DOJ to Big Beer: We’re Cutting You Off

Cheers to the DOJ. <a href="http://www.flickr.com/photos/kalleboo/5953288350/">Photographer</a>/kalleboo

Fight disinformation: Sign up for the free Mother Jones Daily newsletter and follow the news that matters.


Like a drunk closing down a bar, beer behemoth Anheuser-Busch InBev doesn’t know when to stop. That’s the message of the Department of Justice’s recent lawsuit to block A-B InBev’s $20.1 billion takeover of Mexican beer giant Modelo, maker of the iconic (and, in my opinion, insipid) Corona brand, along with other popular brands like Pacifico, Negro Modelo, and Victoria. According to the DOJ’s complaint (PDF), A-B InBev already controls 39 percent of the US beer market, rival MillerCoors owns 26 percent, and Modelo has 7 percent.

By the DOJ’s reckoning, allowing A-B InBev and Modelo to combine would bring AB InBev’s market share up to 46 percent, leaving two companies—A-B InBev and MillerCoors—with 72 percent of the beer market. That’s about three of every four beers consumed in the United States.

If anything, Justice is understating the grip of Big Beer over the US market. Most reckonings of US beer market share—including Tim Heffernan’s great recent article in the Washington Monthly—peg the Big Two’s combined share at 80 percent of the market, or four of every five beers quaffed. That’s at least partly because even before AB-InBev’s move to take over Modelo, it already owned 50 percent of Modelo’s shares, and 43 percent of its voting shares, as the Wall Street Journal reported. In other words, even if the DOJ succeeds in blocking the takeover, the A-B InBev and Modelo already have a quite-intimate relationship.

And Modelo looms even larger in the Mexican market than AB-InBev does in the US. According to Reuters, Grupo Modelo owns 59 percent  of the Mexican beer market—and Mexico is an attractive place to sell beer, because its beer market is expanding at the rate of  2.4 percent annually, and ranks as the “world’s fourth-largest market in terms of profit generated.” Thus the dead hand of corporate-brewed beer extends over North America from Canada, where MillerCoors has huge market share, across the US, and clear down to Mexico.

Interestingly, the Justice Department argues in its complaint (PDF) that the reason AB-InBev wants to completely control Modelo is to eliminate the final vestiges of price competition in the corporate beer market. The DOJ essentially accuses A-B InBev and MillerCoors of, um, moving in sync on price:

ABI [A-B InBev] and MillerCoors often find it more profitable to follow each other’s prices than to compete aggressively for market share by cutting price.  Among other things, ABI typically initiates annual price increases in various markets with the expectation that MillerCoors’ prices will  follow. And they [MillerCoors] frequently do.   

“In contrast, Modelo has resisted ABI-led price hikes,” the complaint continues. And if AB-InBev takes complete control of Modelo, that resistance would end.

To haters of corporate beer like me, it’s quite tempting to see this drama as entertaining but inconsequential. As I’ve written before, the swallowing up of the US beer market by two mega-corporations has not stopped a blossoming of the US craft beer scene. Despite the bulky presence of AB-InBev and MillerCoors, it’s never been easier to find great locally produced, high-quality beer across the US. Who cares if these giant companies churn out a bunch of swill—some of it masquerading as craft—when I can still enjoy the wares of Austin Beerworks or Sixpoint or Russian River or dozens of other great craft brewers?

But as Heffernan’s Washington Monthly article shows, the real stakes in the Big Beer game lie in distribution—the power to dictate what beers are available in which retail coolers and bars. And the bigger Big Beer gets, the more power it will have to take control of distribution, which could mean a harder path for your favorite craft brew going forward. So I’ll raise one to the DOJ for this move.

THE FACTS SPEAK FOR THEMSELVES.

At least we hope they will, because that’s our approach to raising the $350,000 in online donations we need right now—during our high-stakes December fundraising push.

It’s the most important month of the year for our fundraising, with upward of 15 percent of our annual online total coming in during the final week—and there’s a lot to say about why Mother Jones’ journalism, and thus hitting that big number, matters tremendously right now.

But you told us fundraising is annoying—with the gimmicks, overwrought tone, manipulative language, and sheer volume of urgent URGENT URGENT!!! content we’re all bombarded with. It sure can be.

So we’re going to try making this as un-annoying as possible. In “Let the Facts Speak for Themselves” we give it our best shot, answering three questions that most any fundraising should try to speak to: Why us, why now, why does it matter?

The upshot? Mother Jones does journalism you don’t find elsewhere: in-depth, time-intensive, ahead-of-the-curve reporting on underreported beats. We operate on razor-thin margins in an unfathomably hard news business, and can’t afford to come up short on these online goals. And given everything, reporting like ours is vital right now.

If you can afford to part with a few bucks, please support the reporting you get from Mother Jones with a much-needed year-end donation. And please do it now, while you’re thinking about it—with fewer people paying attention to the news like you are, we need everyone with us to get there.

payment methods

THE FACTS SPEAK FOR THEMSELVES.

At least we hope they will, because that’s our approach to raising the $350,000 in online donations we need right now—during our high-stakes December fundraising push.

It’s the most important month of the year for our fundraising, with upward of 15 percent of our annual online total coming in during the final week—and there’s a lot to say about why Mother Jones’ journalism, and thus hitting that big number, matters tremendously right now.

But you told us fundraising is annoying—with the gimmicks, overwrought tone, manipulative language, and sheer volume of urgent URGENT URGENT!!! content we’re all bombarded with. It sure can be.

So we’re going to try making this as un-annoying as possible. In “Let the Facts Speak for Themselves” we give it our best shot, answering three questions that most any fundraising should try to speak to: Why us, why now, why does it matter?

The upshot? Mother Jones does journalism you don’t find elsewhere: in-depth, time-intensive, ahead-of-the-curve reporting on underreported beats. We operate on razor-thin margins in an unfathomably hard news business, and can’t afford to come up short on these online goals. And given everything, reporting like ours is vital right now.

If you can afford to part with a few bucks, please support the reporting you get from Mother Jones with a much-needed year-end donation. And please do it now, while you’re thinking about it—with fewer people paying attention to the news like you are, we need everyone with us to get there.

payment methods

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate