The beer industry continues its global consolidation with Belgium based InBev making a $46 billion offer for US brewer Anheuser-Busch. It is expected the bid will be rejected, but regardless of the outcome of this corporate battle, most beer industry analysts expect to see more mergers.
While the global beer giants merge, small craft brewers are having a greater competitive impact on the industry. MSN has an interesting article on this topic called Will microbrews kill the King of Beers. The gist of the article is the growth of craft brewers (small, independent brewers that produce less than 2 million of barrels of beer per year) is putting a lot of competitive pressure on big beer companies.
In our most recent forecast report we use the beer industry as an example of an industry moving to a barbell structure comprised of relatively few global giants, lots of small firms and very few mid-sized firms. In 1980 the US beer industry had fewer than 20 craft brewers with a negligible share of the US beer market. Today there are over 1400 and combined they own about 6% of the US beer market.
In 1980 there were roughly 35 national beer companies that controlled about 70% of the US beer market. By the end of this summer, 2 companies (Anheuser-Busch and the combination of SABMiller and Molson Coors) will control over 85%.
We're seeing this structure happening in almost all industries. The need for global scale and investor and competitive pressures are driving big companies to get bigger (see our recent post Will Large Corporation Survive). And small firms are exploiting the growing number of niche opportunities either too small, too specialized or not attractive to the giants.
We expect this trend to continue over the next decade with more industries having a barbell structure.
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