Chapter 1

U.S. Beer Industry

Industry Concentration

During the 1950s and through to the 1980s, the U.S. beer industry experienced a period of consolidation as the large national brewers grew larger, and numerous traditional regional breweries went out of business. The decline in the number of regional breweries can be attributed to many reasons. Consumer preferences were shifting away from dark, strongly flavored beers to lighter, drier beers. But it was the regional, smaller brewers who generally specialized in the darker, more flavorful beers, while national and some regional brewers generally produced lighter beers.

Technological Improvements

Beer prior to World War II was distributed to wholesalers and then to retailers within an extremely limited geographic region, by today's standards. Beer was a relatively expensive product to transport considering its value, so any brewers wishing to expand their sales area had to consider freight costs in shipping to other markets.

Economies of Scale

For national brewers, internal expansion led to increasing the size of plants, improvements in packaging, introduction of automated breweries, the development of special fermentation processes, and the building of additional plants.

Advertising Expenditures

The rise in concentration can also be attributed to the skyrocketing growth in advertising expenditures-during the 1950s and early 1960s as well as during the 1970s and early 1980s-undertaken by the national brewers.

Mergers

Mergers played a role also, but they accounted for only a small share of the increase in concentration due to very strict enforcement of antitrust laws by the Justice Department.

Price Wars

Another behavior employed by the big brewers was price wars, especially in the 1970s.

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