Four brewing companies control 50% of the world's beer

Whether you're floating in the foam or submerged in the beer, 50%
of what the world knows as beer comes from only 4 brewing
companies.  Photos by Charlie Papazian

Four brewing companies control and brew half of the world’s beer. They are Belgian-based Anheuser-Busch Inbev, London-listed SABMiller (South African Breweries Miller), Dutch Heineken and Danish Carlsberg.  In a report by Bloomberg last week the last two years of consolidation were summed up with the hefty sum of $75 billion worth of acquisitions.  To what end?

In a featured example and with seemingly great pride, Carlsberg teamed up with Heineken in 2008 to buy and break up Scottish & Newcastle for $11.9 billion.  Scottish & Newcastle formerly a major U.K. brewing company is no more, as can also be said of the English, Scottish and even Irish brewing industry.  Except that the void is being trickle-filled with hundreds of microbrewery startups who are somehow appealing to local markets.

In the world of mega companies brewing megabranded beers the consolidation and acquisition game continues to play out.  Anheuser-Busch Inbev and Heineken are currently in the process of gobbling up Mexico’s largest brewing companies, Modelo and FEMSA respectively.

In another report by Reuters it’s revealed that the largest of the goliaths globally brewed about 300 million U.S. barrels of beer in 2009 with sales of $36.8 billion.  What’s that in beer drinker’s terms?  Their average case of 24 12-oz beer sold to market (not consumers) for $8.90.

Astounding volume and sales enables brewers to reduce the cost of production by being able to get extraordinary discounts from the suppliers of ingredients and equipment needed to brew beer.  Sophisticated brewing machines require less employees to run, further reducing their costs.

It’s a very effective way to make lots of money for the investors of these companies, which seems to have become the primary reason for their existence.  It’s great if you only interested in beer as an investor or as bank that loans the money for the growth.

The beer news in 2009 America released earlier this month indicated beer sales of all the major brewing companies was mostly down – nationally about 2.5% or 5 million barrels.  But profits did not mirror the sales downturn.  According to various beer industry reports Heineken U.S. sales were down 9% but profits were up 30%. Others reported similar trends.

Where will the consolidation trend end?  Will beer drinkers care?  So far a very few care enough to spend the extra money on U.S. craft beer that experienced 7.2% volume growth in 2009.  How much will craft brewers grow in 2010?  I predict 6.5 to 7 percent in 2010, as long as distribution options continue to be accessible to small brewers.  Therein lies a potential problem, as distributors are consolidating or are being bought by large brewing companies.