Beer News

Illinois Breweries Fighting to Keep Right to Distribute

Another battle over the distribution rights of small brewers is being waged in Illinois.

When the Liquor Control Commission thwarted A-B InBev’s attempt to wholly acquire Illinois distributor City Beverage, claiming the acquisition would violate the three-tier mandate, A-B pointed out an inconsistency in the state’s laws: In-state breweries are able to obtain distribution licenses, which also circumvents the three-tier system, yet any out-of-state brewer must go through an in-state distributor to sell their beer in Illinois, according to a 1934 law.

In light of A-B’s complaint, the courts took away self-distribution rights for in-state breweries, but delayed enforcement of the decision to allow the state Legislature to step in.

Now, two bills are making their way through the Legislature that would allow breweries that produce fewer than 60,000 barrels per year, as well as brewpubs that sell fewer than 50,000 barrels, to self-distribute.

A grassroots campaign called “Save the Craft!” has been launched by Ryan Hermes and others behind the website guysdrinkingbeer.com. Hermes tells BA, “Not only are we trying to build support for [current] breweries, but for future breweries in the state. … Self-distribution will be integral to getting [these operations] off the ground.”

One way or another, the state Legislature has been ordered to reach a final decision by May 31.

Goose Island Acquired by A-B InBev

On March 28, Fulton Street Brewery—makers of the rapidly growing Goose Island Beer Company family of ales—announced that they had agreed to be acquired by A-B InBev, their distribution partner since 2006.

A-B InBev spent $38.8 million to acquire FSB from two sources. A 58-percent majority stake in the company was bought from FSB’s founders and investors for $22.5 million. The remaining 42 percent, held by Craft Brewers Alliance, was purchased for another $16.3 million.

This past year, FSB produced around 127,000 barrels, but had been struggling as of late to keep up with demand [see Beer News, issue #45]. A-B InBev has committed $1.3 million to ramp up FSB’s production capacity as early as this summer.

FSB founder and president John Hall states via press release, “Demand for our beers has grown beyond our capacity to serve our wholesale partners, retailers and beer lovers. This partnership … will bring resources to brew more beer here in Chicago to reach more beer drinkers, while continuing our development of new beer styles. This agreement helps us achieve our goals with an ideal partner who helped fuel our growth, appreciates our products and supports their success.”

While John Hall is staying on as CEO, his son, brewmaster Greg Hall, has stepped down and will be succeeded by former Deschutes head brewer Brett Porter.

Surly Campaigns to Change Law and Build Brewery/Restaurant

Surly Brewing Company’s founder/owner, Omar Ansari, wants to build a “destination brewery” in his home state of Minnesota. This facility would enable an increase in production of up to 100,000 barrels, and would include an event center, restaurant and beer garden. The proposed facility could also create up to 150 new jobs.

Unfortunately, Minnesota currently doesn’t allow the on-site sale of beer at production breweries. Ansari is on a mission to change this. He’s lobbying for support of two bills (House File 703 and Senate File 416) proposing the legalization of on-site beer sales. So far, both bills have been greeted with positive bipartisan support.

Ansari clarifies via Surly’s blog, “We are not looking to tear down the three-tier system … we only want to sell glasses of our beer, [not packaged beer or growlers, and only at the brewery].” Ansari continues, “This [is] a whole new world for us and it has proven to be an uphill climb to update the law … We do want to meet with the opposition to find a resolution.”

Surly’s output currently stands at 12,000 barrels per year, but that’s not nearly enough to satisfy consumer demand. To keep enough beer available locally, they’ve had to cut back on distribution to neighboring states.

Mexican Brewery Unveils World’s First Beers for the LGBT Community

Mexico’s Cervecería Minerva brewery has unveiled the first ales specifically targeted at the lesbian, gay, bisexual and transgendered community. The two brews—Salamandra and Purple Hand, both Honey Ales—are each named after popular symbols of the community. The labels are designed as stickers that can be peeled off and worn as a symbol of pride.

The release of these ales is seen by many as a bold step forward, especially since some companies in Mexico have been hesitant to support the LGBT community.

Response to the brews have been enthusiastic, with all 500 cases produced so far selling out in just one week. The brews are currently being sold in Mexico, Japan and Colombia; it will likely be a while before they see widespread international distribution.

Indiana State Laws May Stifle Breweries’ Growth

Craft brewers throughout Indiana—much like the rest of the country—are running into outdated laws that, if left unchecked, could drastically affect their bottom lines. In this case, some of Indiana’s most popular breweries may soon lose the right to self-distribute and will have to pay double the taxes, which could lead to closings of tasting rooms and brewpubs.

Indiana’s current law, which was drafted in 1993, sets a production cap for tax benefits and self-distribution rights at 20,000 barrels per year. At that time, Indiana had a mere three brewpubs putting out 1,000 barrels each year. Now, Indiana’s 34 craft breweries produce over 50,000 barrels per year, the bulk of which is produced by Three Floyds, Sun King and Upland.

With Three Floyds likely to hit the 20,000 barrel mark this year and Sun King set to do so in 2012, brewers across the state are lobbying for change. There are currently no plans to introduce legislation, but brewers remain hopeful. ■