Beer! Microbrew this and craft-brew that, how can beer be victim to consolidation?
The business of hops, yeast and malt is still fairly unconsolidated, but it has come together rather strongly in the past decade, to the point where the most famous American beer brands are all owned by foreigners. Anheuser-Busch InBev is the world’s largest beer manufacturer, with 21% of global sales. Don’t let the storied names out of St. Louis fool you; AB InBev is a Belgian-Brazilian company headquartered in Brussels.
In second place is SABMiller, founded in South Africa, headquartered in London, and owner of the Miller-Coors brands that hearken back to the Colorado Rockies. SABMiller sells roughly 44 billion pints of beer each year. SABMiller just made an offer to buy Heineken, a brewing conglomerate of similar size, which the Dutch company has so far rejected; should a deal go through, the combined firm would also control 21% of the beer market. The Economist also suggests that InBev may just buy SABMiller, creating a behemoth with combined production of nearly 600 million hectolitres (or, in practical terms, 125 billion pints) of beer per year.
Despite this consolidation, local and regional brewing continues to thrive. From mid-size producers like Sam Adams and Brooklyn to do-it-youself brewpubs, a wide variety of beers exist alongside the majors—some 3000 commercial entities in all, ensuring some diversity in a consolidating field.
Update: Flowing Data made a nice beer family tree that visually represents the industry.
This is the latest in a series of summaries of industries whose corporate consolidation has led to a small number of players controlling the majority of a sector, creating oligopolies in the mass market. Previously