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The United States Beer Industry Over the last few decades, the United States (US) beer

industry has been marked by a very clear trend towards an increase in the concentration of the market. Today, some 80% of all the beer consumed in the US is produced by just three companies, up from 57% of the market in 1980. Anheuser-Busch had almost 50% of the market in 20076, up from 28.2% in 1980. SAB-Miller (formed in 2002 when South African Breweries united with Miller Beer) had around 19% of the market, and Molson Coors (formed in 2005 when Canadas Molson united with Coors) had 11% of the market. Anheuser-Busch, SAB-Miller and Molson Coors dominate the mass-market segment of the industry, where competition rotates around aggressive pricing, brand loyalty, wide distribution, and national advertising and spending. In contradiction, another segment in the industry, the premium beer segment, is served by a large number of small breweries and importers, the majority of which have a market share of less than 1%. The premium segment focuses on selective buyers. Producers are involved in the art of craft brewing (craft brewery is a brewery that produces a limited amount of beer). They build their brands around taste and cover higher product costs by charging much higher prices around twice as much for a six pack (6 beers in a package) as the mass-market brewers. The microbrewers and importers have been gaining share and currently are considered for around 11% of the total market. The increase in concentration between mass-market brewers reflects a number of factors. First, usage of beer in the US has been slowly decreasing (even though consumption (usage) of premium beer has been increasing). For each person consumption of beer was maximum at 34 gallons in 1980, fell to a low of 29.1 gallons in 2003, and slowly went back up to 30 gallons for each person in 2005. The decrease in consumption (usage) was partly due to growing popularity of replacements, especially wine and spirits. Second, advertising has steadily increased, putting smaller mass-market brewers at a clear disadvantage. In 1975, the industry was spending $0,18 a case on advertising: by 2002, it was spending $0,40 (these figures are inflation-adjusted or constant dollars). Smaller mass-market brewers could not afford the expensive national television advertising campaign required to match the spending of the largest firms in the industry and they saw their market share decreased as a result. Third, due to a combination of technological change in canning ( putting beer into metal cans ) and distribution, and increased advertising expenditures (spending money on advertisement campaigns) , the size that a mass-market brewer has to achieve in order to save in costs by increased level in production minimum efficient scale (lowest production point at which long-run average costs are minimized) - has steadily increased. By the early 2000s, the minimum efficient scale had increased to 23 million barrels, implying that a market share of 13.06% was required to reap economies of scale. Shortly, the combination of decreasing request, increasing advertising spending and an increase in minimum efficient scale of production put smaller mass-market brewers at a competitive disadvantage. Many sold out ( went to larger companies) to the larger brewers or simply shut down. By the early 2000s there were only twenty-four mass market brewers left in the US, down from eighty-two in 1970.