Big Beer

Mike Konczal points out that the market share for the big beer producers has actually grown since deregulation, with craft brews making up only about 4% of total market share, and the top four beer producers claiming about 91% of market share (in 2002).

I’m still not sure this proves that deregulation is a poor response to the situation at hand. For one thing, bizarre alcohol regulations still exist all across the country which make it fairly easy for big producers to gain an upper hand over small competitors. It’s also not as if the big players are going to lose market share over night. They have decades of a head start over smaller competitors, lots of cash, and the ability to keep buying up small brewers to keep competition to a minimum.

I doubt that any of these factors would exist today if not for prohibition and the various post-prohibition regulations that have plagued the beer industry. That’s the trick with deregulation. Depending on where you start from, it can take all sorts of different shapes. It can be really hard to break a monopoly or an oligopoly through deregulation alone if the industry has been too highly concentrated already, and can outspend and out regulate new entrants. Mike makes some very good points about the difficulty small competitors have getting into big box stores and retailers. But again, these big retailers who work closely with the big beer producers are also beneficiaries of government intervention.

Finally, a change in beer drinking habits is going to be largely about a change in personal taste. People who drank Budweiser before deregulation aren’t necessarily going to just switch over to something new and more expensive overnight. The big producers spend gads of money making sure that kids are hooked on their beer long before they reach drinking age.

Is all this indicative of a failure of neoliberalism? I think it’s indicative of the shortcomings of deregulating a heavily regulated market and expecting much to change very quickly. In some cases, I think this shortcoming leaves room for action on the part of the state to actively undo harm it has itself created – breaking up too-big-to-fail banks, for instance. In other cases, I think it points more to a wait-and-see approach. With beer, plenty of regulatory hurdles still exist that hurt small producers all across the country. But I think the big producers will start to see market share losses over time nonetheless. In many ways, this is the first generation of microbrew drinkers. The tide is turning, it hasn’t turned all the way yet.