Earlier this week, SABMiller and AB InBev agreed to the largest beer merger of the decade and one of the largest deals in history.
AB InBev will acquire SABMiller in a deal that values the company at around $US110 billion, and the combined company will control a third of the world’s beer supply, bringing together iconic brands such as Stella Artois, Corona, Budweiser, Grolsch, and Pilsner Urquell.
In a segment on WNYC’s “Money Talking” this morning, host Charlie Herman asked if this merger would eventually matter to you, the beer consumer.
And the short answer is yes.
The beer industry works on what is called a “three-tier” distribution system.
There are brewers — like AB InBev and SABMiller — independent distributors, and retailers.
As the industry’s brewers consolidate, distributors could, in theory, see their ability to leverage available shelf space at the retail level against a brewers’ prices decline.
Now, of course, this isn’t something that hasn’t occurred to either the brewers or regulators, and SABMiller announced that it will spin out its Miller brand as part of the tie-up with AB InBev. And the merger could still fall apart.
But while large corporate mergers often seem to happen outside the realm of anything that matters on the consumer level, the creation of even bigger “Big Beer” is something you might notice.
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