Over the last couple of years the beer industry has experienced an intense consolidation process resulting in an every declining
number of globally active brewing companies. At the same time, in some large beer markets the number of micro-breweries steadily
increased. While the former is often explained by prevailing economies of scale in this industry the latter is often associated
with demand side arguments including love-of-variety preferences. This chapter offers an additional explanation for these
tendencies observed in the beer markets. More precisely, we argue that a country's policy concerning the taxation of beer
products might have a direct impact on the emerging market structure. More precisely, our main finding supports the view that
EU's beer excise tax regulation which couples a minimum amount of beer excise taxes obliged to charge with the possibility
of reduced rates for small breweries has direct implications for the market structure in the brewing industry. More precisely,
this regulation tends to trigger a polarisation of the market in the sense that one observes a very small number of large
and globally active brewing companies while, at the same time, the number of micro-breweries increases. Medium-sized beer
producers tend to be forced out of the market by this regulation or choose to adjust their production level to a smaller amount.
Some of the (formerly) medium-scale beer producers also have been targets of mergers and acquisitions,which further fosters
an increase in market concentration among the global players in beer producing. This overall finding confirms that specific
tax rules might directly and indirectly affect market structures and in the medium-run might also have implications for customers.
Especially, the very small number of globally active brewing companies might increase the likelihood for collusive behaviour
and thus calls for a careful monitoring by competition authorities all over the world.
Keywords:Excise Duties, European Union, Globalisation, Marketing and Trade, Brewing Industry