Beer Monopoly Bad News for Consumers' Wallets

The threat of a monopoly is fairly simple to grasp – less competition = higher prices. Right now the U.S. Department of Justice is evaluating a major merger for this very reason. 

Anheuser-Busch InBev, the largest beer company in the world, wants to buy Grupo Modelo (a much smaller, but still relatively large beer company). While most of us generally look at beers as either domestic (Bud, Coors, Miller) or imports (Corona, Stella, Amstel), the reality is that most brews are owned by massive multi-national companies. 

InBev’s catalog of brews is enormous, including familiar domestics (Bud) and imports (Stella), while Grupo Modelo has mostly imports – Corona, Modelo, etc.

InBev and Coors-Miller control the vast majority of the global beer market, with Grupo Modelo making up a much smaller fraction.  So you may wonder —With Coors-Miller still out there for competition, why does the Justice Department have a problem with InBev wanting to buy Grupo Modelo?  One word: Mavericks.

The reality is that Coors-Miller and InBev are so powerful that they can greatly determine the overall beer market.  Their main issue is that Modelo is what economists call a “maverick.” 

If Coors-Miller and InBev decide to raise prices, as they have in the past, they have to be careful, because if Grupo Modelo fails to follow suit, Americans may switch brands.

You may recall a couple summers ago, Bud introduced Bud Light Lime, with nearly identical taste and similar clear bottle as Corona.  This wasn’t an accident.  Everything about it was done to take away Modelo’s power, which is largely derived from Corona, the No. 1 import beer in the U.S., so that InBev could turn around and jack up its prices across the board. 

The U.S. Justice Department is seriously worried that if InBev can buy Modelo, then all bets will be off and the big beer companies will be able to gouge consumers. The end result… If you like any major brew, you’ll be screwed. 

Oh, and if this doesn’t make you dislike the big breweries already, then just remember that InBev was recently sued amidst allegations that it’s been watering down Budweiser. 

My advice? Buy local and enjoy a Newport Storm or Narragansett.

Got any legal questions?  Email me at AThayer@srt-law.com  

The materials on this website are for general information purposes only, and do not constitute legal advice.  Viewing the materials contained on this site, or on any linked site, does not create an attorney-client relationship.  Sayer Regan & Thayer, LLP assumes no responsibility for materials posted on any linked site.  If you chose to contact us, or to inquire concerning legal services or legal advice, please be advised that such inquiry does not create an attorney-client relationship.  An attorney-client relationship may only be established by separate agreement.  You should not send any confidential or time-sensitive information to us unless authorized by one of our attorneys.  Information sent before an attorney-client relationship is established may be determined not to be confidential.