The Battle Of Our Beers - Or: Is Nothing Sacred?

Headquartered in Belgium, InBev was formed in 2004 when market leaders Interbrew and AmBev merged, creating a beverage behemoth possessing over 200 brands and selling 202 million hectoliters (hl) of beer -- enough to fill over 8,000 Olympic swimming pools -- and 31.5 million hl of soft drinks a year. InBev is one of two multinationals that share control of 90 percent of the Canadian beer market. The second player is Molson Coors, the result of a 2004 merger between historic Montreal brewery Molson and the Colorado-based Coors. Molson Coors is the fifth largest brewer in the industry worldwide, sporting a portfolio of over 40 brands. These two companies own Canada’s four most popular beers, Budweiser, Molson Canadian, Labatt Blue and Coors Light. They also own a number of regional breweries that consumers do not tend to associate with multinationals, such as InBev’s Keith’s and Kokanee or Molson Coors’ Creemore Springs. Over half of the remaining ten percent of the Canadian market is controlled by Sleeman Breweries, based in Guelph, Ontario. In recent years Sleeman has increased its market share by swallowing several regional breweries, including Quebec’s Unibroue, Upper Canada Brewing of Ontario, British Columbia’s Shaftebury and Okanagan Spring breweries, and the Maritime Beer Company. Sleeman also has distribution agreements for several international brands, including Guinness, Kilkenny, Harp and Grolsch. After Canada’s big three corporate brewers take their share, only four percent of the market remains for independent microbreweries. As a result of this market concentration, Molson Coors and InBev are able to throw around a lot of weight in the marketplace through their Canadian subsidiaries, Molson and Labatt. The struggle between independent and multinational brewers has been particularly evident in Quebec. The Quebec Association of Microbrewers charged Molson and Labatt with engaging in "anticompetitive acts," including demanding exclusivity contracts with bars and imposing restrictions on advertising, measures that prevent independent brewers from promoting and selling their products. The case went to the Competition Bureau of Canada, which dismissed it after an investigation in 2003, citing growth in certain Quebec microbrews and a lack of explicitly predatory pricing. Rather than disproving the claims, however, the Bureau's report appears to have confirmed many of them. "Molson and Labatt had entered into agreements with several of their clients that included clauses restricting their competitors," stated the Competition Board in its ruling. "The analysis showed that such contracting practices were becoming increasingly widespread and were covering an increasing volume of beer in Quebec." A more recent inquiry completed this past December by the Competition Bureau found that Labatt sales representatives in Sherbrooke, Quebec had engaged in anti-competitive practices by offering free beer and money to some store owners to ensure they kept beer prices high during a particularly competitive period. These practices continued even after the Bureau began its investigation. Labatt pled guilty to the charges and received a $250,000 fine. The salespersons involved in the illegal activities have retained their jobs at Labatt. Both Molson Coors and InBev’s Labatt have also become involved in politics, spending profits on supporting a conservative political agenda. The Coors family, founders of the Coors Corporation and major shareholders of Molson Coors, founded the Heritage Foundation, a right-wing pro-Republican think-tank, and have a long history of supporting conservative groups and promoting laissez-faire economic policies and Christian fundamentalism. Pete Coors used brewing profits to launch his unsuccessful candidacy to the US Senate on a Republican platform, and Labatt, for its part, was a major contributor to the Conservative Party of Canada in 2004. Although it has since cleaned up its corporate practices, Coors was also the target of a twenty-year boycott by gay-and-lesbian and ethnic-minority groups in the United States for their homophobic and racist practices in the workplace. Despite the strength of their hold on the Canadian market, the savvy consumer can still avoid the Molson-Labatt duopoly. Over 100 microbreweries exist in Canada, at least one in each province or territory. Unclear labeling, however, will mean a consumer has to do her own research if she wants to support local alternatives to these multinational corporations. Reprint rights: Non-profit publications (including the student press) can reprint articles free of charge, if the author's name and "The Dominion" appear in the byline, and the address http://dominionpaper.ca appears on the same page as the article. http://dominionpaper.ca/business/2006/01/26/the_battle.html [Proofreader's note: this article was edited for spelling and typos on February 5, 2006]

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