E-Malt.com News article: USA: Many craft brewers are concerned that industry consolidation could make it tougher to land distribution arrangements

The chairman of a craft brewers trade group worries that InBev’s $52 billion deal to buy Anheuser-Busch could squeeze small breweries’ distribution efforts.

Rich Doyle, the chief executive of Harpoon Brewery in South Boston and the chairman of the Brewers Association’s board of directors, said many craft brewers are concerned that industry consolidation could make it tougher to land distribution arrangements.
“We’re very concerned about the narrowing of choices for small brewers’ beer,” Doyle said. “When you read in the paper that 80 percent of the beer sold in the United States is now controlled by two companies, that’s a pretty sobering fact.”

InBev’s overtures had initially been resisted by Anheuser-Busch, of St. Louis, which is already the largest brewer by market share in the United States followed by the recently formed MillerCoors joint venture. InBev – a Belgian conglomerate that sells a wide range of brands, including Bass, Beck’s and Stella Artois – overcame that resistance by raising its offer for Anheuser-Busch, the brewer of Budweiser, Michelob and Busch beers.

The deal builds on an existing Anheuser-Busch distribution agreement for InBev’s premium European brands in this country.

Doyle said most independent beer distributors in the U.S. have a contractual arrangement with one of the big brewing companies. He said that as those companies gain clout, small craft brewers worry they could be squeezed out by the big conglomerates if they provide financial incentives to the distributors to focus on their big-name beers.

“The small brewers are concerned that these contracts will be even more constraining on the somewhat independent wholesalers to be able to handle products like ours,” Doyle said. “Ultimately, this is about the consumer having access to the brands they want and the choice they want.”

Doyle said one potential benefit could occur if federal antitrust regulators take a hard look at the beer industry as they review the proposed merger and decide that distribution channels need to be more readily available for craft brewers.

Over at the Boston Beer Co. headquarters a few blocks away from Harpoon’s South Boston brewery, Boston Beer Chairman Jim Koch said he’s not overly concerned about the merger’s impact on his company.

“I don’t think it changes much for us,” said Koch, whose company is the largest craft brewer in the country. “Before the deal, Anheuser-Busch was 100 times our size. Now they’re owned by the Belgians, and they’re 200 times our size.”

Koch said independent distributors are more likely to pick up craft beers than they were when he started selling Samuel Adams beer out of a briefcase in the 1980s, although finding distributors remains a constant concern for craft brewers.

“You’re always subject to big guys trying to take your tap handles and your shelf space,” he said. “It was hard before. It’s not going to be that much harder now.”


16 July, 2008