Teamster President Jim Hoffa in a recent letter to US Attorney General Loretta Lynch urged the Justice Department to reject a proposed merger of the world’s two largest brewing companies unless one of the merger partners reverses its decision to close its brewery in Eden, North Carolina.
The closure would leave 450 Teamster members without jobs.
SABMiller’s, the world’s second largest brewer, announced in September 2015 that it would close its Eden brewery in September 2016. The announcement of the closure came two days before the merger talks between SABMiller’s and Anheuser-Busch-InBev (AB InBev), the world’s largest brewer, became public.
In his letter to the attorney general, Hoffa writes,
If this closure is permitted to move forward, it will not only affect good American jobs. . . but also negatively impact competition in the industry. The impact on consumers, we believe, will become apparent within months after the transactions take place and is likely to persist for years. Reductions in industry capacity of this magnitude translate directly into higher prices for consumers, particularly in an industry that the Antitrust Division itself characterized in 2013 as not behaving competitively.
SABMiller’s, a London-based brewer with its roots in South Africa, operates in the US in a partnership with Molson Coors. In the US, it’s known as MillerCoors, which, in addition to the two main brands, produces an assortment of other beers.
Beers brewed in Eden include Coors, Coors Light, Miller High Life, and Miller Lite among others.
According to the Teamsters, the Eden brewery produces 12.5 percent of the MillerCoors production capacity and 4 percent of all the beer made in the US.
Eden’s production will be transferred to other MillerCoors breweries, but Hoffa argues in his letter to Lynch that the other breweries don’t have the capacity to absorb Eden’s production.
“Closing Eden will not just eliminate production capacity in North Carolina; we believe it will drive down barrelage output at other MillerCoors breweries,” writes Hoffa.
Hoffa proposes that as condition for approving the merger between AB-InBev and SABMiller’s, MillerCoors at least be required to offer the Eden brewery for sale, an option that MillerCoors has been unwilling pursue.
Hoffa suggests that MillerCoors doesn’t want to sell the brewery because in the past when “breweries have been sold to competitors, the result has been good for competition and consumers but bad for the former owner.”
Closing the Eden brewery also will be bad for the local community, which stands to lose more than the 520 good-paying union and non-union jobs at the brewery.
The impact of the closure will ripple throughout the community.
Three local trucking companies have major transportation contracts with MillerCoors, and a Ball Corp. factory in nearby Reidsville makes cans for the brewery.
The brewery is also the source of $1.3 million in tax revenue for a city with a $22 million operating budget.
“This shutdown will be devastating for the brewery workers, their families and our whole community, said Vernon Gammon, secretary-treasurer of Teamsters Local 391, which represents the Eden brewery employees, at a March rally to keep the brewery open.
“This community and our entire state will suffer because of the loss of these good paying jobs,” said North Carolina Attorney General Roy Cooper said at the same rally.
Both the US and North Carolina attorneys general are reviewing the proposed merger for possible violations of state and federal anti-trust laws.
The proposed merger of AB-InBev and SABMiller will create a mega-corporation that will control 30 percent of the world’s beer market and is the latest in a series of mergers that have winnowed competition in the global beer market.
In 2004 AmBev, a Belgium brewer, whose most notable brand in the US is Stella Artois, and Inbrew, a Brazilian brewer, merged to form the largest brewing company in the world–InBev.
In 2008, InBev grew bigger by acquiring Anheuser Busch.
That merger drew the interest of the US Justice Department but was allowed proceed.
SAB, or the South African Breweries, acquired Miller’s in 2002.
Hoffa in his letter noted that the two companies involved in the merger would like to get approval quickly, but he warned that a rush to approval would have consequences.
“The companies involved, no doubt, would like to see the investigation wrapped up in short order so they can complete their mega-merger,” Hoffa said. “Their desire to expedite cannot take precedence over the need to ‘get it right’ for consumers and working families.”