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The Alcohol Industry's Plan to Give America a Giant Drinking Problem

Industry giants are threatening to swallow up America's carefully regulated alcohol industry, and remake America in the image of booze-soaked Britain.

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Miller entered the 1980s riding the tremendous success of its innovative Miller Lite brand. Already the second-largest brewer in America, the company set its sights on expanding, purchasing Jacob Leinenkugel in 1988, and in 1992 bought distribution rights to 20 percent of Canada’s Molson. Distribution rights to Foster’s and several other top imports followed later in the decade. With a market share of 21 percent, Miller had solidified its position as number two.

Anheuser-Busch, like Coors, was run by a family famous for its intensely private control of its business. The company entered the Reagan era as the number one brewer in America, and spent the next decade consolidating that position by leveraging its size, mostly via internal brand diversification, and by aggressively expanding its presence abroad. As the 1990s drew to a close, Anheuser-Busch remained by far the top brewer in the United States, with nearly 50 percent of the market, and one of the biggest brewers in the world. It is a testament to the size of the global beer market that even those eye-popping mergers left vast opportunities for other companies to play the same game. Three are of interest here:

In 1987, two of Belgium’s leading brewers, Artois and Piedboeuf, joined together as Interbrew. For fifteen years they quietly ate up dozens of other brands, and by 2001 they were the second-largest brewer on the planet.

In 1999, Brazil’s two largest brewers, Antarctica and Brahma, joined forces as AmBev, instantly dominating that country’s market and moving quickly to buy up smaller brands throughout South America.

And during the 1990s, South African Breweries, virtual monopolists at home with 98 percent of market, moved decisively into eastern Europe, Russia, India, and China, establishing a formidable position on three continents.

So the 1990s drew to a close with four major players in America and three abroad—seven giant brewing conglomerates for six billion people. The contest to own the world’s beer market had entered its endgame.

In 1999, Stroh was split up and sold off.

Six left.

In 2002, South African Breweries bought Miller, creating SABMiller.

Five left.

In 2004, Interbrew and AmBev merged, forming InBev.


In 2005, Coors and Molson merged to form Molson Coors.


In 2007, Molson Coors and SABMiller created the joint venture MillerCoors to produce and distribute their products in the United States as a single entity.

Two and a half.

And in 2008, in a blockbuster $52 billion deal, InBev bought Anheuser-Busch to form Anheuser-Busch InBev. At the stroke of a pen, half the U.S. beer industry came under the control of an even more powerful firm—one with a huge inventory of international brands ready to ride Budweiser’s coattails into the American market. Then, in June 2012, Anheuser-Busch InBev announced plans to pay $20 billion to acquire the 50 percent of Grupo Modelo that it does not already own.


And soon one?

Industry analysis have recently floated the idea that Anheuser-Busch InBev might purchase MillerCoors. But even in the lax antitrust environment that currently prevails, it is almost impossible to imagine a single company being allowed to control—overtly—80 percent or more of the domestic beer market. This means both Anheuser-Busch InBev and MillerCoors have, for all intents, reached the limit of their horizontal expansion. As in the UK, the only direction to go now is vertical, with the first target being the wholesalers—the second tier of the three-tier system.

Prior to the 2008 takeover, Anheuser-Busch generally accepted the regulatory regime that had governed the U.S. alcohol industry since the repeal of Prohibition. It didn’t attack the independent wholesalers in control of its supply chain, and generally treated them well. “Tough but fair” is a phrase used by several wholesale-business sources to describe their dealings with the Busch family dynasty. Everyone was making money; there was no need to rock the boat.

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