Bar Tending & Beerspectives
by Matt Martinkovic
| Brewsearch & Development - |
| I just read a preview of the new entry in BeerNexu's He Said/She Said and became angry. I did a little research and this is what I found. AB-InBev iis using its formidable US market heft to squeeze out those fast-growing craft-beer makers thanks to the three tiered system. After Prohibition, the US government sought to limit the market power of brewers by imposing the system on the industry. It requires that one set of firms would brew beer; another set would distribute it; and a third would retail it, either in bars or carryout stores. So, in most states, distributors—the companies that move beer from breweries and stock retail outlets' shelves and bars' taps and bottle offerings—can't be owned directly by brewers. To get around that restriction, megabrewers have sought more or less exclusive agreements with nominally independent distributors. Today, the US beer market is dominated by AB InBev and rival MillerCoors, which together own about 80 percent of the market. Independent craft brewers account for 11 percent of the US market—and that's growing rapidly. Most distributors sell either InBev or MillerCoors brands as their bread and butter plus a smattering of independent craft brews. So AB InBev has launched w a new plan to reverse declining volumes" in the US by offering sweet incentives for company-aligned distributors to restrict sales of craft beers and push more Bud Light and whatnot. This incentive program could offer some independent distributors in the U.S. annual reimbursements of as much as $1.5 million if 98% of the beers they sell are AB InBev brands. Distributors whose sales volumes are 95% made up of AB InBev brands would be eligible to have the brewer cover as much as half of their contractual marketing support for those brands, which includes retail promotion and display costs. It is estimated that participating distributors would receive an average annual benefit of $200,000 each. And beyond pushing up the percentage of AB InBev products in the mix, the incentive plans place another restriction on the distributors - they can only carry craft brewers that produce less than 15,000 barrels or sell beer only in one state. At least one distributor has dropped a craft brewer as a result of the incentive program. Deschutes Brewery President Michael Lalonde said Grey Eagle Distributing of St. Louis last week decided it will drop the Oregon brewery behind Mirror Pond Pale Ale because it "had to make a choice to go with the incentive program or stay with craft." All of this raises the question: Under US antitrust law, can a giant company legally throw around its weight like that? The answer may well be yes since the incentive program is voluntary—that is, distributors are free to decline the extra support and continue stocking as many craft brands as they want. Currently, t, just 38 percent of AB InBev-aligned distributors participate in the company's incentive programs. The company aims to double participation in three years behind the new rewards plan. But don't give up just yet. The government anti- trust division is looking into this very carefully. I'll keep you posted. ================ Cheers, Matt |
| Please continue to support my friends at The Northside Lounge Nik's Wunderbar - Whitehouse Station NJ |
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Matt Martinkovic is not only a recognized beer authority but a well known ecological writer whose
work has appeared in the The American Midland Naturalist (University of Notre Dame) among other
industry publications. He also has been an agricultural consultant on, of course, the growing of hops.
work has appeared in the The American Midland Naturalist (University of Notre Dame) among other
industry publications. He also has been an agricultural consultant on, of course, the growing of hops.
| More From Matt: Beerspectives #1. #2, #3, #4, #5, #6, #7, #8, #9 , #10, #11, #12, #13, #14, #15, #16, #17. #18, #19, #20, #21, #22, #23, #24, #25, #26, #27,#28, #29 |
| Budweiser Gets Me Angry |
| To all my readers and friends, I want to thank you for all your support during my time at Nik's Wunderbar and at the Northside Lounge. I'm moving back to the enviromental/ecological field so the next time you see me at a pub it will likely be on a stool next to you. I'll continue to write my column here on BeerNexus giving you my take on what's happening in the beer world with my insights derived from many years in the industry. Cheers! |