I bet he doesn't drink Bud.

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For Beerlovers, Big Isn't Beautiful

Mark Gilbert is a Bloomberg View columnist and writes editorials on economics, finance and politics. He was London bureau chief for Bloomberg News and is the author of “Complicit: How Greed and Collusion Made the Credit Crisis Unstoppable.”
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The proposed combination of Anheuser-Busch InBev and SABMiller, already the world's two biggest brewers, would create a behemoth controlling a third of the world beer market. The U.K. market is a microcosm of the forces that are assailing the mass-market producers. Their instinct to merge is not just because of declining ale sales.

If the merger goes ahead, it will create "the OPEC of beer," as Phil Serafino of Bloomberg News put it. Crude oil, though, comes in just two main flavors, West Texas Intermediate and Brent Crude, whereas the range of tastes available in both draft and bottled beers is expanding as drinkers are increasingly becoming more discerning about how they quench their thirst.

As a keen imbiber of what we Brits call "a pint," I'm a huge fan of the recent surge in inventiveness. I can still recall the flavour of a beer called Backdraft in a brewpub in Jackson Hole, Wyoming, tasting deliciously of bacon.

The gentrification of the industry, with small-scale craft producers stealing market share by offering zingier tastebud-tinglers, is a challenge I fear the industry leaders will try to meet by buying up as many small rivals as they can, leavening their insipid and uninspiring product range with the more exciting innovations being produced by so-called microbreweries. As the big guys try to hoover up more of the independent brewers, they will homogenize the thriving craft-beer industry and destroy it in the process.

In the same way Lexus drivers are willing to pay a premium for their cars because the badge conceals the true parentage as Toyota, I worry that InBev will try to pass off mass-produced slops as tailored drafts. The burst of creativity seen in recent years is vulnerable; a small brewer offered the backing of a huge marketing budget and a chance to cash in on the cachet of its products will struggle to resist a takeover offer. A lobby group called Britain's Beer Alliance, for example, has an attractive website applauding the diversity of the nation's national drink; scroll down the homepage, though, and you'll find SABMiller and InBev front and center of the brewers backing the initiative.

Beer sales in the U.K. have collapsed by almost 30 percent in the past decade, reflecting a global trend: 

Britain has also lost a quarter of its pubs since 1980, for a variety of reasons including skewed real-estate planning laws, a ban on smoking in public places and the arrival of low-priced supermarket alcohol making drinking at home a more attractive option at a time of economic austerity. A third of the remaining British pubs are owned by pub companies such as Punch Taverns, while a fifth are owned by brewers including Greene King with the remainder run as independents: 

But there's a hidden paradox. At the same time as beer sales are slumping and pubs are disappearing, Britain has been adding brewers at an astonishing rate. The nation now has more than 1,400 breweries, a 31 percent increase in the past two years with new businesses opening at a rate of three per week. The industry employs almost 870,000 people; the government even has a community pubs minister, the Conservative Member of Parliament Marcus Jones. The surge in microbreweries is rejuvenating the industry.

My favorite tipple is a red ale called Yakima, fermented by the Meantime Brewery in Greenwich, London. I wrote in May about fears for my beer of choice after SABMiller said it was buying Meantime. The potential merger of the makers of Fosters and Budweiser makes me even more concerned for the future of tasty beverages. 

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the author of this story:
Mark Gilbert at magilbert@bloomberg.net

To contact the editor responsible for this story:
Therese Raphael at traphael4@bloomberg.net