The Brewing Industry
There are three types of beer brewers in the United States: giants like Anheuser-Busch and Miller, importers, and craft brewers. The United States brewing industry began in 1625 when the first brewery was founded. After prohibition the number of breweries sharply declined as most brewing companies went bankrupt between 1947 and 1995. This decline was mostly due to the rapid growth and volume that the four major companies were able to produce. According to Victor and Carol Tremblay, by 1980 Anheuser-Busch, Miller Brewing, Pabst, and Stroh’s made up nearly 80% of the beer market.
The brewing industry is different from many other industries. It is not governed by laws regarding patents or exclusive grants. The inputs required for brewing beer are not controlled by a majority firm and the supply for brewing materials is fragmented. Any new brewer attempting to enter the industry would have to invest heavily to establish a strong reputation and brand awareness and would need to establish a network of suppliers and distributors. The cost becomes almost unthinkable when marketing activities are added. It seems odd that the government allows Anheuser-Busch to maintain such a huge portion of the market.
Unfortunately, most people cannot tell the difference between brands of beer and more expensive brands do not cost proportionally more to make so if a brewer can convince a consumer that one beer is better than another, the brewer is able to charge a higher price for it. This also seems to cause a beer's distinction to be made purely through promotional means. The beer industry spends an extraordinary amount on promotions and advertising activities to differentiate between the brands.
The market demand for beer is very difficult to measure. It undergoes many seasonal fluctuations and varies greatly depending on the region of the country. Beer has been indicated to have a relatively static demand. With such a static demand then it...