That Big Beer Merger Might Make You Pay Too Much for Your Brew

By Mike Pomranz |
FWX WHISKER DAM_0

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As the big Anheuser-Busch merger with SABMiller slowly gets finalized, one of the primary questions remains, how will combining the two largest breweries in the world affect the beer market? To help satisfy American regulators, the new beer behemoth has offered to sell its Miller brands to Molson Coors so that Anheuser-Busch brands and Miller brands won’t be owned by the same company.

One fear regulators have is that if all these brands have a single owner, it could drive up prices, and as the Washington Post’s Wonkblog points out, there may be good reason to worry – because it appears its happened before.

The last major merger to happen in the US market was when SABMiller and Molson Coors created a joint venture known as MillerCoors in 2008. In an extremely revealing chart, you can see that the prices of the big three light beers – Bud, Coors and Miller – which had actually been declining in price over the previous eight years, suddenly jumped back up after that agreement. Comparatively, two other beer brands, Corona and Heineken, continued on their previous rates of decline.

The two economists who analyzed the data, Georgetown's Nathan Miller and Drexel's Matthew Weinberg, reminded the Post, “As is often the case with economic analyses, some alternative explanations cannot be ruled out solely on the basis of the data.” However, they explained their findings thusly: “The price increases that we estimate exceed the predictions of a standard economic model, accounting for changes in demand and cost conditions. This is consistent with tacit collusion between ABI and MillerCoors that emerges after the consummation of the MillerCoors joint venture.”

It’s all a reminder that, even though light beers are cheap, you still might be paying too much.

Related: How to Tell if You're a Beer Geek or a Beer Snob
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