Recently a £780m merger between Marston’s and Carlsberg’s UK brewing operations created the Carlsberg Marston’s Brewing Company. An investigation has been launched into the merger by the UK competition regulator, the Competition and Markets Authority (CMA).
The proposed merger will see Marston’s receive a 40% stake in the newly created Carlsberg Marston’s Brewing Company as well as a cash payment of up to £273m.
The two brewers agreed on the merger and joint venture in May 2020. But the CMA launched a formal competition enquiry into the merger on August 19, 2020 and invited comments from interested parties. The invitation to comment was open till September 2, 2020. October 19 is the deadline for the phase 1 decision and whether to launch a more in-depth ‘phase 2’ investigation.
Market concentration decreases competition in the industry and concentrates profit among a few large players – often multinational alcohol corporations. Market concentration fuels the concentration of financial resources and with it advertising spending power, political lobbying power, and the ability to sell alcohol at much cheaper prices than their competition thereby dominating the market and rendering small alcohol producers unable to compete and eventually unable to survive continue.
Market concentration and market transformation
The coronavirus crisis is putting increasing pressures on mutlinational alcohol giants and will likely fuel even more mergers, market concentration and relentless competition for emerging markets and consumer groups.
At the same time, another development in the alcohol is further accelerated by COVID-19 and that is the emergence of alcohol e-commerce, online retail and on-demand alcohol delivery. This means that new actors are entering the alcohol industry, competing for their share of overall profits and pursuing increases in alcohol availability.
Recently Drizly – an E-commerce platform operating in over 100 markets across the United States and Canada and tellingly known as the “Amazon for liquor” – closed a $50 million Series C funding round. This round of investment was led by New York-based investor Avenir Growth and Tiger Global – an aggressive hedge fund – as well as other existing investors.
Drizly grew by 350% in 2020 compared to the previous year. The number of retail platforms in Drizly doubled since January 1st.
Movendi International has previously reported that Amazon itself is pushing into the alcohol retail business aggressively. Amazon already dominates general online retail and has expanded into the grocery business and food delivery. Selling alcohol has long been in the sights of the company, only limited due to the state and local laws governing alcohol sale in the United States
But Amazon, in a move revealing the focus on changing alcohol laws to extent the alcohol market, has heavily invested since April 2019 by employing its own alcohol policy lobbyist. This suggests Amazon is aggressively pursuing the alcohol market.
The investments from hedge funds that Drizly was able to secure and the investment that Amazon has already made signal that Big Alcohol now includes E-commerce and online retail giants who are betting on weakening alcohol laws to make alcohol more widely available and thus drive consumption and profits.
But the ensuing harm can already be felt in communities.
Online alcohol sale and on-demand delivery has been fueling alcohol harm and contributing to the alcohol burden rapidly around the world, especially during the current public health crisis. Some examples are California, USA, Australia and Kenya. One of the biggest threats of online retail and on-demand delivery driven by profit greed of the corporations and investors behind the platforms is that minors can easily get their hands on alcohol (as age verification and compliance with alcohol laws are no priority of the delivery services), that alcohol use at home in front of children is normalized and that alcohol is now readily and easily available around the clock.
Sources
The Grocer: “CMA launches investigation into £780m Marston’s and Carlsberg deal“
PYMNTS.com: “Drizly Notches $50M For Alcohol eCommerce And Delivery Platform“
The Spirits Business: “Drizly Group raises $50m in funding“