Is there Market Power in the U.S. Brewing Industry?

  • Sanjib Bhuyan Rutgers University, New Brunswick, New Jersey, USA


Increased consolidation in the U.S. brewing industry has raised legitimate concern about brewing firms’ ability to exert market power downstream. Using structural models of oligopoly behavior, we estimate market power in the U.S. brewing industry over the 1980-2009 period during which the sector experienced a rapid increase in concentration and the demise of many small firms.  Our results show that the U.S. beer market is price sensitive and both distilled spirits and carbonated soft drinks were substitutes to beer. While we were unable to detect the impact of labor and material costs on the price of beer, we find that Federal tax on beer increased beer price. Our results indicate that while there was some indication of market power, U.S. brewers did not exert oligopoly power over downstream firms (distributors and retailers).

Author Biography

Sanjib Bhuyan, Rutgers University, New Brunswick, New Jersey, USA

Associate Professor

Department of Agric., Food & Res. Econ.

Rutgers University


Appelbaum, E. (1982). "The estimation of the degree of oligopoly power." Journal of Econometrics 19(2-3): 287-299.

Bartelsman, E. J., Becker, R.A., and W.B. Gray. (2005). “NBER-CES Manufacturing Industry Database. National Bureau of Economic Research technical working paper 205.

Beverage Information Group. (2018). "Beer consumption in the United States in 2017, by category (in 1,000 2.25-gallon cases)." Chart. July 11, 2018. Statista. Accessed July 10, 2019.

Bresnahan, T. (1989). "Empirical methods for industries with market power." In R. Schmalensee and R. Willig, eds. Handbook of Industrial Organization, Volume II, Elsevier Science. The Netherlands: Publishers B.V., pp. 1011-1057.

Conway, J. (2018). “Global Beer Industry - Statistics & Facts.” Accessed July 10, 2019.

Cowling, K. and M. Waterson. (1976). "Price-cost margins and market structure." Econometrica 43: 267-274.

Demsetz, H. (1973). “Industry Structure, Market Rivalry and Public Policy.” Journal of Law and Economics 16:1-9.

Denney, D., B. Lee, D.W. Noh, and V.J. Tremblay. (2002). "Excise taxes and imperfect competition in the U.S. brewing industry." Working Paper, Department of Economics, Oregon State University.

DISCUS. (2019). "Sales market share of the United States alcohol industry from 2000 to 2018, by beverage." Chart. February 12, 2019. Statista. Accessed July 10, 2019.

Elzinga, K.G., and Swisher, A.W. (2011). "Developments in US Merger Policy: The Beer Industry as Lens." In Johan F.M. Swinnen (ed.) The Economics of Beer. Pp. 196-212. New York, NY: Oxford University Press.

Gallet, C.A. and Euzent, P.J. (2002). “The Business Cycle and Competition in the U.S. Brewing Industry.” Journal of Applied Business Research 18(2): 89-96.

Gokhale, J. and V.J. Tremblay. (2011). "Competition and Price Wars in the U.S. Brewing Industry." Working Paper, Department of Economics, Oregon State University.

Grocery Headquarters. (2017). "Market share of the leading domestic beer brands in the United States in 2017." Chart. April 1, 2017. Statista. Accessed July 10, 2019.

IBISWorld. (2012). “Breweries in the US.” IBISWorld Industry Report 31212, November 2012.

Iwasaki, N., B.J. Seldon, and V.J. Tremblay. (2008). "Brewing Wars of Attrition for Profit and Concentration," Review of Industrial Organization 33:263-279.

Kumbhakar, S.C., Baardsen, S., and Lien, G. (2012). “A new method for estimating market power with an application to Norwegian sawmilling.” Review of Industrial Organization 40(2):109-129.

National Beer Wholesalers Association (NBWA). (2019). “Industry Fast Facts.” Accessed July 8, 2019.

Nevo, A. (2001). "Measuring Market Power in the Ready-to-Eat Cereal Industry." Econometrica 69: 307-342.

Pepall, L., D. Richards, and G. Normam. (2002). Industrial Organization: Contemporary Theory and Practice. New York: South-Western College Publishing.

Pipoblabanan C. (2008). “Essays on Parametric and Nonparametric Estimation of Market Structure and Tax Incidence in the U.S. Brewing Industry.” Ph.D. Thesis, Oregon State University.

Rojas, C. (2008). “Price Competition in U.S. Brewing.” Journal of Industrial Economics 61:1-31.

Slade, M. (2004). “Market Power and Joint Dominance in U.K. Brewing.” Journal of Industrial Economics 52: 133–163.

Statista. (2019). "Per-capita volume sales in the beer market worldwide, by country in 2018 (in liters)." Chart. January 3, 2019. Statista. Accessed July 10, 2019.

Tremblay, V. J. and C.H. Tremblay. (1995). “Advertising, price, and welfare: evidence from the US brewing industry.” Southern Economic Journal 62(2): 367–381

Tremblay, V. J. and C.H. Tremblay. (2005). The US Brewing Industry: Data and Economic Analysis. Cambridge, MA: MIT Press.

U.S. Brewers Association. (2011). Brewers Almanac, Brewers Association (1980-2009). United States: Washington, DC.

U.S. Department of Commerce. (2013). Manufacturing: Summary Series: General Summary: Industry Statistics for Industry Groups and Industries: 2007. Bureau of the Census. Available at Accessed on July 10, 2019.

U.S. Department of Commerce. (2012). Bureau of the Census. Annual Survey of Manufacturers 1980-2009.Washington DC.

--------------. (2011). Bureau of Economic Analysis. National Income in the United States, 1980-2009. Washington, DC.

U.S. Department of Labor, Bureau of Labor Statistics. (2012). CPI Detailed Report, 1980-2009. Washington DC.

Wall Street Journal (WSJ), (2013). “U.S. Sues to Block Big Beer Merger.” written by Brent Kendall and Valerie Bauerlein. January 31, Thursday.

Xia, Y., and S.B. Buccola. (2003). “Factor Use and Productivity Change in Alcoholic Beverage Industries.” Southern Economic Journal 70(1): 93-109.

Original Scientific Paper