Anheuser-Busch InBev NV CEO Carlos Brito, attempting to allay concerns about the company’s proposed $110 billion acquisition of SABMiller, said Tuesday would increase domestic beer competition, not weaken it.
While the megamerger would open new markets for AB InBev, Brito said it wouldn’t boost the Budweiser maker’s market position in the United States.
To make sure that’s the case, the Leuven, Belgium-based company plans to sell SABMiller’s 58 percent stake in MillerCoors to joint-venture partner Molson Coors for $12 billion as it seeks to gain approval from the Justice Department.
“The purpose of this transaction is to enhance our ability to serve new markets, particularly in Africa, Asia and Central and South America,” Brito said at a Senate Judiciary subcommittee hearing in Washington. “If anything, our divestiture of SABMiller’s interest in MillerCoors will create an even more competitive marketplace, building upon what is already a golden age of consumer choice in American brewing.”
The hearing was called to examine the impact of the merger, which would create an entity accounting for about half the industry’s profit and almost a third of all beer sold worldwide.
The combined company would hold the No. 1 or No. 2 positions in 24 of the world’s 30 largest beer markets. The Senate subcommittee has no power to block the merger.
Brito said the merger would not only keep competition in the U.S. beer industry where it is today, but would in fact boost Molson Coors’ ability to operate.
Brito was joined by Molson Coors CEO Mark Hunter in saying that independent wholesalers will remain unchanged after the merger.
“Nothing from this transaction will impact any distributor,” Brito said.
MillerCoors currently owns one distributor and Molson Coors has no intention of buying others, Hunter said. In the U.S., the merger will change nothing other than removing one of MillerCoors’ two parent brewers, he said.
“It will not change consumer choice, it will not change the competitive pricing environment, it will not change our market share or our longstanding support for the three-tier system, it will not change our support of U.S. growers and suppliers, and it will not change the explosive growth of craft brewers or their access to the market through the MillerCoors distributor network,” he said.
Brito’s comments were contradicted by Bob Pease, CEO of the Boulder-based Brewers Association, which represents the independent craft-beer industry. He cited the beer giant’s influence over U.S. wholesalers as an example of the company’s unfair competitive edge over smaller players.
“In communities where ABI or a closely related wholesaler is one of two choices for a brewer to access the retail market, the wholesale tier is simply not competitive,” he said.
Sen. Richard Blumenthal, a Democrat from Connecticut, said brewer consolidation over the past few years has created “beer behemoths” that have harmed consumers. AB Inbev’s takeover, he said, should be viewed with a “high degree of skepticism.”
“Through the eyes of consumers, the result has been higher prices,” Blumenthal said. “These megamergers may have been good for shareholders, but not so much for beer drinkers.”
Brito repeatedly told senators that the deal wouldn’t affect craft brewers and their access to consumers. The U.S. beer market “has never been so competitive and so open,” he said.
Sen. Chris Coons, a Delaware Democrat, said he wasn’t so sure.
“Nobody wants to take a seat at a bar and discover their only choices are between a Bud and a Miller,” Coons said.
Some lawmakers said they wanted to ensure that the deal doesn’t restrict distribution of craft beer or their access to ingredients. If those brewers are “squeezed off the shelf” because AB InBev gains power over distribution, consumer choice will be reduced, said Sen. Patrick Leahy, a Vermont Democrat.
“I want to make sure they have a level playing field,” Leahy said. “I don’t want them closed out because they can’t distribute.”
