Review of Industrial Organization (2005) 26:307–324 © Springer 2005
The Dynamics of Industry Concentration for
U.S. Micro and Macro Brewers
VICTOR J. TREMBLAY
, NATSUKO IWASAKI and CAROL
Department of Economics, Oregon State University, 303 Ballard Extension Hall, Oregon
Abstract. In this update we document the changes in industry concentration of macro and
micro brewers in the U.S. brewing industry since 1970. Technological change and the con-
tinued success of Anheuser–Busch forced the macro brewers into a war-of-attrition game
and contributed to rising concentration in the macro sector of the industry. Homogeni-
zation of the beer produced by macro brewers, changes in local demand conditions, and
a more favorable regulatory environment created proﬁtable niches in many local markets
for micro brewery beer, and entry into this sector occurred at a phenomenal rate from
1977 to 1998. Consistent with several models of industry dynamics, over-exuberance led
to a shakeout as the number of micro breweries fell by over 16% from 1998 to 2002.
Key words: brewing industry, concentration, micro breweries.
JEL Classiﬁcations: L11 and L66.
The most prominent feature of the U.S. brewing industry is the continual
change in industry concentration. The macro or mass-producing sector of
the industry consists of large-scale brewers of traditional American lager
beer. Since Prohibition (1920–1933), the number of independent macro
brewers declined dramatically, from 766 in 1935 to about 20 ﬁrms today.
Among these, Anheuser–Busch, Miller (SAB-Miller), and Coors survived
and now dominate this sector of the industry.
While the macro brewers exited in droves, a handful of entrepreneurs
began brewing craft-style beer on a micro scale. This began when Fritz
Maytag purchased the failing Anchor Brewing Company of San Francisco
in 1965. Maytag turned the company around by reverting to the traditional
Author for correspondence: E-mail: V.Tremblay@OregonState.edu