Since the potential merger between AB-Inbev and SABMiller was announced, several pundits have given their opinion on how this is going to affect craft beer in the US. There is a lot of doom and gloom so I figured it’s time I add my voice to the mix. Here goes: I don’t believe the demand for craft beer in the US will be affected. At all. In a weird twist, the merger could even be a good thing by increasing demand for craft beer. More on that strange reasoning in a moment.
First, here is how the merger is expected to play out. Stats show that AB-Inbev controls around 45% of the total US beer market. Since there is no conceivable way the Department of Justice will allow the US business of SABMiller to be added to that 45% due to anti-trust laws, AB-Inbev will likely be forced to sell off the US portion of their new acquisition.
Currently all SABMiller products in the US are sold through MillerCoors, a joint venture that exists only in the US between SABMiller and Molsen Coors. Since they are already invested heavily in this joint venture, many assume Molsen Coors will be the likely purchaser of all SABMiller products in the US. Which effectively means that it will be business as usual for MillerCoors. They will simply become 100% owned by Molsen Coors instead of half owned by Molsen Coors. They will sell the same products to the same distributors through the same retailers to the same consumers. Nothing changes on that front.
Except for one thing. And this is where the strange reasoning about the merger being good for craft beer comes in. “People take beer very personally,” Brewers Association director Paul Gatza told Melissa Stanger of Business Insider. “When something happens to their favorite beer or their ability to get it, or something helps or hurts a brewer they care about, they internalize it and want to do something about it. People may see [the merger] as a time to rally around their local brewery.”
Here’s the thing. There are now over 4,000 craft breweries in the US with another 1,800 or so planning to open in the next year. Craft beer is growing at 16% per year and is expected to continue to increase market share for at least another decade. Maybe two. So the genie is already out of the bottle. People are moving in droves toward supporting their local brewery. A change in who owns half of Miller Brewing in the US is not going to stop that trend.
What do you think? Will the merger actually drive more demand for craft beer?
[…] a recent post by yours truly concerning the AB-InBev/SABMiller mega merger, I made the argument the acquisition could actually help craft beer. My reasoning was simple. Such […]