THE boss of SABMiller, Graham Mackay, recently suggested that the big rush of consolidation in the brewing industry was over. Like the bar talk encouraged by his company's products the pronouncement was precise, certain—and wrong. On Tuesday October 9th London-based SABMiller, one of the world's bigger brewers and America's second largest, and Molson Coors, America's third-biggest beermaker, announced that they would get together in a joint venture in America. The deal will create a huge operation with revenues of $6.6 billion.

The pair are teaming up to take on both Anheuser-Busch, America's biggest brewer, and American drinkers who are showing a declining thirst for their wares. Beer drinking in most rich countries is growing slowly or is in decline. One estimate suggests that America might see spending on beer grow by just 1.5% this year. And the growth is courtesy of imported or small-scale craft-beer. Rich drinkers prefer to tipple on premium ales or wine and spirits, so sales of the mass-market varieties are suffering.

By drawing together SABMiller and Molson Coors will be better placed in the bar brawl against Anheuser-Busch, which has nabbed around half of the American beer market and which pumps out 102.6m barrels of beer a year. MillerCoors, as the new venture will be known, will command some 29% of the American beer market. Apart from the chance to cut costs by an expected $500m a year, MillerCoors expects to be more competitive in the costly price wars against Anheuser-Busch and its flagship Budweiser brand.

Beer is a largely a local business. Faced with the prospect of dwindling sales in established markets brewers first consolidated to cut costs in their home countries, then went abroad in search of markets where growth at a decent clip was still possible, namely in Latin America, Asia, Eastern Europe and Africa.

In the last round of consolidation in 2004-05 SABMiller snapped up Grupo Empresarial Bavaria, South America's second-largest brewer, and Belgium's Interbrew created the world's leading beermaker by volume, InBev, with its purchase of Brazil's AmBev. Anheuser-Busch also won a savage battle against SABMiller to buy Harbin, a leading Chinese brewer in the world's leading beer market. Since then the big brewers have picked off smaller targets around the world. While competition is often fierce in these new markets and margins thin, analysts expect to see more robust growth. And as drinkers in these countries get richer the brewers will hope to wean them onto more profitable imported drinks.

The deal between SABMiller and Molson Coors indicates that other attempted strategies to wring more cash out of the beermaking have not proved successful. Despite some forays abroad Anheuser-Busch has largely eschewed spreading beyond its home market, still relying on America for 80% of its profits. And in 2002 when SAB, a South African brewer, bought America's Miller for $5.6 billion it was with the intention of taking on Anheuser-Busch in its own back yard.

That has not proved a success for SABMiller. Its new ally, Molson Coors, has a better record selling premium craft-beers, one area where the market is growing. SABMiller has been sniffy about their prospects in the past. But then that company is stumping up 58% of the assets for the new business whereas control will be split 50-50. And Molson Coors will provide the chairman and chief executive for the new venture.

Even if this is a sign of failure in America at least SABMiller has a thriving worldwide business to fall back on. In America the battle between Anheuser-Busch and MillerCoors is likely to intensify in years to come. And Anheuser-Busch has nowhere to run, unless you believe the pub talk that is: that a tie-up with Inbev is now on the cards.