Big Beer Corporations Are Snapping Up Small Breweries, Watering Down Competition

The variety of the craft-brewing wave sweeping the US makes drinking beer more fun than ever. Maryland's Flying Dog Brewery brews a beer from local oysters, and the Delaware-based Dogfish Head uses an ancient beer recipe they dug up from 2,700-year-old drinking vessels in the tomb of King Midas.

But as this trend spreads, there’s another revolution going on that’s concentrating most of the world’s beer into the hands of just a few mega-corporations. These kings of beer are riding the wave of craft brewing enthusiasm, buying up smaller breweries, and duping customers along the way.

“If you want to listen to Milli Vanilli, I suppose that’s a choice you get to make. Just know that you’re making that choice,” is how Greg Koch of Stone Brewing Company put it.

Take Blue Point, Long Island’s first microbrewery. A couple of home brewers started the company 10 years ago, but this year, Anheuser-Busch InBev bought Blue Point for $24 million. John Hall, the founder of Chicago’s Goose Island beer, told a reporter in 2013, “Goose Island is a craft beer, period.” Yet it too was sold to AB InBev in 2011.

Whereas craft beers only made up about six percent of the beer sales in the US in 2012, AB InBev owns almost half of the US market. Together the top-four beer companies – AB InBev, MillerCoors, Heineken, and Modelo – brew 78 percent of the beer sold in the US.  The diversity of beer has changed – in 1978, the US was home to just 89 breweries, and as of last year, that number had climbed to 2,336—but the craft and microbrew boom still seems unlikely to make a major dent in the corporations’ power.

The strange brew of each dominant beer company’s name speaks of the rapid monopolization of the industry over the past ten years. The story of AB InBev, the biggest beer corporation in the world, is emblematic of this shift. In 2004 Brazil’s Companhia de Bebidas das Américas (AmBev) merged with Belgian’s InterBrew to form InBev, and in 2008, this conglomerate went on to take over Anheuser-Busch to form AB InBev. In the process, they gained one of China’s biggest brewers, Harbin, and Canada’s Labatt beer company.

The world’s second biggest brewing conglomerate, SAB Miller, has followed a similar path. The mega-brewer formed after South African Breweries purchased Miller in 2002 and bought Bavaria, the second biggest brewer in South America in 2004. Two years later, the giant merged with MolsonCoors to make MillerCoors, which in 2011 purchased Foster’s, Australia’s largest brewing company, and Efes, Russia’s second biggest beer business.

The result is a world whose beer is mostly in the hands of just a few corporations, with AB InBev leaping ahead as the king of beers.

And what about all of those brews often considered to be craft beers or imported, but actually turn out to be from the same place that produced nearly everything else at the corner store? For example, Heineken now owns Dos Equis, Tecate and Sol. MillerCoors owns Fosters and Molson Canadian. Along with Budweiser, Beck’s, Bud Light, Brahma and Quilmes, AB InBev owns Stella Artois, Corona, and Goose Island—as well as about 18 percent of the rest of the beer produced on the planet.

“AB InBev aims to dominate the world’s beer supply, one country at a time,” explained a Fortune profile of the company.

Their plan has worked so far—they own over 200 different beers across the globe—but they have also run into trouble. In January of last year, the US Department of Justice launched a lawsuit to prevent AB InBev from buying Mexico’s Grupo Modelo. In a statement Bill Baer, the Assistant Attorney General in charge of the Department of Justice’s Antitrust Division, said the merger plans threatened to hurt competition in the US beer market and concentrate the beer industry, resulting in “less competition and higher beer prices.”

Who runs AB InBev’s beer empire? Carlos Brito is the Brazilian-born, Stanford-educated, CEO of the company, who worked at Shell Oil before coming to the beer business. He’s known on Wall Street as a low profile, frugal boss with an eye for making a profit. Brito is the one who acquired Anheuser-Busch in 2008, then went ahead and laid off 1,400 of the AB workers, used thinner glass for its bottles, weaker cardboard for its 12 packs, and ditched the traditional and often-touted “beechwood aging” of Budweiser to save money. Indeed, there are plenty of pissed off drinkers who have complained about the lower quality of their beer since Brito’s corporate monster took over what they drink.

The multimillionaire clearly knows how to cut costs. “I don’t have a company car. I don’t care. I can buy my own car,” Brito explained at a 2008 speech at Stanford, “I don’t need the company to give me beer. I can buy my own beer.”

If Brito has his way, everybody else will have to buy his beer too.