The $100 billion US beer market is about to get shaken — again.
Molson Coors Brewing Co. is expected to announce Wednesday that it will acquire full control of the Miller and Coors brands in the US for $12 billion, according to a report.
The two popular beer brands have been owned since 2008 by a joint venture that the UK’s SABMiller had a 58 percent stake in.
Denver’s Molson Coors Brewing Co. owned the rest of the JV, called MillerCoors.
But with the world’s No. 1 brewer, Anheuser-Busch InBev, expected on Wednesday to announce a deal to buy the No. 2 brewer, SABMiller, the British beer maker needed to unload its US operation in hopes of gaining regulatory approval of the ABI deal.
Molson’s shares rose 1.1 percent on the news, to $88.29.
Ironically, the Department of Justice in 2008, after an eight-month review, allowed the JV to be formed — believing it would become a “more effective beer competitor” to ABI.
That did not happen.
ABI has actually increased its US market-share lead over MillerCoors from 2009 through 2014, to 14.9 percentage points — up from 14.6 percentage points — according to a McKinsey analyst report based on dollar sales.
Overall, ABI in 2014 had a 41 percent slice of the US market; MillerCoors had 26 percent.
Also, the joint venture has not been innovative in launching new products, sources said.
MillerCoors said it will close its Eden, NC, plant next year to save costs.
As a result, the sales of the JV to Molson Coors may not be enough to gain US regulatory approval, sources said.
“Absolutely, the DOJ will look at what was the effect of the joint venture and if there is an opportunity to fix it,” a well-placed DC source said.
Part of the concern, too, is that the JV acts as a stand-alone entity, concentrating the bulk of America’s brewing into only two entities, instead of three.
ABI should be able to sell SABMiller’s stake in the venture to a party other than Molson Coors, which could change the competitive landscape, one anti-trust expert said.
ABI is buying SAB largely for its strong presence in China and throughout Africa.