Daily News: Planned merger of city’s two largest beer distributors could threaten thousands of minority-owned bodegas

A merger of Manhattan Beer Distributors and Phoenix Beehive Beverage Distributors would create one massive company capable of imposing a chokehold on the city’s beer market. Bodegas sell 60% to 70% of all the beer in New York.

From New York Daily News:

It is a classic David vs. Goliath story.

A mega-merger between two of New York City’s largest beer distributors that could take place at the beginning of next year would endanger the survival of the city’s mostly minority-owned 13,000 bodegas and its 100 independent beer suppliers, 30% of which are owned by minorities and women.

“If the merger happens we would have to deal with a monopoly,” said Ramon Murphy, president of the Bodega Association of the United States. “They would dictate prices, limit brands and make it much more expensive for the public. There are anti-monopoly laws and they need to be enforced.”

Murphy is right. If the merger goes ahead, the Bronx-based Manhattan Beer Distributors — which will sell and deliver more than 35 million cases of beer in 2014 — and the Brooklyn-based Phoenix Beehive Beverage Distributors, which will sell and deliver 13 million cases, would become one company of cyclopean proportions capable of imposing a chokehold on the city’s beer market.

On Wednesday the Bodega Association will hold a press conference to make public “The Fight for Small Business Survival in an Age of Box Stores and Wholesaler Consolidation,” a report done on their and the Empire State Beer Association’s behalf, making it clear why the merger is a bad idea for them and for consumers.

“Our coalition opposes the merger,” said the Bodega Association in a written statement. “It seriously threatens the New York State beer market as a whole.”

According to the report, large franchise beer wholesalers such as Manhattan Beer and Phoenix Beehive — anointed by multinational brewers Corona/Coors, and Miller and Heineken, which control 90% of beer production in the country — discriminate against small independent beer distributors and bodegas.

Even though bodegas sell 60% to 70% of all the beer in New York, the franchise wholesalers discriminate by refusing to give the independents a true wholesale discount and by charging bodegas more for beer than they charge chains and box stores.

“One bodega is not selling more beers than Costco but 13,000 bodegas are,” said Murphy, who points out that beer represents 25% of their business. “Yet, they (box stores) are getting better prices.”

But the small guys are not taking it lying down. They are hoping Mayor de Blasio will oppose the merger and support a bill introduced in January in the state Legislature that would set posted beer prices to prevent discrimination against bodegas, and protect and preserve small retailers and distributors against the monopolists.

According to the association, the Great Recession of 2008 had a disproportionate impact on bodegas, which are closing in record numbers due to slow sales, high taxes and burdensome regulations.

“We are involved in a fight for survival,” Murphy said. “We cannot do it without beer sales.”

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