The U.S. Department of the Treasury, in consultation with the U.S. Department of Justice and the Federal Trade Commission, released a new report today on competition in the markets for beer, wine, and spirits that finds significant concentration in certain markets.The report is part of an executive order issued by U.S. President Joe Biden in July, seeking greater competitiveness in different aspects of American commerce. Beer brewing in particular has been identified as a sector of concern.
According to the report, two major industry trends mark the last several decades.
The first is significant growth in the number of small and “craft” producers of beer, wine, and spirits. There are now over 6,400 operating breweries in the United States, up from a low of 89 in the late 1970s, and more than 6,600 operating wineries. There also more than 1,900 operating distilleries. These businesses are dispersed throughout the country, and they have helped build a strong global reputation for quality and craftsmanship. In addition, over the last several decades the United States has become an innovator in bringing new types of beers, wine, and spirits to the world.
However, the second trend is one of consolidation, particularly at the distribution and/or retail levels for beer, wine, and spirits and at the production level for beer. In many states, there has been significant consolidation in distribution. Additionally, two brewers [namely AB InBev and Molson Coors] have dominated the U.S. markets since 2008 and today account for an estimated 65 percent of the beer market nationwide, as measured by revenue.
“American consumers, small business owners, entrepreneurs, and workers should not have to suffer under the thumb of a highly concentrated beer industry,” said Assistant Attorney General Jonathan Kanter of the Department of Justice’s Antitrust Division. “Enforcement and regulatory authorities should have the courage to learn and the fortitude necessary to enforce the law and protect competition.”
“The report identifies several competitive issues in the beer, wine, and spirits markets, which, if remedied, would allow entrepreneurs, small businesses, and new entrants to compete on a level playing field with larger market participants,” added Assistant Secretary for Economic Policy Ben Harris.
The report drew mixed reactions from the beer industry
“We are disappointed by the Administration’s mischaracterization of the thriving American beer industry,” said Jim McGreevy, President and CEO of the Beer Institute. “The American beer industry is one of the most vibrant industries in the country. Since 2010, we have seen more than 10,000 new breweries permitted, and today–from agriculture and manufacturing to construction and transportation, the beer industry supports more than two million American jobs and contributes more than $331 billion to the nation’s economy. Consumers are benefiting from the growing number of brewers and beer importers, with more choices for beer than at any other time in our nation’s history.”
“We applaud the Treasury Department’s recommendations on how to improve competition in the beverage alcohol industry,” said Bob Pease, President and CEO of the American Brewers Association. “We are glad to see that the report recognizes that some laws, even those originally designed for a pro-competitive purpose, have inhibited the growth and competitiveness of craft producers.
“Second, we see much to like in its conclusions and applaud the report’s focus on the Federal Alcohol Administration Act’s trade practice provisions and the continued need to combat practices like slotting fees and discriminatory conduct.
“Lastly, we appreciate the report’s recognition that some laws have become out-of-date and that new rules may better serve public health and foster competition,” Pease added
