Anheuser-Busch Distributor Incentive Program Raises More Concerns Of A Stifled Craft Beer Market

With its $107 billion merger with SABMiller making waves and federal regulators investigating its purchase of several small distributors, one might think that Anheuser-Busch InBev would lay low when it comes to rocking the distribution boat. But that’s apparently not the case, as the company recently unveiled an incentive program that would provide distributors with a sliding scale of bonuses if most of the beer they sell comes from the brewer.

The Wall Street Journal reports that the incentive program, aimed at reversing a decline in sales, could provide as much as $1.5 million in reimbursements to independent distributors if 98% of the beers they sell come from AB InBev.

If a company’s sales volumes are made of 95% AB InBev brands – like Budweiser, Bud Light andrecently acquired craft beers from Golden Road and Goose Island – they would be eligible to have as much as half of their marketing support for the products — promotions and display costs — covered by the beer giant, according to distributors who spoke with the WSJ.

AB InBev has reportedly already told its network of 500 distributors, and others, that they would qualify for the incentive program as long as craft brewers they carry produce less than 15,000 barrels or sell beer only in one state.

When AB InBev announced the three-year plan at a meeting last month, the company estimated that participating distributors would receive an average of $200,000 in benefits annually.

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Here's the backstory of the "questionable" incentive programs that were referred to in yesterday's beer giant merger story. I didn't know that "incentives" like this were even legal, and don't think that they should be.

"For its part, AB InBev must stop its questionable practice of providing anticompetitive incentives — like covering marketing costs for distributors who kept a strict limit on non-AB InBev products."