People don’t usually think of Beer and Banks together. Most people like their bartender more than their banker, even if those bankers at times get pretty wild. Certainly bankers have gotten pretty friendly with bartenders since Dodd-Frank was passed, now that they have federal regulators hovering over them on a daily basis. That would drive anyone to drink. But the comparison of what is happening with beer and what is happening with banks is an excellent study in free enterprise in America today.
It used to be that there were a few breweries that controlled the beer market. But it was not always that way. Back in the 1890’s there were over 2,000 breweries in America. By the 1950’s that had slipped to 89. By the 21st century, the government was protecting us from mega-mergers of breweries. In 2002, SAB acquired Miller. That was followed by Coors merging with Molson. If that was not bad enough, in 2008 SABMiller merged with Molson Coors to become MillerCoors. That was quickly followed the same year by InBev acquiring Anheuser-Busch. Common wisdom was that all these super mergers were going to cause consumers harm. But it did not quite turn out that way.
There are now more breweries in America than ever before. There are about 2,475 and rising. Those of you who go to a local pub today could see 30 beers on tap, and none of those are the big boys. Those beers change weekly. It used to be if you want to be a sophisticate you would drink a foreign brew like Heineken or Peroni. That is so passé. If you are drinking what is on TV you are behind the time. Gastro-pubs are popping up all over. With microbreweries opening up regularly (221 new ones just in the second half of 2012), those that drink beer are truly in the golden age of brews in America.
Despite the fear that was being spread by government officials with the mega-mergers, the free market cured that problem. The microbreweries are growing at a huge rate and eating the lunch of the big boys. The only thing that stands in the way of these entrepreneurs is normal health laws, zoning laws and building permits. That is what makes this country the miracle it has always been.
On the other hand there is the banking business. There have been mergers before and during the last 50 years there have been a slew of mergers. When that happened, entrepreneurs saw the opportunity and started new banks. That is what we expected to see happen after the banking crisis of 2008. After all, we had sung this song before.