Coors, but not Miller Lite, Coors Lite, and Blue Moon?

 

[Cagey]

I can drink Blue Moon again? Yay.

 

[BFIB]

Long story short, the message the DOJ just sent to AB-In Bev is buying out companies to keep your short term profits afloat won't work anymore. Gotta actually provide results with what you have now.

 

[hom3land]

Couldn't tell you last time I bought any of those shitty beers. Spend money on your local brewery.

 

[br3wnor]

I can't keep track of who owns what any more. But I think these huge companies are smart enough to realize that if they start taking control of these different craft beers and homogenizing them they'll just be shooting themselves in the foot. I'd imagine they help these breweries scale up and make more beer but as long as they don't directly affect the quality of the product I don't really care who's getting paid in the end. Being in NY I have so many craft options that even if they started fucking w/ the quality I'd just move onto something else.

 

[Delusibeta]

Admittedly, I'd have preferred it if the DOJ blocked the merger on anti-competitive grounds, but this is an acceptable compromise.

 

[andythinkpad]

Look forward to Verizon buying AT&T in the Clinton Reign.

 

[hodayathink]

You are right, the DOJ got the best outcome possible but it would be nice for a change if the government stepped up and occasionally opted to protect the little guy.

AT&T and T-Mobile.

 

[Kill3r7]

AT&T and T-Mobile.

You could have used the more recent example of the big health insurance mergers which they blocked but then again a broken clock is right twice a day (DOJ).

 

[weremichael]

I certainly am, but plenty of local breweries make fine Belgians.

I agree, but what's my substitute for High Life?

I can drink Blue Moon again? Yay.

I guess so, but drink it at Coors Field as penance.

 

[Malvolio]

I agree, but what's my substitute for High Life?

Having sex in a canoe.

 

[weremichael]

Having sex in a canoe.

That'll work.

 

[outunderthestars]

This is great news for craft brewers. As a home brewerhomebrewer considering opening a nano brewery I am excited that he DOJ put in the disto regulations.

 

[sohois]

Who are the major beer producers left now worldwide? Abinbevsab, Heineken and the Chinese Snow and Tsingtao?

 

[Kill3r7]

Who are the major beer producers left now worldwide? Abinbevsab, Heineken and the Chinese Snow and Tsingtao?

Carlsberg group is the other one. They are right behind Heineken, although Snow will take off as the cost of living in China rises.

 

[Josh5890]

I'm soooooo glad I do not drink

Spoiler

Please don't merge pop companies

 

[Kill3r7]

I'm soooooo glad I do not drink

Spoiler

Please don't merge pop companies

Ironically enough SABMiller is a major bottler of Coca-Cola.

 

[KingV]

I mean, the thing is they don't own Coors which is a major player in the Western US.

But the reality is this "monopoly" is a consolidation of mass market lite beer companies that have been losing sales drastically. If this slows their aquisition of craft beer companies that will actually be better for consumers, because that is where the market is moving.

This is a good "have your dying industry, leave the newly forming one be"

IMO, Anheuser Busch has partially created the declining mass market beer market by the 3G Capitals management strategy of cutting everything to the bone for the sake of maximum margin.

3G is an evil company, and I don't buy products produced by any of their companies outside of very occasionally. Not even Heinz ketchup now (switched to French's)

 

[StMeph]

This is like buying up newspapers in the 2000s and consolidating slowly-dying businesses.

 

[jstripes]

This is like buying up newspapers in the 2000s and consolidating slowly-dying businesses.

So you're saying the internet is going to replace beer?

 

[AnotherDayAnotherDollar]

InBev effectively will control the majority of the US beer market and 30% of the world beer market. They will now own 4 of the 5 most valuable beer brands in the world
(8/10 in the US). What could possibly go wrong?

What US beer marketshare will it have now?

 

[Kill3r7]

What US beer marketshare will it have now?

AB InBev by itself was in the low 40%s had they kept Miller and Coors Lite it would have been closer to 70-75%.

EDIT: Actually scratch that, AB InBev's market share in the US will remain unchanged. See http://www.chicagotribune.com/business/ct-ab-inbev-sabmiller-beer-merger-20160601-story.html

 

[StMeph]

So you're saying the internet is going to replace beer?

No, I'm saying the market is moving toward more agile smaller brewers with more diverse offerings than the established major producers. This isn't only affecting beer, but a lot of the major American food conglomerates as their business model is being chipped at from all sides.

 

[AnotherDayAnotherDollar]

AB InBev by itself was in the low 40%s had they kept Miller and Coors Lite it would have been closer to 70-75%.

EDIT: Actually scratch that, AB InBev's market share in the US will remain unchanged. See http://www.chicagotribune.com/business/ct-ab-inbev-sabmiller-beer-merger-20160601-story.html

So it will stay ~40-45% then.

With some exceptions (like the FCC stipulated pay tv subscribers and broadcasting percentage limits), the DOJ/FTC would not find that to be a monopoly as it states that generally a marketshare of < 50% does not a monopoly make

https://www.justice.gov/atr/competi...conduct-under-section-2-sherman-act-chapter-2

https://www.ftc.gov/tips-advice/com...ws/single-firm-conduct/monopolization-defined

As a matter of fact, I think the divestiture of Coors is to better help the deal go through smoothly and for international reasons. The links above state that even a 70-80% marketshare could be argued that it's not a monopoly. Doesn't mean the courts wouldn't still rule for the divestiture, but that AB could have realistically fought for it.