U.S. Senate Hears Beer Merger Objections

January 7, 2016 Asheville , Hendersonville , News Stories 2370 Views
U.S. Senate Hears Beer Merger Objections


The issue could impact breweries large and small in North Carolina.

Concerns were raised in the hearing before the Senate Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights about the possible impact on craft and independent wholesalers from a merger of the two giants behind Budweiser, Miller and Coors beers.

“The proposed merger we consider today would join the two giants of the beer industry, which are together responsible for more than 70 percent of the U.S. market,” Sen. Patrick Leahy (D-VT) said at the hearing.

As part of the merger, SAB Miller would sell its 58 percent stake in the joint venture MillerCoors to Molson Coors Brewing Company. MillerCoors would then be run as a business unit of MolsonCoors, giving it full control of the Miller and Coors brands in the U.S. That move is intended to allay antitrust concerns, according to news reports.

Leahy noted that, but continued, “Given the size of these companies, we need to look closely at this transaction. I want to hear more about how the divestment will operate in practice, and whether the merger will have other consequences for the beer market—including given the practice of big brewers buying up small craft breweries.

“It is important that we also consider competition in the markets for hops, barley, glass and aluminum. These are essential inputs for any brewer to compete.”

Breweries spread in NC

The proposed merger comes on the heels of explosive growth in the craft brewery industry nationwide, and especially here in North Carolina.

The market share for craft brews has grown from 4 percent in 1997 to 11 percent currently.

The North Carolina Craft Brewers Guild says the state “is home to 132 breweries and brewpubs — the most of any state south of Pennsylvania and east of Texas.” The trade group says its industry directly or indirectly employs about 10,000 people statewide.

Molson Coors CEO Mark Hunter assured the committee that nothing would change for consumers, customers, distributors or the communities involved with manufacturing the beers.

Eden brewery set to close

But here in North Carolina things are changing for the town of Eden, which will lose its brewery next year.

In September, MillerCoors announced it would close its Eden brewery in September 2016, ostensibly due to it proximity to its Shenandoah, Va. brewery.

The Shenandoah brewery is newer and “better suited geographically in relation to Northeast Markets,” according to a release by the company.

The Eden brewery currently employs about 520 people and produced 7.1 million barrels of beer last year. (A barrel is 31 gallons.)

Miller and Coors merged seven years ago to better compete with Anheuser-Busch, but since the merger volume has declined by nearly 10 million barrels.

The company blames the decline in volume on a variety of factors, including the economic downturn, the explosion of the craft and independent beer sector, and other factors.

The release said that as a result of the declining volume, MillerCoors breweries are operating at an increasingly inefficient capacity and the company is working to combat that. The release also said that MillerCoors expects continued volume declines in the next few years.

“Today we made the difficult decision to close our brewery in Eden, N.C., in order to optimize our brewery footprint and streamline operations for greater efficiency across our remaining seven breweries,” Chief Integrated Supply Chain Officer Fernando Palacios said.

“We take great pride in supporting the communities where we live and work,” Palacios said. “We’ve been proud to be part of the Eden community since we shipped our first products in 1978. We will work with community leaders to make sure we continue to support the community while we are brewing beer in Eden.”

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