As the news hit that SABMiller has accepted the takeover bid from its rival Anheuser-Busch InBev, this resulted in a lot of chatter amongst the brewing industry. It also caught the eye of Oregon’s senior United States Senator. Last week Senator Ron Wyden wrote a letter to Loretta E. Lynch of the Department of Justice and to Edith Ramirez of the Federal Trade Commission urging both entities to consider how this merger would impact craft brewers, consumers and distributors in his state of Oregon and across the United States.
After this letter was sent to the DOJ and FTC on Monday, November 9, it was announced that Wyden would host a Brewery Roundtable later in the week at Ecliptic Brewing to learn more about the issues facing this growing industry. On Friday the 13th this discussion took place. In attendance were various brewers, brewery owners, distributors and Brian Butenschoen, Executive Director of the Oregon Brewers Guild.
According to Wyden’s letter to the DOJ and FTC, the Oregon brewing industry is home to more than 230 breweries that employ over 7,400 people and contribute $2.8 billion to the state’s economy. In light of this large economic factor Wyden is “Concerned by recent reports suggesting Anheuser-Busch InBev and its wholly owned distributors may have acted to curb competition in markets including Oregon. The reports detail large brewers seeking to obstruct and outmaneuver craft brewers by purchasing distributors and exerting control over tap lines and store shelves. Out of concern over such reports, I have consistently proposed increased enforcement resources for those agencies charged with ensuring a fair marketplace for brewers and distributors.”
After all of the panel settled into their chairs Wyden opened up the discussion expressing this issue and the unanswered questions that this the merger’s affect will have on Oregon craft brewers and the vast amount of jobs this industry supplies. What concerns Wyden the most is that this merger has “Establish a new number one global beer company. It will harm fair access to distribution chains and consumers.” The central issue is that access to markets is everything. He then adds, “This is not going to be on my watch.”
Here in Oregon we have a very vibrant craft beer market, the strongest in the country. John Harris of Ecliptic Brewing mentioned that, “Oregon is pretty safe,” when it comes to what the large corporate brewery can do. However this merger will affect more than just Oregon breweries. “It’s not just an Oregon issue. It affects all States,” according to Van Havig of Gigantic Brewing.
The biggest concern from the group of about 10 breweries that were present was with the Three Tier System that consists of producer, distributor and retailer. Havig mentions, “We have a three tier system for a reason.” Steve Moore of 13 Virtues Brewing is afraid that A-B InBev, “Will chip away at our three tier system. Almost feels as if they are moving towards a one tier system.” This sentiment was echoed by a few others including Art Larrance of Cascade Brewing. “Foreign companies want to have us live by their rules. It’s a corrupt system. They beat everybody up. They think its business as usual in America,” stated Larrance.
The sole distributor on the panel was Rob Maletis from Maletis Beverage, which is also an A-B InBev house along with a highly respected craft beer portfolio. He mentioned, “The three tier system has worked well. We make sure to do the best job we can. We help get craft beer to the market.”
Another concern brought forth is the sort of buying power a company of this size could place on the booming craft beer industry. This new big conglomerate could begin to go after some of the commodities in craft beer such as its strong use of barley and hops. This could take a few years as there are contracts written for some of these crops. Havig mentioned, “They could buy our hop contracts in say 2021.”
Today, November 16, Wyden returns to Washington D.C. for its short session where he will be bringing these issues up with his fellow Democrat and Republican colleagues. When pressed on the individuals he is seeking support from Wyden remained tight lipped as he respects their privacy until they want to come forward. He has also sought the support of the Brewers Association and The Beer Institute among a few other trade groups. As Wyden stated, “Consider this message sent!” This is definitely not the last that we will hear about this merger.
D.J. is a Portland, Oregon based writer that spent his formative years in the Midwest. With over 20 years under his belt of drinking beer at festivals across America and the world, he has developed a strong appreciation and understanding of craft beer and the industry that surrounds it. He can be found in any of the great breweries or beer bars that make Portland the best beer city in the world. His writing can also be found in Northwest Brewing News and can be followed on Twitter at @hopapalooza.