Over at Washington Monthly, Tim Heffernan has an in-depth piece on a topic dear to my heart: the stunning consolidation of the US beer industry. He points out, as I have before, that two vast, globe-spanning companies, SABMliler and Anheuser-Busch InBev, control 80 percent of the US beer market. Heffernan argues that the two companies have essentially hit a wall in getting much bigger here—consolidation is already so extreme that there just isn't much more consolidating to do without provoking the ire of antitrust authorities. To increase their profits, he shows, the companies are moving toward a vertical-integration strategy: gunning for control of the distribution and wholesaling. That way, they can grow by extracting more revenue and profit out of each dollar Americans spend on beer.
Heffernan takes an odd angle to set up his story. Hyperconsolidation of the kind seen in the beer industry drives down consumer prices, he writes, and low prices for alcohol lead to excessive drunkenness. More on that below—I think Heffernan might be off here. But what caught my eye was his discussion of the way the beer giants are squeezing suppliers and wholesalers to take control of the retail shelf—and potentially squeezing out independent craft brewers, whose wares (which I adore) have taken off in the past 20 years even as the giants consolidated.