Barack Buggers Big Beer: Bravo!

When it comes to learning new words, I am pretty much on the fence.  Like, I vacillate.  It would seem that my inbred, Leonardo-level lust for learning—the product of a nearly bionic brain and a four-digit IQ (not to brag, but I can recite pi from memory for nine hours straight without once repeating a single digit)—is somewhat offset by my paranoia that, should I admit to ‘not knowing a word’, somebody somewhere might think me less than a superhuman, supremely seraphic savant.

Bless me, Father, for I have sinned; it has been twenty minutes since my last confession:

That is precisely why I make up words with irritating regularity:  I am too proud to use a Thesaurus and too sniffy to ask a colleague for help.

The Exception Proves The Rule

However, in reading a post by Australian wine writer David Brookes, I came across a word with which I was not familiar: ‘Duopoly’—which right off the bat sounds like an oxymoron because ‘duo’ means two and poly means either a green bird in search of a yellow cracker or ‘more than two’.

David Brookes

David Brookes

Of course, on the surface it is not unusual to read something written by an Australian and utter a throaty little WTF?, because they are always coming up with words you never heard of.  Words like budgie smugglers (men’s bathing suits), dinkum (true), fossick (to search for something) and barrack (not Obama).

But duopoly, apparently, is not Australian slang for a bi-sexual parrot, but has direct relevance to the beer industry, and here in the United States especially, where 80% of the beer is sold by one of two Bunyanesque breweries: MillerCoors and Anheuser-Busch.

In economics, the term ‘duopoly’ refers to this kind of market, where two producers of a single homogenous product (beer) have dominant control.  When this situation arises, the pair of players either 1) assume the production levels of the other and produce to match, or 2) in a price vs. quantity war, assume that if one firm lowers price, the other one will not follow suit—otherwise, prices ultimately drop below the cost of each unit, so nobody wants to sell anything because they lose money every time they do.

Nash 'n' Crowe

Nash ‘n’ Crowe

When both congolmerates use identical logic, they find they have nothing to gain by unilaterally changing strategies, so the market winds up teetering in a Nash-equilibrium.

The Nash-equilibrium, by the way, was named for the paranoid schizophrenic John Nash as portrayed by Russell Crowe in the 2001 flick ‘A Beautiful Mind’.

Enough With The Boring Before You Start Snoring… 

Seriously, people; because right here, right now, we all have ringside seats to a genuine, consequential, cuthroat beer war between MillerCoors and Anheuser-Busch, and a war should be many awful things, but it should not boring.  It should be bloodthirsty and violent, filled with split skulls, spilled brains, eyeballs popping out of heads, acquisitions and mergers, entrails pouring into the sand, limbs being severed from bodies while us spectators thumbs-down everything with one hand while clutching a growler of Bell’s Two Hearted Ale in the other because we are snobs and don’t like either brand.

hatfieldsFrankly, MillerCoors vs. Anheuser-Busch makes the Hatfields vs. McCoys look like Dick and Jane playing tag on an elemetary school reading poster, and for years, they were allowed to tear competing labels off ‘rival’ bottles from around the world and slap them on their own greasy, greedy foreheads.  Like most corporations, they are black holes, hungry for every neighboring galaxy.

I really can’t say that it all the fault of George Bush’s administration, because that would be unfair, short-sighted and somewhat iniquitous:  Acutally, there were two George Bush administrations.

Try this:

It’s All the Fault of the George W. Bush Administration

Clipboard logosYou see, Uncle W. and Anti Trust never did get along, and between 2001 and 2009 (Bush II’s reign of terror), with antitrust laws treated as an uneccessary nuisance that hindered capitalism, the beer industry went through a period of juggernaut consolodation that reached its apogee in 2008 when Anheuser-Busch was purchased by Belgium-based InBev and the merger between MillerCoors and London’s behemoth brewer SABMiller, which had purchased the Miller Brewing Company in 2002, thus effectively taking control of these iconic American beers out of American hands and into the hands of limeys and phlegms Flems.

Why Is This a Bad Thing?

A rhetorical question, natch.  But, trust me on this (as opposed to antitrusting me), friends and lovers: It is a very bad thing—almost as bad as that hubristic, pathologically-chummy Texan, whose pseudopopulist accent is a fingernail upon the chalkboard of the soul, returning  to his home state to score top tee-times and watch executions while our American boys and girls (literally) that he deployed to the Middle East are still getting their shit blown away by pissed-off terrorists.

  • It is a bad thing because, with the concentration of corporate power resulting from these mega-mergers, the MillerCoors/Aneheuser-Busch sphere of influence was shifted offshore.  Thus, American shareholders are challenged to attend annual meetings and generate support for shareholder resolutions.
  • It’s a bad thing because the power of ‘The Duopoly’ (henceforth referred to as the Double-Douche Deuce) is suddenly so all-consuming that distributors pretty find their nuts nailed to the brewpub dart board.  They have no choice but to comply with preposterous, and potentially illegal concessions (like agreeing to sell only their brands) or risk having their contracts pulled.
  • It’s a bad thing because it puts Congress in a strait-jacket: Every time an alcohol tax increase is proposed there are threats of brewery shut-downs and job losses.
  • It’s a bad thing because these greedy, gargantuan, geminate Godzillas are able to spend tens of millions of dollars lobbying the Federal Trade Commission, the Department of Commerce, the White House, the World Trade Organization and state legislatures, and thereby influence you-and-me-affecting policies.

stoutI mean, do you honestly think it is us who are enjoying the benefits of an aggressive beer lobby holding down taxes and fighting fee increases?   Don’t make me laugh—I might choke on my Gritty McDuff’s Black Fly Stout.  According to a 2012 study by the American Antitrust Institute, since the mergers were green-lighted by Bush-the-Tush—and, incidentally, much faster than is usual in such heavily-regulated processes—beer prices have risen faster than the Consumer Price Index, even as ABInBev/SABMiller’s share prices, revenues, profits and dividends have increased dramatically.

Now, as a final affront to us bleary-eyed, teary-eyed brothers in brew, Anheuser-Busch InBev has announced that it intends to pay $20.1 billion to buy the 50%  stake in Grupo Modelo of Mexico that it does not already own, thus further pulling the rug from beneath that wholesome, healthy, root-of-free-enterprise and supply-and-demand battle cry:

Competition.

Barack to the Rescue?

Fair to say, the current administration has a slightly more consumer-friendly view of antitrust policies.  Already scuttled? AT&T’s 2011 offer to buy T-Mobile USA and 3M’s purchase of a rival that would have given it an 80 percent market share in office supplies. Now, under Obama’s direction, the Justice Department has filed suit to prevent the ABInBev purchase of Grupo Modelo, maker of Corona and currently the third largest beer company in the country.

The regulatory suit makes a compelling case: Modelo has traditionally competed with the Brewery Brace by keeping the price of Corona stable, even as the big two raised theirs; a textbook example of the Bertrand duopoly model, and the perfect incentive for consumers to transfer Bud Lite loyalty to Corona—and why not?  Both suck equally.

But, it’s a sure bet that Corona’s cost-competitive edge will disappear if the purchase is approved.

sam adams logoThus far, the response from ABInBev has been weaker than lukewarm O’Douls: The company has  the arrogance and audacity to cite the success of Samuel Adams as proof that the ‘little guy’ still has a fighting chance in American beer wars.

Odd that Sam Adams should have been their choice for reference, because—ignoring the fact that Sam Adams is largely contract brewed in numerous facilities, some owned by ABInBev and others by SABMiller, and likewise ignoring the fact that even at well over a million barrels per year (craft/specialty beer industry average = 15,000 barrels per year)—Sam Adams still only accounts for about 1% of U.S. beer sales.

In fact, outside the duopoly, two other breweries, Heinekin and Modelo, represent another ten percent of the market, putting 90% of American beer sales into the hands of four conglomerates, all of them controlled from foreign terroir. 

mickeysWhen you figure that the entire craft brew market is less than 6% of total beer sales in the United States, ABInBev’s argument doesn’t pass the smell test.  In fact, it reminds me of a skunked Big Mouth Mickey’s from those callow, drink-drenched days of boyhood.

And now, by golly, the rumor-that-will-not-die (probably because it’s true) is that the AB/Modelo deal is merely a template to see how the regulatory authorities would react to the perfect storm of antitrust challenges—a final free-market fusion of forty-ounce forces, like something out of an Isaac Asimov sci-fi novel—the merger of AbInBev and SABMiller, creating a mothership of a monopoly.  That appears to be the direction in which both companies would like to head, and with feud history in mind, it’s hardly out of the question: Recall that Roseanna McCoy wound up married to Johnson Hatfield.

Could the unthinkable happen?  Never say never.

Instead, say precisely what a wordmithing, wallaby-worshipping wine writer like David Brookes would say:

“Fair suck of the sav, mate…?!?”
 

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One Response to Barack Buggers Big Beer: Bravo!

  1. Anonymous says:

    Here’s an update on Samuel Adams breweries. The company now owns three breweries and no longer contract brews at big breweries. They bought existing breweries in Cincinnati Ohio in 1997 and a brewery that Schaefer built in (+/-) about seven years ago near Allentown PA. In addition, they have their small headquarters brewery in Boston.

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