Too Big to Ale? Globalization and Consolidation in the Beer Industry

Abstract

The global beer industry has transformed dramatically in recent decades. Two key trends include (1) consolidation resulting from mergers, acquisitions and joint ventures, and (2) the largest firms expanding into new regions. While beer was previously a very local product, these trends have combined to result in approximately half of global sales being controlled by just four firms: AB InBev, SABMiller, Heineken, and Carlsberg. Notably, these top four companies are all headquartered in Western Europe. The primary products of the largest firms are pale lagers, with ales and numerous other potential beer varieties produced only in much smaller quantities, if at all. Why are these changes occurring now? Many other industries, including soft drinks, have seen a small number of companies achieve global dominance earlier than the beer industry. Recent policy and technological changes, however, have eroded many barriers to consolidation and geographic expansion for beer firms. They have enabled the largest firms to exert more political and economic power, and to move closer to the endgame of a global monopoly. These trends are not inevitable, however, and are countered by (1) the rise of specialty brewers and their much more diverse selection of beer varieties, and (2) cultural barriers to the global branding and marketing of beer.