Lawmakers worry AB InBev beer deal will hurt craft brewers

[December 09, 2015]    By Diane Bartz

WASHINGTON (Reuters) - Anheuser-Busch InBev <ABI.BR>, the world's biggest brewer, faced tough questions on Tuesday from U.S. lawmakers unhappy over its plan to buy SABMiller <SAB.L> due to concerns the deal will hurt the fast-growing U.S. craft beer industry.

AB InBev announced the $106 billion deal in November, promising to sell SABMiller's stake in MillerCoors to Molson Coors so it could win U.S. antitrust approval. The company has said it did the deal to expand in Africa, Asia and Latin America.

But in a hearing of the Senate Judiciary Committee's antitrust subcommittee, lawmakers worried about the merger's effect on craft beer, defined as brewing in volume of fewer than 6 million barrels annually. Craft was 11 percent of the U.S. market last year.

Despite the panel's concerns, it will have no say on whether it goes ahead. That decision lies with the U.S. Justice Department.

The AB InBev deal for SABMiller is the latest in a long list of beer deals that range from InBev's purchase of Anheuser-Busch in 2008 to the purchases of craft beers and distributors who deliver beer for both the giants and the new craft entrants.

"What we've seen over the past years is a trend toward mammoth beer behemoths in our market and the result has not been a happy one for many consumers," said Richard Blumenthal, a Connecticut Democrat. "I would urge the Department of Justice to think beyond the divestiture that has been proposed."

He pressured AB InBev chief executive officer Carlos Brito to pledge that he would not terminate wholesalers or squeeze small craft brewers.

"I can commit as a result of this transaction there will be no such a thing," Brito responded. "This transaction is really about the rest of the world. It's not about the U.S."

Lawmakers were clearly sympathetic to craft brewers. "Nobody wants to take a seat at a bar and discover that their only choices are a Bud and a Miller," said Senator Chris Coons.

Craft beer makers have two big concerns. One is that they use the same network of distributors as AB InBev and MillerCoors. AB InBev has purchased distributors, forcing the craft beers they sold to go elsewhere, said Bob Pease, head of craft industry trade group Brewers Association.

Craft brewers also worry about losing access to ingredients and containers they need to make their beer, said Senator Patrick Leahy.

(Reporting by Diane Bartz; Editing by Cynthia Osterman)

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