What Is Going On In The Beer Industry?

Whatever happened to just taking a seat at the bar and ordering a nice cold one? The business of beer has been big news in the past week, with a tempest over watered-down Budweiser, an ongoing debate over whether an Anheuser-Busch/InBev buyout of Mexico's Grupo Modelo would lead to a "beer monopoly," and a report this morning that beer sales rose modestly in 2012 for the first time since the Recession.

What does all this mean for the average beer drinker? And further, do Bud's problems mean bigger things for the emerging craft beer industry, which some credit with sparking the sales rise last year?

It's probably too soon to tell on both counts. Clearly, Budweiser is not happy about the negative publicity stirred by a proposed class-action lawsuit claiming that the makers of Bud and other alcoholic beverages misrepresented the alcohol content in products such as Budweiser, Michelob, Michelob Ultra, Bud Light Platinum and others. The plaintiffs contend that Bud's parent company was aiming to boost profits by watering down their beers. Anheuser-Busch InBev fired back today, taking out full-page ads in major newspapers to refute the charges.

At the same time, AB-InBev is attempting to push through its acquisition of Mexico's Grupo Modelo, makers of Corona, despite apparent opposition from the U.S. Justice Department. The New York Times Magazine yesterday featured an analysis of the situation, "Are We In Danger Of A Beer Monopoly," that not only broke down the issue of whether the merger of beer giants would be harmful, but included tons of interesting facts about the industry. Who knew that there were 2,336 breweries in the U.S. at the beginning of 2013, with a new one opening, on average, every day? (Some are admittedly small; see our report Nanobrewing Is Blowing Up In New York City.) Or that sales of Budweiser have dropped every year for the past 25 years?

The gist of the Times Magazine article is that so-called monopolies often help rather than hurt their industries, creating increased competition, so the Justice Department's seemingly good intentions in keeping the AB-InBev/Modelo merger, um, on ice, might not be the best result (the Justice Dept. rejected the deal initially but is reviewing it after an appeal).

So back to the craft beer question. Does the apparent buzz around the craft brewing industry amount to even a drop in the $90 billion per year U.S. beer market? A report in today's New York Post credits craft beers and imports for the 1.4% jump, the first since 2007. "People are drinking better beers, more often," a beer industry expert tells the Post.

Still, the news for Anheuser-Busch isn't all bad, according to the Post. The company reported its first rise in shipments last year for the first time since 2008. A modest 0.7% rise, but a rise nonetheless.