Would Americans Drink More if Beer Were Cheaper?

An interesting read from Boston.com:

Britain’s problem, journalist Tim Heffernan explains, is that beer in the UK is extremely cheap. And it’s really cheap because the big beer companies there are highly vertically integrated: They brew the beer, distribute the beer, and sell the beer to consumers. This total control of the distribution chain allows brewers to cut out middlemen and keep prices low—and the cheaper beer is, the thinking goes, the more of it people will necessarily consume.

In the United States vertical integration of liquor companies has been illegal since the end of Prohibition.

But as Heffernan shows, beer companies in the U.S. are beginning to find ways around these regulations. For one, the beer industry has undergone massive consolidation to the point where just two companies—Anheuser-Bush InBev and MillerCoors—now control 80 percent of the U.S. beer market, and these two mega-brewers are using their clout to cut into distributors’ margins. For two, retail sales of alcohol are increasingly consolidated through big box chains like Walmart and Costco, which thrive on cutting prices and boosting volume and which give the two big brewers potentially more direct access to consumers. The net result, Heffernan worries, is that soon American brewers may be able to drown U.S. drinkers in beer the way U.K. brewers do.
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