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What Bud Buying Miller Means for Choice, Price, and Craft Beer

Published On 10/13/2015 Published On 10/13/2015

Well, it happened. After a month of acquisition rumors and spurned offers, SABMiller agreed to terms of a $104-billion acquisition bid from Anheuser-Busch InBev in mid-October, according to a statement from SABMiller. The sale must still be approved by regulators in the UK (SABMiller is traded on the London exchange), but if it holds up, we'll be looking at a massive new corporation with around $55 billion in annual sales and control of nearly a third of the world's beer.

All hail the global super-brewer! Our beery happiness, we entrust to thee! Except... is this bad news for people who love Miller and Coors beers? Aren't corporate mergers bad for consumers? IS THE MONOPOLY MAN COMING FOR MY HIGH LIFE? AND WHAT DOES THIS MEAN FOR I, CRAFT BEER LOVER?!

Short answer: nothing! Chill out and continue drinking as usual. Longer answer... well, keep reading.

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Will There Be Fewer Types Of Beer To Drink?

"There probably wont be much in the way of noticeable changes," speculated Brewers Association director Paul Gatza in a phone call with Thrillist  back in September, when word first got out about this mammoth potential acquisition, "until the time that someone else buys those Miller brands in the US."

Remember, because SABMiller and AB InBev together control about 75% of the US beer market, it's widely assumed (if not totally guaranteed) that the US Department of Justice will require ABI to sell off SABMiller's US interests (confusingly named MillerCoors, and jointly owned with even-more-confusingly named Molson Coors) before approving the acquisition in this country.

Patrick Emerson, an associate economics professor at Oregon State University and the beer aficionado behind Beeronomics, agreed.

"I think U.S. consumers of these brands have little to worry about.  I would expect the major brands that these two companies produce to remain after the merger so there should not be a significant reduction in choice overall," he told Thrillist in a recent email exchange, "although [...] you might find some consolidation on one brand," in terms of taps and bottles at the individual bar or restaurant you're in.

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Will Beer Cost More?

Emerson isn't worried about an enormous, predatory monopoly that would spike the price of High Life or Bud, either. In the case of ABI/SABMiller, he explained, "a lot of price pressure [and competition] is not coming from other macro brewers, but rather from other adult beverages like distilled spirits, craft beer, etc."

Because those categories offer a different product that can't be easily undercut, the new ABI/SABMiller corporation's "ability to raise prices [would be] severely limited," he said.


Will The Sale Impact Craft Beer?

"I think in the US craft beer will be largely unaffected by this," guessed Emerson, citing that the specialty market doesn't really compete directly with macros for US shelf space and tap handles (though they do often compete directly with each other). In fact, he said, this may even be a good thing, as any resultant brand consolidation could free up more retail opportunity for the burgeoning craft industry.

Gatza, whose organization represents the country's 4,000 craft brewers and would have every reason to be anxious about negative impacts, was similarly nonplussed.

"I don’t think it will affect market share for craft," he told Thrillist. At most, he speculated that regional brewers (the term for brewers that produce under 6 million barrels a year; Sam Adams, Yuengling, and Sierra Nevada all fit the bill) may feel some ripples.
 

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The Big Money Mumbo-Jumbo

Now that your fears of Big Beer coming for your beer have been (hopefully) placated, take a step back and revel in the sheer magnitude of this deal.

The business benchmarks of this sale are set to break records. The merger would clock in as the world's third-largest on record, reports Market Watch, ahead of AOL's Time Warner takeover and the ExxonMobil marriage.

It would also consolidate around 29% of all global beer sales, and nine of the world's top 20 bestselling beers by volume, under the same corporate umbrella, according to Money.

News of the deal shot up SABMiller's stock prices by almost 10%, and it's climbed nearly 35% since the rumors started to swirl.

If the deal doesn't go through before October 28th (if an agreement can't be reached with the DOJ, or if the buyer's shareholders reject the sale, for example), then under UK law, it will be dead on the table, and ABI would owe SABMiller a $3 billion penalty.

In other words, while the creation of a super-brewer won't necessarily have an effect on your lager-guzzling habit, it's still an enormous business move. And now you know all about it.

Dave Infante is a senior writer for Thrillist. Follow @dinfontay on Twitter, Instagram, and Facebook.

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