US Treasury seeks to shake up alcohol market to help smaller participants

The Treasury Department of U.S raised concerns about consolidation in the $250 billion-a-year domestic alcohol market and outlined reforms to boost competition and save consumers hundreds of millions of dollars each year.

New controls on mergers and acquisitions, different tax rates and the removal of regulatory burdens for new entrants to the wine, beer and spirits market would make the market fairer for new manufacturers and cheaper for consumers, the Treasury said in a 63-page document.

The long-awaited report is part of a July decree on competitiveness. His focus on the beer industry, in particular, marks the latest push by the government of Joe Biden to fight what it sees as overconsolidation in industries from meatpacking to transportation.

In response to more than 800 public comments on the matter, Treasury suggested in the report stronger oversight by the Department of Justice and the Federal Trade Commission, stronger enforcement of existing rules, and the development of new ones.

“American consumers, small business owners, entrepreneurs and workers should not suffer from a highly concentrated beer industry,” said Assistant Attorney General Jonathan Kanter. “Authorities should have the courage to learn and the strength to enforce the law and protect competition.”

The US market for beer, wine, and spirits has spawned thousands of new breweries, wineries, and distilleries in the last decade.

However, a web of complicated state and federal regulations, some of which date back to the end of Prohibition in 1933, coupled with “exclusionary behavior” by producers, distributors and mass retailers, means that small players can find it difficult to compete and thrive, US officials said.

The two largest companies that sell beer in the United States – Anheuser Busch InBev and Molson Coors – account for 65% of revenue.

“We are determined to protect what has been a thriving and vibrant industry, entered into by many small businesses,” while also addressing issues that “lead to excessive prices for consumers,” a senior official said.

Laws restricting price competition cause beer consumers alone to pay $487 million more a year than they should, and can drive up the cost of a bottle of wine by up to 18% and a bottle of liquor more than 30%, according to the report, which cites studies.