I drink my beer from a can, don’t take away my choices
By Lindsay Lewis
Over the last several weeks, there has been increased focus and attention on the competition and antitrust debate in Washington. There has been a debate about the connection between these policies and efforts to address historically high inflation. With real consequential decisions looming for consumers, it’s perplexing why the administration chooses to focus on industries that provide consumers with more choices of quality products at competitive prices, such as the beer industry.
Yet, the Biden administration has voiced its concern. In a February report, the U.S. Treasury claims that the beer industry is facing increasing consolidation, lessening consumer choice, and ultimately asks that regulators evaluate whether mergers in the beer industry are providing fewer options for American customers.
Research shows that voters do not agree with the administration’s assessment when it comes to beer. A series of PPI commissioned polls found that when asked about concentration and competition within various sectors of the economy, 77% of voters responded that they do not currently support the government taking action to increase competition within the beer industry — reinforced with the reasoning that new rules imposed on the beer would raise the price they pay at the store. The lack of support is especially significant when compared to opinions on competition in industries like prescription drugs or health insurance. When polled, roughly 70% of voters support government action to increase competition in these industries, sending a strong signal of where the American people are feeling the impact of consolidation in their everyday lives.
When it comes to prices, this impact is not felt as much in the case of beer as in other items. Despite the assertion that a current lack of competition between beer companies is resulting in more expensive products, only 12% of voters say that beer prices have gone up a lot, while more than 80% say the same about necessities such as gas, housing, and groceries — an industry where consolidation poses a more significant concern.
The data is supportive of voters’ views on these trends. Looking at prices over time, the Bureau of Labor Statistics has reported that between 2017 and September 2022, the price of beer, ales, and other malt beverages consumed at home rose at a 2.7% pace. For comparison, the price of all food consumed at home rose at a 4.4% rate over the same period, and the price of non-alcoholic beverages at a 4.5% pace. Additionally, during the inflationary surge of the past year, beer consumed at home has had one of the lowest price increases of any food or beverage item.
The relatively slow growth of beer prices can be attributed in part to an increase in the number of breweries. In a report from the administration earlier this year, the Treasury Department noted that the market share held by the biggest companies in the beer industry has trended downward in recent years, all while there has been “significant growth in the number of small and ‘craft’ producers of beer” in the last few decades. The beer industry has undergone massive growth and continuous change with a positive reaction from the consumers, thanks in part to the popularity of craft breweries.
In 2021, the United States boasted over 9,000 domestic breweries — a significant leap from the roughly 4,800 active breweries in 2015. For American beer drinkers, this is good news, as it offers more choices. As major players in the beer industry grow, they do so to keep up with the growth seen across the industry, a trend which has not resulted in higher prices while giving way for new, innovative products facilitated by small businesses and enjoyed by consumers.
But, it goes beyond great products and brands. The beer industry supports more than 2 million American jobs across this country. And, these opportunities touch nearly every part of the U.S. economy — union workers, farmers, bartenders, brewers, retail workers, raw material suppliers, and many more.
It’s clear that beer isn’t the problem, and that consumers will continue to enjoy.
Having a beer may cure what “ales” you, but going after beer won’t cure the economic and inflationary issues our country is facing. Regulators should focus on industries where Americans are feeling the effects of consolidation and less on where price and access all point to robust competition, like beer.
Lindsay Lewis is the Executive Director at the Progressive Policy Institute.