Despite the more than 9000 breweries currently online across the nation, two major companies own 65 percent of the market. And a recent report by the Treasury Department suggests that the government isn’t comfortable with that…

Here’s the deal….

In spite of the incredible growth of the craft beer industry, which began in the late ‘70s but really came into its own in the ‘90s, the beer industry is still dominated by two majors, Anheuser-Busch and Molson Coors.

(Courtesy Anhueser-Busch)

Craft breweries are largely small and increasingly local operations with limited reach and smaller aspirations, while Anheuser-Busch and Molson Coors are global.

No matter the strides that American craft breweries have made, these two majors still dominate, but a new report by the US Treasury has given President Biden the ammunition to radically reform the production and distribution of alcohol in the United States.

The 64-page report found that America’s beer drinkers pay up to $478 million per year more than they should. It also revealed troubling barriers to entry to the alcohol markets.

The Competition in the Markets for Beer, Wine, And Spirits” report was the result of the Biden administration’s executive order on Promoting Competition in the American Economy, an effort to find ways to improve competition in the alcohol industry.

Over six months the Treasury received submissions from more than 800 consumer groups, industry bodies and other interested parties, and its findings may have given President Biden the ammunition he needs to radically reform the production and distribution of alcohol in the US.

“Two major industry trends mark the last several decades,” the report revealed. “The first is significant growth in the number of small and ‘craft’ producers of beer, wine, and spirits. There are now over 6,400 operating breweries in the United States, up from a low of 89 in the late 1970s,” the report states…

(Courtesy Molson Coors)

“However, the second trend is one of consolidation, particularly at the distribution and/or retail levels for beer, wine, and spirits and at the production level for beer. In many states, there has been significant consolidation in distribution. Additionally, two brewers have dominated the U.S. markets since 2008 and today account for an estimated 65 percent of the beer market nationwide, as measured by revenue.”

The report found that despite the “flourishing of small craft producers in local markets, the beer industry still wasn’t as competitive as it could be.

The report recommends a series of reforms including stricter merger and acquisition scrutiny by the Department of Justice and Federal Trade Commission to “better level the playing field” for small businesses, which as the Drinks Business reports “tend to struggle against bigger companies with pricing power.”

The Treasury also wants  to reform “outdated” state and federal regulation, some of which date back to the end of Prohibition in 1933, which established the “three tier system,” a process thought by many to limit new entrants the same access to the market that majors like Anheuser-Busch and Molson Coors enjoy.

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