ST. LOUIS – Forty years ago, one of the nation's top brewers introduced a beer that would dramatically change the beer business — and wake up the folks on Pestalozzi Street in St. Louis.
Miller Lite, launched by Miller Brewing in 1975, introduced the light beer segment to a broad swath of the U.S., and became a leading brand popular even in the home of Anheuser-Busch.
Now, as the world's biggest brewers join forces, the ownership of Miller beer brands will be different — and that could mean big changes for the U.S. beer market.
Molson Coors is poised to take complete ownership of the Miller brands next year, catapulting the Colorado-based brewer to the No. 2 spot in the U.S. beer industry. Then it will face alone the decades-long challenge that SABMiller failed to surmount: toppling behemoth Anheuser-Busch.
A-B InBev, the world's largest brewer, last week finalized a $108 billion deal to buy rival No. 2 SABMiller. The acquisition will allow the brewer to get even bigger and chase sales in growing international markets, including Africa.
But to satisfy U.S. antitrust concerns, London-based SABMiller plans to sell its stake in brewing joint venture MillerCoors to partner Molson Coors. MillerCoors, which controls the Miller and Coors beer brands, was created in 2008 to help the two brewers compete against Anheuser-Busch.
When the deal finalizes, Molson Coors will be the No. 2 brewer in the U.S., with about 26 percent market share, trailing only A-B InBev, which has 45 percent market share, according to trade publication Beer Marketer's Insights.
"It makes Molson Coors a stronger competitor and gives them more resources to put behind Miller Lite and Coors Light," said Harry Schuhmacher, publisher of Beer Business Daily. "Molson Coors is going to experience significant cost savings and tax benefits, and this gives them an ability to reinvest that in their U.S. business."
Last week, Molson Coors said the change of ownership provides access to more than $250 million in annual anticipated cash tax benefits, and $200 million in annual synergies by the fourth year following the sale.
The deal "allows us to unlock the substantial potential of full ownership and control of the U.S. business," making the company a stronger, more efficient competitor, Molson Coors president and CEO Mark Hunter said last week during an online presentation.
Still, A-B InBev, whose U.S. brewing business Anheuser-Busch is based in St. Louis, will remain a formidable competitor.
"A-B is more than two times their size and can always outspend them," Schuhmacher said. "It's very difficult to compete with an 800-pound gorilla."
Eric Shepard, executive editor of Beer Marketer's Insights, said it's too early to tell what the impact will be for consumers.
"The double irony in this is that for A-B InBev, the U.S. will be a smaller part of its business, and they're creating a competitor that's financially stronger than it was before," Shepard said. "With one owner, decisionmaking for Molson Coors will be easier. Whether they're able to compete more efficiently remains to be seen."