OK, hold onto your butts because this is some legal stuff I’m gonna be layin’ down here. I have it on good authority that there is a method to AB InBev’s madness when it came to the purchase of Goose Island Beer Company, and unfortunately it has nothing to do with making beer…

This is the kind of thing that happens when distribution laws are made up state by state and there is no overall Federal regulation or rules. Seems that within the State of Illinois if you own a brewery you are able to “self distribute” within the state.

So what does this mean and why is it important? Well given our three tier system of alcohol distribution in this country, if you can cut out a tier you can make a lot more money. Traditionally, beer is made at the brewery, sold to a distributor, who turns around and sells it to a retailer, and is marked up at each stage before we get to buy it at a store. If a Brewery can cut out a step, they can not only get their mark up, but the distributor’s mark up too, and if they are smart they can take a little less to get the product to consumers at a lower price, making their beer more attractive to the price conscious end consumer.

So not only are they making more money by being able to sell their products directly to retailers, but they can also gain more market share from all the fizzy yellow beer drinkers. Lets face it, if you had to choose between Natty Light and Bud at the same price most would choose Bud. So that is the total motivation behind the purchase of the Goose Island Beer Company. Money, and lots more of it.

So if you were thinking that somehow Bud was interested in making better beer, you were mistaken. They want to make more money, pure and simple. Why else would they pay $38 million for Goose Island, when it was only really worth about $4 Million? Because they can spend $38 million and make $50 million every year forever (or whatever the number is). This also explains why they had no interest in the tap houses that Goose Island owns. They don’t care about the beer, or the culture, or the community. They care about the money.

Unfortunately this bodes poorly for the brewery as we know it. Since they really don’t care about it, I’m sure it will continue as a viable business, but the craft and culture that was there will be replaced with one driven by profit and money.

UPDATE: Thanks to Steve a commenter that submitted a link to a story that was in the Chicago Tribune. You can read the Trib’s Article here. This shows that the purchase of the Goose Island facility is part of a multi pronged attack to be able to self distribute all AB InBev beers in the state of Illinois. Thanks Steve!

UPDATE #2: The plot thickens. Interesting that AB InBev is trying to kill a bill before the State legislature that would extend the ability of small producers to self distribute past May 31st of this year when current legislation sunsets. At the same time they have been in a two year legal wrangle to purchase a distributorship in the Chicago area. While these two things seem to contradict themselves it is becoming clear that Goose Island is a pawn. Purchasing GI got them a seat at the table to discuss this self distribution law. They are very outspoken and want to crush it, thus killing many small breweries in Illinois. At the same time they are pushing legislation that would allow them to purchase the distributor in Chicago. This means that at the end of the day they would be the only brewery in the State with the means to self distribute. Shady and oh so Chicago!

UPDATE #3: This has been going on for a while in the Illinois State Legislature. Here is an excellent write up of the legal manuvers happening in Springfield. Also it looks like Miller Coors is getting into the fray as they try to defend their number 1 position as highest beer seller in Chicagoland, and are fighting against what AB InBev is trying to do. Here is the article.

Update #4: Turns out that there are a couple of guys that have been watchdogging the Illinois Legislature since this has began back in late February. This is a really great anthology of all the happenings around this issue. I’d like to thank Ryan Hermes for leaving a comment about all the work they have done over at http://www.guysdrinkingbeer.com. Here is a link to a page they started called Save the Craft. This is an execellent resource both for information, and to get involved in the fray if you are so inclined. Thanks Ryan. Here is the link to the page.





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