Imagine a brewing company so big that a political party makes it part of their platform.
United States Democrats released a new economic platform today which details the party’s plans to rein in corporate monopolies and curb various other abuses of economic powers. And in its plan, the party calls out the beer industry by name, suggesting brewing giants like Anheuser-Busch InBev, with its deep pockets and growing stable of subsidiaries all over the world, pose a grave threat to the business of small brewing.
The party writes:
“As of 2016, five breweries controlled over 50 percent of global beer production compared to ten companies in 2004. Although there is a burgeoning craft brewery industry, these small businesses are under threat from large legacy brewers that are acquiring their craft competitors or trying to block craft brewers’ access to the marketplace. In the last year, InBev which owns Anheuser-Busch and is the world’s largest beer company, struck a deal to purchase SABMiller, the second largest. The companies have already announced that jobs will be cut as a result of the merger, and the resulting conglomerate will make it even harder for small, local breweries to compete.”
Dubbed “A Better Deal” (an apparent dig at President Donald Trump’s book, The Art of the Deal), the plan calls specifically to “prevent big mergers that would harm consumers, workers, and competition,” among other things, and across a number of other industries, including pharmaceuticals, cable and telecommunications, air travel, food, and even eyeglasses (the latter a surprisingly monopolistic industry to most shoppers).
On Sunday, in a prelude to the plan’s release today, Nancy Pelosi, minority leader in the House of Representatives, expounded further in an essay published by the Washington Post.
“We will demand that proposed mergers meet tough new standards to protect competition before approval,” she wrote, “and will institute post-merger reviews to ensure that consolidated companies keep their promises to American consumers.”
For AB InBev, a successful execution of this promise would likely mean increased inspection on its deals. In September of 2016, in light of the company’s acquisition of Devils Backbone, the Department of Justice vowed to “carefully scrutinize any future craft acquisitions made by ABI.” This promise, largely a result of Brewers Association lobbying on behalf of small and independent brewers, has yet to bear any outward evidence of limitations as a result of such scrutiny.
Since then, however, the company hasn’t exactly halted its spending, buying up Karbach in Houston, Texas and Wicked Weed in Asheville, North Carolina in the months that followed. It's unclear at what point the intended scrutiny will ever have a substantive affect, especially in light of the regulation-slashing administration now in power.
GBH reached out to AB InBev for comment regarding the Democratic party's newly detailed economic platform and will update this post when we hear back.
As the company continues to mount its "America" campaign (in which it literally swapped its logo on bottles and cans for the word "America" and subsequently for the names of the states in which it's beers are brewed, including "Texas"), one starts to wonder if these marketing campaigns are targeted at consumers or the state and federal lawmakers who are growing frustrated behind the scenes and now speaking out with an official platform. These campaigns may be an attempt to draw attention to the stateside impact of the Brazilian- and Belgian-owned international brewing conglomerate that just swallowed its largest competition in South-African-owned SABMiller and is likely on its way to a baker's dozen in U.S. craft brewers.
It's hard to say that AB InBev has had a directly negative effect on small brewers, which in the recent slow-down still touts 6% growth, even as some of its largest members leave post-acquisition. With more breweries that at any point in our history, craft is still a vibrant sector. To that end, this platform doesn't seem aimed at encouraging more growth and diversity with any specific progressive legislation, which is still exceptionally out-dated at the state level and preventing even existing ambitions from moving ahead. Any progress there will involve some knock-down-drag-out fights over the relevance of the three-tier system and other archaic pre-prohibition laws.
Rather, this platform seems aimed against the overwhelming consolidation of power playing out among many industries right now. We talked to Scott Metzger, the rabble-rousing founder of Freetail Brewing in San Antonio, Texas and a board member of the Brewers Association, and a former economics professor who also worked for the US Department of Treasury and a Fortune 10 oil & gas company for a practical perspective on that front:
"Generally speaking (from my perspective as an economist and not a brewer) over time American anti-trust policy has tended to swing like a pendulum between too strict and too lenient. I think it’s fairly safe to say that we have been on the lenient side of that pendulum swing for at least the last 10-15 years or so with no indication that it has started swinging back.
As a brewer, we are seeing ABI operate with a great deal of leeway. They are not only the most dominant brewer, but their Wholly Owned Distributor network also makes them the largest beer distributor in the U.S., and even where they don’t own distributors, they still have a significant influence on 'independent' wholesalers. Their acquisition of craft brands has been covered at length, but only the savviest of outlets have seemed to pick up on the retail presence they’ve gained via craft acquisitions. Even when ABI is found in violation of trade practice in various states, states are so limited in their recourse they’re only left with slaps on the wrist that lack teeth to the point where they are more like tickles of a feather.
Ultimately, I’m not entirely sure being a plank on either party’s platform accomplishes much, but perhaps at least it will draw some attention to anti-trust policy in general…though admittedly this may not necessarily be a topic that the average person can really wrap their mind around. Ultimately, oversight from congress coupled with an FTC and DOJ committed to an appropriately measured anti-trust policy would be quite welcoming."
Whether that part of the platform will get the attention it deserves amidst the scandal and healthcare debacle playing out now remains to be seen. There's a lot of winning for the Dems to do first before they even get a shot. Meanwhile, there’s a more bipartisan beer effort unfolding in congress as well, with leaders from both parties teaming up to help slash excise tax rates imposed on brewers. Fingers crossed.
—Dave Eisenberg + Michael Kiser
A Better Deal [Democratic Leader]