Yuengling opposes DOJ settlement with AB-InBev
In a recent letter to the anti-trust watchdog, the Department of Justice (DOJ), the nearly 200-year-old brewer D.G. Yuengling & Son objects to the terms of the settlement between the DOJ and AB-InBev forged in July 2016, which was a precondition for AB-InBev’s takeover of SABMiller.
The family-owned Yuengling worries about AB-InBev’s ensuing oversized influence over the channels of distribution in the US. The brewer, based in Pottsville, Pennsylvania, feels the squeeze acutely, because unlike many super-premium craft beer brands, its beers are priced to compete directly with blue-collar beers such as Budweiser and Bud Lite.
The DOJ settlement requires AB-InBev to sell off SABMiller's US business, including its interest in MillerCoors, divest its right to sell and brew certain SABMiller beers in the U.S. and abandon its worldwide interest in the Miller brand, as well as making some distribution concessions.
But Yuengling said the agreement doesn’t do enough to prevent the new company from dominating distribution channels, limiting the ability of independent brewers to reach their customers and expand territory.
Allegedly, AB-InBev has aggressively fought Yuengling’s expansion into new territories, such as Mississippi, by leaning on distributors, most of which are dependent on AB-InBev for 70 to 90 percent of their sales.
While Yuengling is the largest independent brewer in the US with an estimated turnover of USD 500 million and sales of 3.4 million hl in 2015, its volume still makes up only 1 percent of the beer market. And while craft-brewers might not feel too threatened by AB-InBev now, that could soon change as soon as AB-InBev buys up more microbrewers and cranks out their pricey beers.
“Yuengling considers recent events and the proposed merger as one of the biggest threats to its existence, short of a second round of Prohibition,” the company wrote in the letter.
It has asked the Justice Department to reconsider its approval of the deal, or impose more restrictions on AB-InBev because the proposed measures regarding distribution don’t go far enough, Yuengling said.
The DOJ’s proposed settlement is awaiting final federal court approval.
