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Illinois booze barons line up to fight Anheuser-Busch

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  • Illinois booze barons line up to fight Anheuser-Busch



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    Illinois booze barons line up to fight Anheuser-Busch
    In the 1920s, Chicago beer barons settled their turf wars with Tommy guns. Today, they dispatch lawyers to the Illinois Liquor Control Commission, where the stakes are just as high.

    Wirtz Beverage Group, MillerCoors LLC and Southern Wine & Spirits of America Inc. are urging the commission to deny Anheuser-Busch Cos. a license to distribute its own beer in Illinois.

    Anheuser-Busch is seeking the license as part of its move to purchase the state's largest distributor of Budweiser and other Anheuser-Busch products. Opponents of the St. Louis giant, itself a subsidiary of Belgium's InBev A.B., say granting it would undermine the state's three-tier system, which requires manufacturers to sell to wholesalers, which sell to stores and bars.

    Allowing the world's biggest brewer to distribute could lead big wine and liquor makers to cut out distributors as well, threatening highly lucrative franchises like Wirtz Beverage, which turned liquor wholesaling into a family fortune.

    At a special hearing before the liquor commission last week, representatives of Wirtz, MillerCoors and Southern, the biggest liquor distributor in the country, watched as Anheuser-Busch lawyers argued that state laws don't specifically exclude a brewer from distributing, which the company did through Illinois subsidiaries until 2005.

    Industry observers say whatever the commission decides, the losing side is certain to appeal in state court, given what's at stake. "This case is huge because it could lead to the deregulation of the industry in Illinois," says Morton Siegel, an attorney who specializes in alcohol issues for Chicago-based Siegel Moses & Schoenstadt P.C. "There is also no doubt in my mind this case will ultimately end up in court."

    The controversy stems from Anheuser-Busch's attempted buyout of City Beverage, of Chicago. The brewer said it reached a deal to purchase for "tens of millions of dollars" Detroit-based Soave Enterprises' 70% stake in City Beverage; Anheuser-Busch already owns the other 30%.

    But on Feb. 11, the day before the buyout was to close, the state liquor commission said it wouldn't give Anheuser-Busch a license.

    Daniel Kolditz, an Anheuser-Busch attorney, told the commission last week that "everyone was pretty stunned"and said the "issue is of critical importance to Anheuser-Busch."

    Anheuser-Busch representatives say the company distributed beer in Illinois from 1980 to 2005 and there have been no changes in the law since then. The brewer also told the commission that it has licenses to distribute in 24 states.

    But Richard Haymaker, the commission's chief legal counsel, recommended against granting Anheuser-Busch a license, saying it could "undermine the three-tier system."

    Alcohol laws differ state by state, but Illinois is viewed in the industry as a strong defender of such systems, which were established after the repeal of Prohibition to maintain the independence of retailers, distributors and manufacturers and to provide greater checks on the sale and production of alcohol.

    The laws led to prosperous alcohol distribution businesses for some well-connected Chicago businessmen. W. Rockwell "Rocky" Wirtz, the owner of the Blackhawks, runs a $1.5-billion business that dominates the spirits market along with Miami-based Southern, which has more than $8 billion in sales nationwide. Reyes Holdings LLC, the $11.75-billion business owned by Chris and Jude Reyes, operates Chicago Beverage Systems LLC, the city's biggest beer distributor. MillerCoors distributes through Chicago Beverage.

    "If Anheuser-Busch starts distributing itself, the industry is concerned it drives a big hole through the three-tier system and could lead it to implode," says James Webster, a Chicago attorney for Southern.

    A Wirtz spokesman says, "Granting a wholesaler license to a supplier would significantly threaten the three-tier system. In this particular case, it would also stifle competition and make it extremely difficult for consumers to access smaller, craft brands."

    Yusef Jackson, a son of the Rev. Jesse Jackson, runs an Anheuser-Busch distributor in Chicago. If it gains control of City Beverage, Anheuser-Busch could look to buy Mr. Jackson's franchise next.

    A lawyer for MillerCoors told the commission it opposed allowing out-of-state brewers to distribute in Illinois. MillerCoors held a distribution license a decade ago but forfeited it upon the commission's request. Chicago is the only big market in the country where MillerCoors sells more beer than Anheuser.
    Cheers!
    Banjo Bandolas
    Probrewer.com
    v- 541-284-5500
    banjo@probrewer.com

  • #2
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    A Wirtz spokesman says, "Granting a wholesaler license to a supplier would significantly threaten the three-tier system. In this particular case, it would also stifle competition and make it extremely difficult for consumers to access smaller, craft brands....."
    Yah...their billions may dwindle to millions and that means a hard future for their employees. But form an STRONG alliance with all things craft and a company such as Wirtz could make it. More craft brewery's would have to create their own distribution network like Brooklyn etc. No small task but proven to work if your willing to take on the added work and risk.

    A lawyer for MillerCoors told the commission it opposed allowing out-of-state brewers to distribute in Illinois. MillerCoors held a distribution license a decade ago but forfeited it upon the commission's request. Chicago is the only big market in the country where MillerCoors sells more beer than Anheuser.
    http://www.chicagobusiness.com/cgi-b...rticleId=33104
    Funny stuff!

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