The U.S. Justice Department has blocked a move by AB InBev, makers of Budweiser and several other beers, to purchase rival brewer Grupo Modelo, parent company of Corona. Going after the company was a strategic move, but not in the way some would expect. While buying Grupo Modelo would eliminate them as a rival, AB InBev actually has much smaller fish to fry. The main goal is to keep the little guy from getting too big a piece of the pie.
The little guy, in this instance, is smaller, craft brewing companies. According to the Huffington Post, craft brewers are on the rise. While in 1994 there were only 537 craft brewing companies, as of July 2012 there were over 2,000. Compare that to a 13% decline in Budweiser sales between 2009 and 2012, and you'll see why the company is scared of what the future may hold.
Internal documents obtained by the Justice Department support that fear, reading, "We must slow the volume trend of High End Segment and cannot let the industry transform." AB InBev currently controls 39% of the beer market, compared to the 5% controlled by the craft beer industry. Should the purchase of Grupo Modelo be approved, AB InBev would would control 46% of the market, giving them the ability to stifle their competition and control price.
In a statement, the beer company said they would "vigorously contest" the block, calling the move "inconsistent with the law, the facts and the reality of the marketplace."
It's likely craft brewers everywhere would disagree with that sentiment.
Photo/Video credit: Getty Images
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