Craft beer breweries are welcoming increased scrutiny over the price of beer. While big beer claims that the price for beer has remained the same, The Department of Justice and Federal Trade Commission is about to follow up on concerns and recommendations made by Treasury Department that the industry that distributes beer, wine, and spirits is getting too concentrated.
According to The National Law review, The report from the treasury says that consumers of beer alone are potentially paying $487 million more a year than they actually should be. Prices for wine may be overpriced by 18% and spirits by more than 30%. And craft beer breweries are celebrating this because the remedies the Treasury is proposing could be beneficial for them.
Of course, craft beer prices are typically higher than the beer sold by large corporations, but incentives to increase their competitive edge could help them get a leg up. Ultimately, if the market is more competitive, we’d all stop overpaying for beet.
The Biden Administration
President Biden directed the treasury to examine and report back on the competitive landscape in the market in July of 2021. He did this via executive order 14036 in consultation with the Attorney General and the Chair of the FTC.
The treasury notes two key industry trends in its 64-page report on the issue. First, Craft beer and small companies have boomed since the 70s. Today, there are more than 6,400 breweries, 6,600 wineries, and 1,900 distillers in the united states.
The other trend noted by the treasury is the consolidation in the distribution and in the retail sales of these products. Despite the boom in craft beer brands, wineries, and distillers, two companies absolutely dominate the market. Anheuser-Busch InBev Worldwide, Inc. (ABI) and MillerCoors. These two companies alone account for 65% of the market.
Craft Beer Prices are Higher, but They’re Still Luring in Customers with their Unique Flavors
While these beers are a bit more on the expensive side, Craft beers are slowly luring away more customers from the likes of Budweiser, Bud Light, Miller, and Coors. But this has lead ABI to gobble up craft breweries, which further stifles competition. It may be great for ABI, but it’s not great for everyone else.
“Studies have shown direct links between major brewery mergers and an ability to raise prices in the markets in which they compete,” the treasury reports.
Bob Pease of the brewers association, whose job is to help serve smaller, independent brewers, praised the report. Because while the craft brewery industry is growing, the market remains consolidated, putting a much heavier price tag on beer for consumers.
The one major criticism from craft brewers, however, is old data. While the report suggests that there’s around 6,400, but newer studies have suggested that that number rests at around 9,000.
“Old data sentences like that don’t help sell the report,” Keith Gribbins with Craft Brewing Business wrote.
But regardless of the numbers, it looks like both industry leaders and consumers are eying the report. And aside from the few people the current market problem benefits, almost everyone is hoping for a change.