During my craft beer law class this summer at McGeorge, many students were surprised to hear about the many ways that Big Beer seeks to restore lost market share. One way in particular that seemed to rankle their eager minds is how Big Beer quietly impacts the supply chain that independent craft brewers (and home brewers) rely on. There are several ways that Big Beer uses the market to continue to dominate production. But there are two examples that people rarely talk about and seem not to know about.
The first example stems AB InBev’s purchase and ownership of Northern Brewer.* Northern Brewer is generally regarded as the largest supplier of homebrew materials for both home brewers and nano breweries alike. As many of you know, home brewers and nano breweries tend to be an independent lot. They typically make beer for the passion of it. But what many don’t realize, and what the public at large doesn’t realize, is that when home brewers or nano-breweries purchase their supplies from Northern Brewer, the profit from that goes to Big Beer. You see, in 2016 AB InBev’s venture capital business (ZX Ventures) purchased Northern Brewer. What this means is that even though a nano brewer might be truly independent as defined by the BA and even use the BA’s independent logo on its packaging, AB InBev still has its fingers in the mash. The same goes for home brewers. Is it illegal? Nope. But it’s just one more tactic that smells like integration and monopolization. One of my brewer friends was quick to tell me last week that “AB will own everything in ten years.” Maybe so.
The other example that seemed to resonate with the students is AB InBev’s purchase of nearly the entire 2017 South African hop harvest.** South African hops contain some of the most desired, newer aroma varietals on the market, including African Queen, Southern Star, and Southern Aroma. Many craft breweries either used these hops or would love to get their hands on them. But AB InBev beat them to the punch. Instead, it just bought all of the South African hops that were to be allocated for North American craft brewers for use in AB InBev’s “High End” beers. Is it illegal? Nope. But you can see the uphill battle that independent breweries face when dealing with such market power.
Ok, so I realize that Big Beer has a business to run and that its pockets are far deeper than any independent brewery can fathom. But there is such a thing as being a fair market citizen. And while Big Beer does step up and do the right thing (like emergency water for Puerto Rico) on occasion, those in the industry view those kind of seemingly altruistic acts with suspicion—especially in light of the type of conduct described above. For good reason.
Let me know what you think. Cheers.