MillerCoors faces antitrust investigation on brewery closure

The Teamsters Union have struck a small victory. North Carolina has decided to investigate MillerCoors’ decision to close its Eden brewery, U.S. media reported on 30 March 2016. The East coast state will join the U.S. Department of Justice in its antitrust investigation into the merger of AB-InBev and SABMiller, the latter being one of the current co-owners of MillerCoors.

The decision to close the Eden brewery in six months’ time, after 38 years in the community, was made public in September last year at about the time AB-InBev made overtures to SABMiller. The Teamsters Union, which represents the 520 Eden brewery employees who received notices that layoffs will begin in June, alleges that the brewery closure is related to the mega merger. It is believed that Molson Coors, the buyer of SABMiller’s stake in MillerCoors, found the brewery surplus to requirements and did not want it included in its separate deal with AB-InBev.

The Teamsters argue, somewhat unconvincingly but politically effectively, that the brewery closure will result in high beer prices since it will delete about 4 percent of the entire U.S. beer production capacity.

However, there is little doubt that MillerCoors is burdened with excess brewing capacity. MillerCoors’ beer sales totalled 64.5 million barrels in 2008, according to trade publication Beer Marketer’s Insights. By 2014, that had dropped to 55.8 million barrels – that’s a loss of 8.7 million barrel (over 10 million hl), or perhaps about the output of a single brewery within the MillerCoors system.

The overall U.S. market for beer declined 0.2 percent in 2015, according to the Brewers Association. That, plus almost a decade of declining sales volume at MillerCoors, is the reason the Chicago-based company cites for closing the Eden brewery.

Now North Carolina’s Attorney General Roy Cooper plans to investigate the brewery closure. Reportedly, he is even looking for a buyer to keep the brewery operating in North Carolina. He may be a bit overoptimistic because who will need a brewery with a capacity of over 7 million barrels beer these days?