Speculation on Big Beer Mergers Abounds

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Created: Monday, October 06 2014 11:09

October 7, 2014

Industry speculation of a potential megamerger between the world's two largest beer companies, Anheuser-Busch InBev (A-B InBev) and SABMiller, has gained momentum in recent months, and according to some business analysts, appears increasingly likely.

The two behemoths are the result of a decade of mergers and acquisitions, consolidating dozens of companies into a Big Beer duopoly that controls 30% of the world's beer market. U.S. antitrust regulators are not expected to block the deal, and have raised few concerns over past mergers.  A-B InBev's 2013 acquisition of Grupo Modelo (producers of Corona) raised eyebrows at the U.S. Department of Justice, but the deal was approved with only minor concessions, paving the way for A-B InBev to swallow SABMiller.

The consolidation of corporate power created by an A-B InBev/SABMiller merger would result in an unprecedented, oppressive influence over alcohol policy around the globe. In the U.S., both companies are a relentless presence, both overt and subliminal, undermining alcohol regulation. A-B InBev is one of the highest U.S. spenders on lobbying, shelling out $20.8 million since 2008. SABMiller, operating in the U.S. as MillerCoors in a joint venture with Molson Coors, has spent $13.1 million since 2008. Their efforts have sucessfully chipped away at the three-tier system that separates alcohol production, distribution and sales in the U.S., designed to protect public health and safety. The latest blatant attempt to circumvent this system is A-B InBev's move to purchase of a distributorship in Kentucky. The Duopoly has also successfully opposed any increase in the federal excise tax since 1991, costing the U.S. government millions in inflation erosion, while economic harm from excessive alcohol consumption now costs U.S. governments over $94 billion a year. Nevertheless, the beer lobby, led by A-B InBev and MillerCoors, sponsors legislation to decrease the Federal beer tax each year, under the moniker "Brewers Excise and Economic Relief Act." A-B InBev reported $43.2 billion in revenue in 2013; SABMiller reported $34.5 billion.

The merger would be disastrous for other countries as well, particularly those in the developing world. SABMiller and A-B InBev vie for domination of emerging markets in Asia, Latin America, and Africa, where their growth depends upon ever-increasing consumption, while consumption levels have nearly reached saturation in North America and Europe. According to the 2014 World Health Organization's (WHO) Global Status Report on Alcohol, countries with lower per-capita income tend to consume less alcohol; however, alcohol-attributable mortality and burden of disease and injury will generally be greater in societies with lower economic development than in more affluent societies. Over the past decade, aggressive marketing tactics by SABMiller and A-B InBev have resulted in increased per capita consumption across these developing regions, and increased alcohol-related harm has followed.

Big Beer aggressively and consistently interferes with efforts to enact evidence-based policy to reduce alcohol-related harm and resulting costs. Corporations exert pressure and influence with organizations like the the Global Alcohol Producers Group (GAPG), with goals to block reasonable, researched alcohol policy recommendations from WHO while making public statements to sound like public health support. Examples of such interference include blocking minimum pricing in Britain and a ban on alcohol advertising in South Africa. Many of the countries in developing regions targeted by SABMiller and A-B InBev have weak alcohol policies, and are particularly vulnerable to such interference because of Big Beer's political and economic clout.

The WHO position remains that all necessary measures should be taken to protect the formulation of health policies from distortion by commercial or vested interests; therefore the alcohol industry has no role in the formulation of alcohol policies. Yet Big Beer (and the rest of Big Alcohol) continues to assert its will and demand for profits over public health policy, and a combined A-B InBev/SABMiller will wield an even bigger stick against policymakers attempting to protect the public from alcohol-related harm. An A-B InBev/SABMiller merger would have an incredibly negative impact on health and safety for populations around the globe.