Oligopoly in the brewing industry
At first glance, the UK brewing industry might appear to be highly competitive, with many pubs in close proximity to one another and with many brands of beer and lager offered for sale. However, in reality most pubs are owned by the major brewers. Tied houses, as they are called, account for about 40 per cent of a brewer’s turnover, and sell only a limited range of the beers and lagers that are available. Consumer choice is clearly constrained. The oligopolistic nature of the brewing industry can be seen when we consider the market shares of the leading brewers (see table). In 1985 the three largest brewers held 47 per cent of the market. By 2001 this had grown to 73 per cent. What is also significant is that small independent brewers, which generally operate within a local or regional market, have seen a dramatic fall in their market share. With this huge growth in the market power of the major brewers have come large rises in the price of beer (even after taking inflation and tax increases into account). Prices in the UK have risen faster than anywhere else in Europe.
Market shares of the largest brewers
| |1985 | | |2005 | | |(%) | | |(%) | |Bass |22 | |Scottish-Courage |27 | |Allied Lyons (Carlsberg) |13 | |Coors (Carling, Worthington) |20 | |Grand Met (Watneys) |12 | |!nbev (Bass, Beck’s, Stella) |19 | |Whitbread |11 |...