I visited the Anheuser-Busch factory over the summer and was surprised to see Leffe on tap at the in-house bar. That’s right: Leffe, the Belgian beer with the old-timey script and a medieval monastery-looking thing on its label, is now owned by the same company that brews Budweiser.
Perhaps I shouldn’t have been so surprised. Big beer companies have been acquiring smaller, more flavorful rivals for decades, and there have been several huge cross-border mergers in recent years. In fact, it wasn’t because Anheuser-Busch bought Leffe that it was on draft at the factory; it was because Leffe’s Belgian parent, InBev, bought Anheuser-Busch in 2008.
Yet when news broke last week that two beer juggernauts, Anheuser-Busch InBev and SABMiller, were considering a $100 billion-plus merger, it got people’s attention. If successful—which is still a big “if”—the deal would create a combined company that produces more than 30% of the world’s beer, according to Euromonitor International. (A “beer monster” in the words of The Economist.)
So, what does this all mean?
If you have nightmares about all your favorite brands gradually blending into one sad, foamy, yellow drink, the news is probably a bummer for you. On the other hand, if you enjoy the crisp, boring flavor of Bud, you’re in luck! Not only do AB Inbev and SABMiller want to keep you drinking those beers, but they are unlikely to raise prices on them, even if they merge.
One reason AB Inbev wants to buy its British rival is that people aren’t drinking as much of its beer. It’s the same issue that big soft-drink companies face: consumers are moving toward beverages that are higher-end, have more unique flavors or have healthier ingredients. Others won’t drink big beer brands on principle.
As a result, profits at both AB Inbev and SABMiller have come under pressure. If the two companies can’t sell more beer on their own, they might be able to sell more of each other’s beers to each other’s customers, and cut costs by merging. And while regulatory concerns about mergers usually have to do with a lack of competition sending prices higher, those concerns don’t seem especially relevant here.
That's because the two companies have relatively little geographic overlap and, as the Economist story notes, it would be pretty painless to divest the couple of brands where they do. Also, a 2013 study of Miller-Coors showed that big beer mergers don’t necessarily result in higher prices over the long run, because the combined company saves enough money to render it unnecessary.
In fact, AB Inbev and SABMiller—alone or together—would hurt themselves by jacking up prices on their Average Joe beers, since there’s already a lack of demand. So, it’s unlikely that prices will flare up significantly for reasons other than taxes or inflation.
Whatever happens, big beer will keep lusting after your favorite craft brews, occasionally buying the ones that sell out, so enjoy them while they last.
I oversee Fusion's money section and have spent most of my time as a journalist writing about banks and finance. I live in Brooklyn with my partner Geoffrey & our two dogs, Captain & Tallulah. Favs: leopard print, Diet Coke, gummy candy, Ireland.