Craft Alcohol Makers Thrive as Government Launches Antitrust Investigation –

Recent developments Executive orderThis summer, the Biden administration directed federal agencies to investigate anticompetitive barriers across dozens industries. The order was headlined for its potential impact on Big Tech but it also covered America’s most beloved pastime, alcohol.

According to the executive order the Alcohol and Tobacco Tax and Trade Bureau is (TTB) To be taskedWith investigating the “conditions of competition” within the drink industry. TTB called for comments from the public on concerns about competition in the alcohol sector in July. TTB regulators now have to close the comment period and begin considering any action. They should be quick to realize the true nature of the situation. Alcohol competition is a problem They are not as they appear at first blush.

There has been consistent calls to increase antitrust scrutiny for American alcohol markets. ThemeFor many years, left-leaning circles have been thriving. Anheuser-Busch’s highly publicized 2016 campaign is the major reason behind this hand-wringing. AcquisitionSAB Miller, and also It’s splashyStories about Big Beer purchasing up microbreweries

Alcohol regulators need to take an honest look at all the facts before they jump on board with antitrust. American’s unique alcohol industry has three distinct sub-sectors. Wholesalers, producers and retailers. The tiered system dates back to Prohibition and every state has its own laws that require each tier to be legally distinct.

This rule makes it almost impossible for producers, such as craft breweries, to have a storefront or restaurant. The brewery must instead sell their beer to wholesalers, who in turn sell the beer to retail outlets, which then sells the beer to customers.

This complicated system means that each of the three levels must be examined individually to identify potential problems. Any honest effort to do so quickly leads to only one conclusion: Alcohol markets are more competitive than ever—with the exception of the wholesale tier.

Producers such as wineries and breweries are the first level. In the age of craft alcohol, there are more alcohol producers. Contrary to headlines about Big Beer buying up microbreweries in a mad rush for profits, overall market share is stable. ShiftedFrom larger to smaller brewers, by 5 percent since 2010.

There are so many new products. Breweries that opened in America over the last several decades also underscores just how dynamic the American brewery sector is: In 1991, there were 312 breweries in America; in 2020, there were 8,884—only 120 of these are categorized as non-craft/large breweries. Big Beer’s popularity is actually declining and not growing. This is The distilleryAnd WineryAs more craft producers are introduced to the market, similar stories emerge in other sectors.

Retail tiers of alcohol are also very competitive. You can buy alcohol anywhere, from the nearest bar to the grocery store and football stadiums. Only 50 of the largest alcohol retailers in America are listed. 25 percent market shareThis makes it nearly impossible for one entity to have undue influence at the retail level.

However, wholesalers are consolidating rapidly in contrast to retailers and producers. Wholesalers of spirits and wine have increased in number. RejectedThe number of people who have been diagnosed with cancer has increased from 3,00 in 1995 to 1,200 in 2017, and the rate of increase is now at Beer wholesalersFrom 4,595 in 1980, to just 3,000 in 2020, the number of wholesalers fell by 5%. Large wholesalers are increasing their sales. DominanceMarket share: In 2010, the top 10 distributors of wine and spirits accounted for 59% of the market, but they now account for 75 percent. Even worse, many alcohol producers note that their products are effectively empty of all the ingredients. One or more choicesFor wholesalers on most local markets, this means creating an a de factoDuopoly is possible in several regions.

It is not the intention of anyone to see American alcohol markets become monolithic or concentrated in just a handful of large corporations. The times are changing and both alcohol retailers and breweries have access to a healthy and vibrant marketplace.

Wholesaler consolidation can be a problem, but the best solution is to dismantle the three-tier artificial system completely to eliminate the wholesaler bottleneck. Produces would be able to sell directly to customers and reduce their influence over the wholesaler tier. Although some people consider the three-tier system vital, it is only one option of several regulatory alternatives that can be used to make sure alcohol is safe handled and sold.

It is possible to improve competition in American beer markets by Reduplication The role of the government is enhanced by antitrust scrutiny, but not through reforms to its three-tier structure.