During these long, hot summer months, nothing cools you off like a frosty mug of beer. In fact, this past Fourth of July, 3 out of 4 Americans reportedly celebrated by drinking a beer, according to one industry-backed poll. And to be sure, consumers had no shortage of options: From hoppy imperial IPAs, to tart sours, to sippable pilsners, the modern American beer market is overflowing with innovative brews.
The beer sector has quickly become one of the most competitive industries in America. So it may come as a surprise that some politicians think today’s beer market is not competitive enough — and might even be in need of antitrust scrutiny to prevent potential beer monopolies from forming. Yet before politicians consider inserting the government into one of our most robust industries, they should crack open a cold one and review the facts, which simply don’t support this overreach.
Still, numerous Democratic presidential candidates have voiced their desire to “make antitrust cool again.” While most of these statements have targeted the tech industry, it’s only a matter of time before the sentiment spreads to beer. In fact, Democratic Sen. Amy Klobuchar of Minnesota has explicitly pushed for more antitrust scrutiny of the beer industry in the past, warning of a so-called “beerhemoth” if large companies such as Anheuser-Busch InBev and SABMiller joined forces.
More recently, congressional Democrats listed the beer sector among five examples of industries that the government may need to “crack down on” for monopolistic tendencies. They specifically cited the fact that several large brewing companies have made high-profile acquisitions of smaller craft breweries in recent years, which the lawmakers argue could “block craft brewers access to the marketplace.”
The problem with this theory is that there’s no real evidence to back it up.
Any effort to create a beer monopoly — even if a company were to try to do so — would be nearly impossible in our ultra-competitive beer markets. As even the most casual beer consumer can attest, grocery store shelves are now loaded with an incredible array of beer brands from breweries of every shape and size. Compared to even a decade ago, when beer shelves mostly consisted of a few macro lagers, modern consumers have a nearly infinite selection from which to choose. And the numbers back up anecdotal experience: Since 2010, the number of breweries in America has more than tripled to nearly 6,500, with the overwhelming majority operating independently.
Even more dramatically, the way Americans drink their beer has evolved. Beer drinkers today have become obsessed with new releases and frequently rotating tap lines. This persistent demand for new beer offerings shows that consumers are often less loyal to a particular company or beer than they have been in the past, and that true market dominance is harder than ever to achieve.
To the extent that brand loyalty still exists in the modern beer marketplace, research suggests that “connection with the community” is the factor most likely to instill such loyalty. This means that beer drinkers often prefer the brewery down the street over others, viewing it as a community hub reminiscent of the local taverns of yesteryear. A market that rewards this type of localism is, by its nature, fragmented, and less susceptible to monopolistic consolidation.
It’s also important to take a step back and consider whether there’s actually anything inherently wrong with larger breweries buying smaller operations. While many smaller breweries remain proudly independent and are able to thrive, many other craft brewers have found value in partnering with larger companies. For instance, the founders of Devil’s Backbone Brewing Company in Virginia, which was purchased by AB-InBev in 2016, have noted that the additional capital they received from the sale has allowed them to build a new headquarters and spend more time on research and development. What’s so bad about that?
In the end, decisions over how to structure businesses like a brewery are best left to the free market. The beer industry is as competitive as it has ever been, and consumers are enjoying a never-ending selection of brews from a broad array of brewers. Unless politicians can find better evidence for their concerns, any talk of antitrust scrutiny for beer should be put on ice.
Image credit: NewFabrika