Industry giants are threatening to swallow up America's carefully regulated alcohol industry, and remake America in the image of booze-soaked Britain.
And so the onslaught continues, by direct and indirect means, with few Americans having even the vaguest idea of what’s going on. In Ohio, for example, MillerCoors tried unsuccessfully to negate the contracts that its component companies, SABMiller and Coors, had already signed with distributors, with the goal of forcing them to renegotiate terms with the more powerful merged venture. In California, the state attorney general declared MillerCoors’s efforts at wholesaler exclusivity a violation of state law. In Illinois, Anheuser-Busch InBev stands accused by the state’s distributors of holding an illegal interest in a top Chicago-area wholesaler. If Anheuser-Busch InBev wins the case, now being heard by the Illinois Liquor Control Commission, the company may be emboldened to argue for similar rights in other states. (On October 31, after this article went to press, the Commission ruled in favor of Anheuser-Busch InBev, effectively permitting beer makers to self-distribute in Illinois.)
In fact, by exploiting existing weaknesses in some states’ commerce laws, Anheuser-Busch InBev owns fourteen distributorships in ten states (New York and California, as mentioned above, plus New Jersey, Ohio, Massachusetts, Colorado, Oregon, Oklahoma, Kentucky, and Hawaii) and is part owner of two more. The biggest beer producer in America, Anheuser-Busch InBev is now by volume the biggest beer distributor, too.
At times, the Big Two don’t even have to lead the fight. Costco spent $22 million last year in a successful ballot initiative campaign that allows them to stock their shelves directly from wholesale warehouses, effectively eliminating the protective inefficiencies of the second-tier distribution system. Such mutually beneficial efforts by big-box stores and the Big Two are no surprise: they all work on a high-volume, low-margin profit model. And though three-tier laws prohibit direct collaboration between them, it’s also no accident that in a March interview with the trade publication Beer Business Daily, Anheuser-Busch InBev Vice President Dave Almeida described in perfect detail how retailers can maximize their profits by replacing craft brews with “premium” beer—its term for its mass-produced light lager. Synergy: it’s coming to a store near you.
Horizontal integration of alcohol production. Vertical integration of distribution and retail. Loosened local regulations. National chain stores. Streamlined marketing. Volume pricing. Alcohol as an ordinary commodity. America resembles Britain more and more each passing day. How do you like them apples?
In recent years, the UK has started to reverse course as it struggles with its epidemic of alcoholism. After ten years of study and against vehement industry protest, a conservative, Tory-led Parliament now appears serious about passing reforms aimed at weakening vertical monopolies in the British alcohol industry and forcing the cost of drinking upward through minimum-price laws. Eighty years late, Great Britain is recognizing the hard-learned lesson that our forebears enshrined in the 21st Amendment: that alcohol truly is no ordinary commodity, and must be handled with care. We would do well to recall that wisdom ourselves.
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