Elizabeth Flock at US News has a pretty good piece on the issues at stake in the Justice Department’s lawsuit against AB-Inbev last month. One omitted detail that seems important–AB-Inbev has been able to ‘lead’ MillerCoors on price changes, while Grupo Modelo has been stubbornly independent. (The Justice Department may also be an inadvertent beneficiary of the Republican Party’s war on functional government.) The lawsuit has already lead to access to chilling, rage-inducing internal memos, such as “We must slow the volume trend of High End Segment and cannot let the industry transform.”
Both Anheuser-Busch InBev and MillerCoors employ “category space analysts,” whose job is to visit a store like 7-Eleven and consult them on the optimal placements of beer on the shelves.
“They are doing the sets, they [say to a store]: ‘We can do that for you,'” says Koch. “And then they can take my beer from eye level to the top shelf, which drops my sales rate in half.”
With thousands of small breweries in the works, beer buyers and brewers say the battle for shelf space may only get worse.
Koch says he has also seen Samuel Adams beer pushed out of airports and sports venues—two places where consumers do a lot of sampling. “We work very hard to get our beer into a sports venue, and then when the big brewer realizes we got in there… they buy out the bowl, and then we’re gone.”
Despite the theoretical independence of the three ‘tiers’–production, distribution, retail–AB-Inbev and MillerCoors own their own distribution companies. They have their own “crafty” brands (Leinenkugel, Blue Moon, Shock-top) that they’ll push to replace shelf space devoted to the craft market with these brands. In places like Seattle and Portland, where Craft beers have broken through and have considerable market share (roughly 25% and 30%, respectively) these strategies won’t work, but in smaller markets, where craft beer has room for growth, these strategies could be devastating. The story of craft beer in the last 35 years has been a success story–one of impressive growth, even as the industry behemoths have consolidated and worked to prevent or co-opt changes in the industry. But there’s no guarantee the happy story will continue. This lawsuit is a positive sign, but liberalizing distribution rules, which a few states have done, could really help as well.