Wednesday, September 16, 2009

Beer Duopoly

"Whenever there are only two companies (in an industry), there is a tendency for prices to rise," Gitter said. "As long as they're willing to follow each other, they can keep (raising prices)."

From a recent article on the rising price of beer from Gerald Ensley at the Tallahassee Democrat.

In short with the merger of Miller and Coors now two companies MillerCoors and Anheuser Busch control 80% of the US beer market. Most people know a monopoly is when one company controls a market, when two companies control a market its called a duopoly. The two companies can't legally work together to raise prices like a monopoly (that's called collusion), but one can raise their price and hope the other follows to maintain higher prices.

The Wall Street Journal chronicles the price increase that is coming and points like I did to the new duopoly.

As I suggested to Ensley, the only way to fight these companies is to grab another beer brand, I myself fought the duopoly last night with a frosty Sam Adams (which sells 8% of the market).

But if Sam follows suit, I'm still OK because I can always relax and have a homebrew.

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1 comment:

rjgitter said...

Well, I don't view this as a duopoly problem. With Bud and Coors it is more like an effluent charge for producing a pollutant. Ahhh, for a Rogue Dead Guy Ale about now.