Beer giants threaten craft breweries

We’re living in a golden age for craft breweries. Data collected by the U.S. Census Bureau show the number of U.S. breweries grew from 398 in 2007 to 5,766 in 2015.

Iowa alone is home to 70 craft breweries. We rank 14th nationally for the number of breweries per capita. We even have a bar that serves more than 100 Iowa beers on tap.

Craft breweries are a great example of innovative new small businesses challenging monopolistic incumbents. More than 98% of all breweries are locally owned small businesses. These are the type of businesses that grow our local economies.

But the beer monopolies are clever. Anheuser-Busch InBev and MolsonCoors sell 71% of all beer in the USA, which leaves very little room for craft breweries. Yet mega-brewer Anheuser-Busch InBev still finds new and more innovative ways to take independence away from these small businesses. It recently created ZV Ventures, a wholly owned venture capital firm that has been quietly investing in beer ratings websites and delivery services and using them as mechanisms to stifle competition. 

Since 2011, Anheuser-Busch InBev has bought 10 craft breweries, including Goose Island and Elysian, to compete with local craft brewers. Anheuser-Busch InBev’s ownership stake in rating websites could allow it to manipulate the ratings to push the craft breweries it owns rather than its smaller competitors.

Paul Gatza, director of the Brewers Association, a trade association for craft brewers, expressed concern that Anheuser-Busch InBev’s ratings websites could confuse consumers and would be used to try to influence sales. Sam Calagione, founder of Delaware’s Dogfish Head brewery, echoed this sentiment because of the illusion of independence that these sites project.

What is happening in the beer industry is a microcosm for our economy. Economists across the political spectrum agree that monopolies harm small businesses and communities and also lead to higher costs and lower quality for consumers. Yet huge corporations are gaining monopolies in many industries. For example, one company has a 73% market share in baby food. One company has 47% market share in pet food. It happens to be the same company: Nestle.

When the robber barons of the gilded age grew too powerful, visionaries like Teddy Roosevelt stepped in to restore competition. Let’s allow Iowa’s craft breweries to thrive. If we want local small businesses to have a chance in the modern economy, we have to enforce our antitrust laws and stop barons like Anheuser-Busch InBev from robbing us.

Austin Frerick is seeking the Democratic nomination for Iowa's 3rd District Congressional seat. He is a former economist for the U.S. Treasury and a graduate of Grinnell College.