Dear Mr Brito,
I am writing as the Chairman of the European Beer Consumers’ Union (EBCU) which speaks for the national beer consumer groups of Europe and as such monitors the activities of your company from the consumer perspective.
We focus on matters affecting the European Beer drinker, such as reducing tax burdens for beer drinkers by keeping the cost of a pint affordable, and issues involving the reduction of diversity and the negative affect this has on consumer choice.
Since ABI absorbed SAB Miller and took control of roughly 30% of global beer production, we have become increasingly concerned that your company is seeking to control the global beer market by deploying tactics that have the effect of restricting the opportunities of your competitors rather than promoting your own.
Our research suggests that ABI intends to look at each and every part of the beer business with a view to taking a controlling position and in effect gain unfair advantage by applying pressure at numerous pinch points in the journey that a beer takes from grain to glass.
We have been concerned to hear that ABI has come to own exclusive rights to the use of a hop variety, an unusual move made more concerning by the actions of one of your competitors in copyrighting a strain of brewers’ barley. We understand that first rights to water supplies have been obtained and their validity tested in law. We have heard that there are plans to forward purchase whole hop and barley crops and further massive water reserves.
We have been aware for some time of the massive logistical power, particularly in the areas of packaging, cold chain warehousing and transportation that your company controls, and are concerned at market predictions that a future merger with or absorb Coca-Cola, a company with similar strengths, is distinctly possible. This would have major implications for the consumable liquids market globally.
Several of our member organisations report local sales teams leaning on wholesalers and retailers to accept highly advantageous sales deals for your company’s products on condition that they exclude other brewers’ products. Some claim to have been threatened with withdrawal of supplies altogether if they refuse. While we raise no objection to price-cutting, in EBCU’s view it is never acceptable that these additional conditions are applied to such a deal.
We are further concerned by the activities of your wholly owned subsidiary ZX Ventures, which appears to have bought a stake in the world’s leading consumer ratings website, Ratebeer, without any obvious investment potential beyond seeking undue influence. Its Chief Disruptive Officer is also on record saying that ZXV cannot declare other deals that they have made.
Finally, in sharp contrast to smaller, more local brewers, where the creation of employment opportunities is impressively high, ABI appears to seek only to cut jobs, without much evidence that savings made by doing this are passed to the consumer. Indeed the opposite is true, with there being a tendency for many of your low cost beer brands – most recently in Europe Bud Light – being sold at a premium price that cannot be justified by production or distribution costs.
The threat to the consumer is obvious. Each and every one of these practices tends to disadvantage smaller producers by squeezing their supplies of better-end raw ingredients, limiting their access to markets and subtly pushing up their prices. It smacks of a willingness to use sharp practice to advance competitiveness.
All of these examples suggest that the policies currently being adopted by your company tend mostly to work to the disadvantage of consumers, or at best to pay the consumer little regard. This is particularly worrying given the extent to which your company is buying its way into the craft beer market, an area that has until now espoused an altogether different set of values.
EBCU seeks detailed assurances that the thrust of your company’s global strategy, and European strategy in particular, is not anti-competitive in the ways outlined above. We would also welcome your views on how AB-InBev will sustain and grow a vibrant and diverse beer culture in Europe and beyond into the future.
Henri Reuchlin
Chairman EBCU, The Voice of the European Beer Consumer
